SA’s new-year spark snuffed out fast

With a solid two weeks of uninterrupted electricity flowing down the power lines in the latter part of December, South Africans started the new year with a tiny spark of hope that Eskom and its executives might actually be trying to keep the lights on.

This was in the wake of a scathing court judgment a fortnight earlier that hammered the government for the years of failure that created the country s load-shedding crisis and violated’ citizens’

human rights. That spark sadly became one of the first fatalities of 2024, and its passing should be marked with an official day of mourning for the country’s economy. To escape our collective “boiling frog syndrome” and fully understand just how far up the creek we’ll be if the national leadership status quo endures after 2024’s general election, we need to hit the loadshedding rewind button.

If you add up all the load-shedding in 2023, South Africans suffered through more than 41 weeks of power cuts. The stats show that in 2023 the cumulative number of load-shedding hours soared 84% over the total outage hours in 2022.

Given that in five short years our grid output has plunged from 141 hours (or less than a week) of load-shedding for the whole of 2018 to the disaster that was 2023, it doesn’t take a rocket scientist to figure out where SA is headed unless something drastic is done to stabilise the country’s power supply.

It’s simple: no power grid, no economy. Estimates by the Reserve

Bank put the economic cost of stage 6 load-shedding as high as R900m a day. At stage 3, the daily economic toll is in the region of R200m.

Given the five-year incremental trajectory of outages, even at the lower end of the central bank’s assessment, this amounts to economic losses of R6bn per month. The annual deficit to the private sector at the top end of the scale is horrifying.

In an attempt to mitigate a full-scale economic implosion SA imported R16.5bn worth of solar panels in the first nine months of 2023. This investment in renewable energy has certainly been a positive step, but nowhere near enough.

DATA

Looking back on the dark year that was, the objective data is:

● In the first half of 2023 SA suffered more load-shedding than the combined outages of the 15 years from the start of load-shedding in 2007 to the end of 2021. The power supply in the last six months of 2023 was equally dire. Between 2007 and 2021 Eskom blew R680bn in capital expenditure, with “generally poor results ”— a direct quote from a Treasury report published in August 2023. The same report notes that household electrical costs have risen 60% since 2017.

● Even worse, the Reserve Bank says that between 2007 and 2022 average Eskom tariffs increased 450%, significantly higher than inflation.

● At the end of the third quarter of 2023 Eskom’s total debt burden sat at an eye-watering R442.7bn — having rocketed nearly R19bn in six short months. Eskom’s September interim results confirmed the government’s R78bn taxpayer-funded bailout, despite its dismal governance record, ongoing audit fails under the provisions of the Public Finance Management Act and rampant, pervasive corruption, mismanagement and misuse of funds.

● Eskom’s staff headcount remains disastrously high; at the end of the third quarter it stood at 39,987 despite repeated directives to cut the fat. A 2016 World Bank report estimated that Eskom was overstaffed by a staggering 66% compared to baseline staff per client counts in other energy markets.

● This staff bloat costs taxpayers in excess of R33bn a year, according to the Reserve Bank report.

To summarise 2023, with government’s blessing Eskom charged consumers electricity tariffs that were roughly quadruple the comparative 16year inflation rate, for a service it failed to provide for more than three quarters of the 12 months under review. Bleak, depressing, demoralising — choose your preferred adjective.

December 1 delivered the second load-shedding-related court defeat of the year for the state, but this time the Pretoria high court’s gloves were off and none of the respondents — ranging from the president and cabinet ministers to Eskom and the National Energy Regulator of SA (Nersa) — was spared. The scathing judgment lambasted the government for years of mismanagement that created the loadshedding crisis, castigated the state and Eskom for finger-pointing “blame games” and set a two-month deadline for uninterrupted electricity to be supplied to state schools, hospitals and police facilities.

The government’s standard playbook when put on the spot over the years has been to ignore, delay, defer and deny, but after being slammed with human rights violations

— and with a populace on the far side of extremely miffed ahead of an election

— worldwide opinion categorises this approach to responding to the ruling as “high risk”.

Yet, defying common sense, the government and Eskom have chosen to walk on the wild side, with both entities lodging appeals against the judgment, which was issued by a full bench of the high court.

Most unbelievable is one of the core grounds of Eskom’s appeal, which is that “it was mistakenly included as being responsible for the electricity crisis, because it was not responsible for any of the (stated) government conduct that resulted in the electricity crisis”.

Yes, seriously. Wouldn’t the irony be hysterical if Eskom wasn’t such a disaster and the country in such crisis?

SCENARIO

If you’re not depressed yet, in the same week that the government announced its appeal, mineral resources & energy minister Gwede Mantashe gazetted for public comment the long-awaited draft Integrated Resources Plan (IRP) of 2023, and the main takeaway is that load-shedding isn’t going anywhere until at least 2030.

If you want it in government-speak: “For 2023 to 2030, the scenario planning shows energy insecurity is likely to remain a factor. Analysis ... highlights a concerning electricity supply and demand deficit. While ongoing additional generation capacity initiatives are expected to alleviate unserved energy, they do not fully address the underlying system adequacy.”

In a couple of weeks President Cyril Ramaphosa will open parliament with his state of the nation address, and — just as he’s done every February — he’ll fill this speech with a litany of achievements and vow that this year the government will fix what’s broken.

To mangle a famous Einstein quote: “Insanity is hearing the same thing over and over again and expecting different results.”

It’s time for South Africans to end the insanity and rescue our economy, businesses, jobs, homes, families and our children’s futures before there’s nothing left to save. Lest we forget, it’s the people rather than the government who hold the power. Our power is through the polls, and it’s most effective when there’s less thought given to party loyalty and more to professional performance.

In the corporate sector, if a company’s managers misuse shareholder investments they’ll be fired immediately. If you think of what’s necessary to run a country, imagine a company on steroids with the same fiscal principles. Voters are the shareholders of the “company” that is SA Inc, and it’s up to us to ensure the most trustworthy and qualified executive team is appointed to lead us out of the electricity crisis, which will otherwise end up bankrupting our “business”.

As voting “shareholders” we only get one opportunity every four years to decide our country’s future. If we don’t act this year to end the insanity and create a different result, the awful truth is that in four years’ time what we as voters want might not matter, because looking at 2023’s objective data, chances are by 2028 there won’t be much left to save.