Eskom’s short-sightedness means users pay twice the legal limit as power theft bites
IT’S DIFFICULT – probably impossible – to put a precise figure on the revenue Eskom’s losing to electricity theft and non-payment. But what is indisputable is that Eskom’s skills crunch and poor distribution channels have compromised its capacity to detect and stem the growing number of illegal residential and industrial consumers connecting to its grid. The net result? Legally connected consumers are picking up the tab and subsidising thieves and non-payers.
A recent research report by engineering consultant Chris Yelland for the South African National Energy Association (SANEA) stated that Eskom’s failure to rein in electricity theft and non-payment cost the power utility around R5,3bn in lost revenue last year.
Yelland’s research showed that almost 3 600MW – equivalent to the output of a major coal-fired power station or about 10% of the current national demand of around 36 000MW – wasn’t accounted for by the public corporation and its distributors and was most probably siphoned off the national grid.
Says Yelland: “That figure tallies with the one in Eskom’s financial report – except the company chose to classify theft and non-payment under ‘nontechnical losses’ in its report.” Non- technical losses refer to unaccounted for electricity that got “lost” somewhere along its distribution channels or was for some reason not accounted for.
Maboe Maphaka, Eskom’s corporate manager responsible for monitoring losses to theft, has dismissed the report as sensationalist, arguing that SA isn’t worse off than other countries. Says Maphaka: “Eskom’s nontechnical losses at 7% are fairly low when one factors in the global industry average of 10% to 15%. The bottom line is that we aren’t a law enforcement agency but in the business of providing electricity.”
But the economic effects of power theft have in some cases seen legal users paying almost twice above their legal limit. Most telling for Yelland is the financial impact of electricity theft on SA’s productive economy – more so, given the current environment of severe generating capacity shortages.
Says Yelland: “If we’re serious about addressing this country’s economic growth challenges we not only need to grow capacity but we also need to address the flawed distribution channels.”
Ronel Oberholzer, senior economist at research group Global Insight, supports Yelland’s view. She says power rationing imposed by Eskom on 138 of its top energy consumers – including gold and p l a t i num producers AngloGold Ashanti, Gold Fields and Harmony – could potentially knock off 0,3% of GDP growth for this year, while the 6% growth target by 2014 could be missed by 0,4%.
Simply put, were it not for theft and a permeating culture of non-payment among consumers, Yelland says SA wouldn’t be experiencing a power generating capacity crisis or electricity cuts. The trouble is, Eskom’s large vertically integrated accounting systems and inadequate revenue protection practices can’t detect those anomalies, Yelland says. “The scale of electricity theft and non-payment in SA has been caused by management’s complacency and neglect over many years.”
To which Maphaka retorts: “While agreeing with some of the findings of Yelland’s research, the view that management is mostly to blame for electricity theft and nonpayment is overly simplistic. We all know it’s easy to sensationalise such a report but that isn’t a true reflection of the situation on the ground.”
While admitting that Eskom is battling a rising tide of cable theft, Maphaka says it’s spending millions to strengthen security at most of its sub-stations in outlying areas – usually the source of illegal connections.
Hugh McGibbon, Eskom’s GM: Distribution, reinforces that view, saying that stealing electricity now involves organised crime. Even more challenging, says McGibbon, is the fact that some large-scale sugarcane farmers in areas close to KwaZulu-Natal’s Tugela region have embraced the scourge. Says McGibbon: “I had first-hand experience of electricity theft when I was GM for a distribution company in the KZN region.”
In townships such as Soweto and Tembisa, McGibbon says Eskom is fighting much more sophisticated electricity crime syndicates. “From our experience in most of those trouble spots, it’s only fair to suggest that electricity theft and non-payment are more of a social problem than a management capacity issue.”