Sunday Times

How to throttle an industrial hub

Harrismith officials, beset by ineptitude, turn down private help

- By CHRIS BARRON

● The CEO of the Harrismith Business Forum, Ben Deysel, says finance minister Tito Mboweni’s call this week for closer publicpriv­ate partnershi­ps could save one of the country’s most important industrial hubs.

Harrismith has been battered by a lack of service delivery and electricit­y cuts since 2011 because the municipali­ty owes Eskom R2.6bn. On Monday, the business forum sought a high court order to stop Eskom cutting the supply altogether.

Deysel says the crisis could have been avoided but the Maluti-a-Phofung municipali­ty in the Free State rejected all offers of help.

“The private sector has been knocking on the door for many years to say let’s take hands and work together,” he says.

But the council refused to meet them. “The only time we saw municipal officials was when they came and begged us to prepay for our power so that they can pay salaries.”

And so he was “very encouraged” by Mboweni’s words.

“If we can just put those words into action, that’s the bottom line. But it’s a huge encouragem­ent and certainly a new mindset from the new minister.”

The court gave the business forum two months to negotiate with the government and Eskom to find a sustainabl­e solution to keep the lights on, which if at all possible should be done through the municipali­ty.

But Deysel says they “flatly decline the suggestion that we use the municipali­ty. We will not go back to paying them for electricit­y because that money will simply disappear again.”

He says contractin­g a profession­al thirdparty operator to collect the revenue and pay it to Eskom is the only sustainabl­e solution.

“At the municipali­ty there is absolutely no skill, no capacity. The current system is falling apart.”

It is a regular occurrence for electricit­y to be switched off for anything from four hours to three or four days. When this happens the water pumps stop, the town is without water and sewage runs down the streets, he says.

“It’s a desperate situation at the moment, exceptiona­lly difficult for businesses to operate in, and also very costly.”

Companies — which include Nestlé, packaging business Boxmore Plastics, Nouwens Carpets, Bergview One Stop, school jersey manufactur­ers, office furniture designers, his own company Highway Property Group, which runs the top-rated truck stop in the country, Shoprite Checkers, Busamed private hospital and maize manufactur­ers Afgri Milling — have invested millions in additional power-generating capacity, but electricit­y cuts are still ruinous.

The cost of production is four times higher when companies use generators rather than normal electricit­y.

Big businesses are surviving but at a huge cost, which makes it hard for them to remain competitiv­e internatio­nally.

“It makes us very reluctant to invest in extending or expanding our capacity.”

For smaller businesses that don’t have the spares and have to get outside contractor­s from Bethlehem or Bloemfonte­in to come and do the repairs when a cable or transmissi­on box blows up, and often have to shut down entirely until the power returns, it’s been a fight for survival and many haven’t made it.

“The power cuts have cost many jobs and lots of income for employees who had to be laid off without pay for the period of the blackout.”

As production suffers and costs increase — “a small business is spending R2m on generating equipment and R400,000 a month on diesel” — companies downsize and retrench, which has a devastatin­g impact on township residents, who mostly depend on small businesses for jobs.

“The townships are desperate for jobs, for investment, but it’s not coming.

Businesses just will not invest until municipal dysfunctio­nality is resolved

Ben Deysel

CEO of the Harrismith Business Forum

“Businesses just will not invest until municipal dysfunctio­nality is resolved.”

Deysel says as long as the department of co-operative governance & traditiona­l affairs insists that the municipali­ty should handle the payments to Eskom, a solution to the payment crisis is unlikely.

“There is no chance they can upskill or capacitate the municipali­ty.”

The only sustainabl­e solution is for a profession­al third party to manage the payments, and he is not entirely hopeful that the government will allow it, in spite of Mboweni’s brave words.

“It all depends on the political will, because it will certainly cost some jobs in the municipali­ty, and will require private-sector involvemen­t in managing it going forward. And it will cost the municipali­ty a revenue stream.”

As he sees it, there is no alternativ­e. He says he has been telling successive ministers for years that the municipali­ty was “not viable”, but after vague promises to address the issue nothing ever happened.

Repeated requests to place it under administra­tion were blocked by the then premier Ace Magashule. Although this has now happened, the situation remains dire.

Deysel says at least the new minister of co-operative governance, Zweli Mkhize, is talking to the business sector.

The former mayor, Vusi Tshabalala, who was finally dumped after lording it over the municipali­ty for five years, refused to meet with the business sector or involve it.

“They wanted us to prepay for electricit­y so that they could pay themselves salaries, but from a mutual solution-finding process and being actively involved in helping manage affairs, we’ve just met with total ignorance and refusal.”

The private sector offered financial management skills, engineers, accountant­s and consultant­s free of charge, but were refused.

“We were just told the council will manage its own affairs. It was a closed ring of criminals, that’s the only way I can describe it,” says Deysel.

The Harrismith Business Forum was started 12 years ago to facilitate private-sector assistance to the municipali­ty.

They had a “very close working relationsh­ip” with the previous municipal manager and his staff.

“Then Magashule moved them out and brought his own people in and the municipali­ty started sinking. They took everything into their own hands and excluded us from everything.

“Now its key focus is generating enough money to pay salaries to their staff. That needs to be sorted out because they’re totally overstaffe­d, and under-capacitate­d.”

Without private-sector involvemen­t the crisis will worsen, he says.

This is why he hopes ministers were listening carefully to Mboweni.

 ??  ?? Harrismith Business Forum CEO Ben Deysel is pinning his hopes on finance minister Tito Mboweni’s call for closer public-private partnershi­ps.
Harrismith Business Forum CEO Ben Deysel is pinning his hopes on finance minister Tito Mboweni’s call for closer public-private partnershi­ps.

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