Soweto re­fuses to switch to pay­ing

Anti-apartheid hubs will not pay Eskom on ba­sis of ANC strug­gle prom­ises

The Star Early Edition - - BUSINESS NEWS - Xola Potelwa

ZODWA Madiba has not paid an elec­tric­ity bill in 14 years and is res­o­lute she never will, hold­ing the rul­ing ANC to vague prom­ises made in the dy­ing days of apartheid to pro­vide free elec­tric­ity to all South Africans.

Such de­fi­ance is wide­spread in the sprawl­ing town­ship of Soweto, cru­cible of the an­ti­a­partheid strug­gle and home to 1.5 mil­lion peo­ple who, be­tween them, owe state power util­ity Eskom R3.6 bil­lion in un­paid bills.

Although the sum is dwarfed by the R225bn rev­enue short­fall Eskom says it faces over the next four to five years.

Eskom gen­er­ates almost all the elec­tric­ity in South Africa, and nearly half that pro­duced in the whole of the sub-Sa­ha­ran re­gion. Prices are set by the en­ergy reg­u­la­tor, yet Eskom says it costs more to pro­duce than what South Africans pay.

Soweto owes more for elec­tric­ity than the rest of the coun­try put to­gether, where ar­rears to­tal just R2.6bn.

“If you re­mem­ber, when this gov­ern­ment en­tered they said ‘Free elec­tric­ity for all’. Tell me: what does that mean?” asks Madiba, a 57-year-old com­mu­nity ac­tivist and mem­ber of the Soweto Elec­tric­ity Cri­sis Com­mit­tee (SECC).

Founded to counter the gov­ern­ment’s re­fusal to de­liver free or af­ford­able elec­tric­ity, the group says Sowe­tans con­tinue to suf­fer from poverty and job­less­ness that linger 20 years after white rule ended.

“At that time peo­ple were fight­ing apartheid, so they didn’t pay. Now, they just don’t have money. Peo­ple are de­pend- ing on grants from their granny,” Madiba says.

Un­der the ANC, mil­lions of South Africans have es­caped poverty through so­cial wel­fare but the grants are weigh­ing on gov­ern­ment fi­nances, espe- cially as the econ­omy stalls and one in four peo­ple re­main with­out work.

Eskom is in some­thing of a vi­cious cy­cle: with­out eco­nomic growth, pow­ered by elec­tric­ity, there will not be enough tax money for sus­tained so­cial spend­ing and to invest in in­fra­struc­ture, in­clud­ing power gen­er­a­tion.

With Eskom in fi­nan­cial trou­ble, the gov­ern­ment says all South Africans should do their bit, a mes­sage widely re­jected in Soweto, where the SECC reg­u­larly re­con­nects – il­le­gally – those whose power has been cut off.

The util­ity says it has a plan to im­prove debt col­lec­tion and get cus­tomers pay­ing but de­clined to com­ment on Soweto’s his­tory of in­sti­tu­tion­alised delin­quency.

Ten years ago it was forced to write off R1.4bn in debts owed by Sowe­tans, cre­at­ing the im­pres­sion for res­i­dents that they can get away with it.

“That’s the bed Eskom made and they are start­ing to sleep in it,” said economist Chris Hart at In­vest­ment So­lu­tions.

“Peo­ple need to be pay­ing for those ser­vices.”

Eskom’s bad debts rose to 1.1 per­cent of rev­enue in 2013/14 from 0.82 per­cent the pre­vi­ous year, sug­gest­ing its billing plans have some way to go and em­pha­sis­ing the need for al­ter­na­tive fund­ing.

The gov­ern­ment is in­ject­ing an ex­tra R20bn into the util­ity, and may con­vert a R60bn loan into eq­uity, but other fund­ing op­tions are nar­row­ing fast. Moody’s cut Eskom’s credit rat­ing to junk two weeks ago.

“Eskom is not in a com­fort­able space be­cause the credit rat­ing agen­cies are see­ing mul­ti­ple chal­lenges at all lev­els,” Hart said. – Reuters

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