Soweto refuses to switch to paying

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

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