ESKOM’S MISPLACED PRIORITIES
Its price hike of 15.6% will crush many of its customers, but Eskom seems to care more about the fact it’ll lighten the pressure on government
If, like many South Africans, you’re finding it tricky to stretch your salary to the end of the month, SA’s least-reliable company is about to make it a whole heap harder. Last week, Eskom was given the green light by the high court to hike power prices 15.6% from April.
It’s punitive in the extreme: besides being five times SA’s inflation rate, the increase comes at a time when unemployment is at a record 32.5%, and even those who do have jobs have had their salaries slashed.
And yet, the utility has displayed precisely zero empathy. Like the amiable neighbourhood sociopath, it “welcomed” this hike, saying it is “likely to lessen the [government’s] financial burden of supporting Eskom”.
CFO Calib Cassim added that the poor won’t be affected since they’ll be “supported through the free basic electricity programme” and “affordability subsidies”.
It’s a revealing statement. It shows that in Eskom’s eyes, it is the government’s interests, not those of its customers ,that are the priority — even though this is the same government that mismanaged Eskom into a debt hole.
It is hard to disagree with the trade union Uasa, which said: “Fleecing South Africans of their last disposable income to correct a crisis of Eskom’s own making is a scandalous abuse of power that will drive people further into poverty.”
The increase shows a “detachment from the real world”, said Uasa. After all, it was decided by executives in a boardroom at Megawatt Park who, between them, got R36m last year — so they probably won’t struggle to pay their bills.
Cassim’s assurances also underestimate how a hike ripples through the entire economy — as is evident from the views of many South Africans who spoke to the Sowetan newspaper last week.
Derrick Sibisi, a welder from Protea Glen who runs a company called Metal Buildings, says his landlady told him she’ll have to raise the R3,000 rent due to the Eskom hike. “We cannot move on with a country that is like this. People are losing jobs … but the cost of living is increasing,” he says.
Perhaps the most poignant story is that of Mologadi Mokakati, 41, who left her job as a domestic worker to open a bakery and catering business in Limpopo. “I buy my electricity weekly and have to make sure it lasts me the whole week because baking uses a lot of electricity. I don’t even know what I will do if electricity continues to go up. It means I will have to relook the business,” she says.
Small companies such as Mokakati’s are exactly what are needed to rebuild SA’s business sector, especially in a jobscarce province like Limpopo.
It’s not like the middle class can take up this slack either. Last year’s Old Mutual Savings & Investment Monitor surveyed 1,487 people earning more than R5,000 a month — 57% reported their income had dropped or disappeared entirely, while 37% were behind on household bills.
And, don’t tell Cassim, but the hikes are going to hit companies too, leading many to slash jobs.
The Energy Intensive User Group of Southern Africa, which speaks for companies like Anglo American, Sasol and Transnet, says the hike “will nullify opportunities for any meaningful recovery” and lead to “a prolonged economic recession long after the rest of the world recovers”.
Well, you might say, surely Eskom needs this rate hike to become financially sustainable? Except, it does have other options; it’s just that sucking customers dry is the easiest.
In particular, South Africans shouldn’t have to shoulder double-digit rate hikes to subsidise Eskom staff who shouldn’t be there. Back in 2016, the World Bank estimated that Eskom was 66% overstaffed, and its workers were paid more than double the norm in 35 other African countries.
Speaking last week, CEO André de Ruyter said this was too harsh — but he did admit Eskom was probably paying 6,000 people more than it needed. Actually, he says, an analysis showed it needed 38,000 employees. “We think that is a right-sized number. We are now at about 44,000.”
In other words, even by De Ruyter’s own calculations, Eskom is nearly 14% overstaffed. You’d imagine the World Bank would put that number far higher.
However you slice it, why should consumers have to subsidise redundant workers? The answer is: partly because the government doesn’t want to upset the trade unions.
As De Ruyter says: “We followed the instruction of our shareholders not to engage in forced retrenchments. We are on a path to steadily reduce our headcount over time.”
This inefficiency doesn’t come cheap. For the year to March 2020, Eskom spent R32.5bn on staff — including R25.1bn in salaries, R2.3bn in overtime and R1.3bn in bonuses. And even then, this overstaffed utility spent another R2.1bn hiring “temporary” and “contract” workers.
Of course, Eskom’s real problem is debt: it actually made an operating profit of R4.6bn — but it was the R33bn it had to pay on its loans that tipped it into a loss. But trimming staff costs would give it more leeway.
The bottom line is, small companies are going bust partly so Eskom can keep 6,000 people who aren’t needed. Is it more important to subsidise them, than to create a functioning economy in which people like Mokakati can keep her bakery open, and have a reasonable shot at success?
De Ruyter says Eskom plans to push through another 15% hike next year too. “After that, provided of course we resolve the municipal debt challenge, which is a significant one, Eskom should be a sustainable business.”
That’s a huge caveat. Precisely because of punishing rates hikes, municipalities are facing a crisis of escalating bad debts, as people struggle to pay their bills. What sort of myopia prevents Eskom from seeing this bigger picture?
With more price hikes, its profit might look better — but it will have done this by sacrificing the rest of the economy.
The bottom line is, small companies are going bust partly so Eskom can keep 6,000 people who are doing nothing
The ANC’s severe case of schizophrenia was on stark display this week as its secretary-general Ace Magashule appeared in court. First, former president Jacob Zuma, who loudly pronounced that he would defy the Constitutional Court, and failed to pitch up at Judge Raymond Zondo’s state capture inquiry, was billed to take part in a policy talk hosted by ANC policy chief Jeff Radebe.
Strangely, Zuma told the session that the law in
SA is too lenient. Perhaps revealing his own legal strategy, Zuma said the law, in fact, protected the rights of the accused. He was no doubt speaking from the comfort of his part taxpayer-sponsored Nkandla private residence, surrounded by VIP protection which ordinary citizens are paying for, made possible by the very laws he uses as toilet paper on a daily basis.
Another example is the consistently conflicting message from the ANC’s national executive committee (NEC). On the one hand, President Cyril Ramaphosa used his closing remarks in at least three NEC meetings to outline the party’s war on corruption and how it’s cleaning up its image: after the last meeting, he recommitted the ANC to this fight once again, saying the party had adopted guidelines compelling those facing graft charges to step aside.
Just days later, Magashule held a press conference on the sidelines of his court appearance for corruption charges. Flanked by the party’s national spokesperson, he gave a rather different explanation of those very same NEC decisions. Has it dawned on ANC NEC members — 80 of SA’s most powerful politicians — how ridiculous it is for party decisions on corruption to be communicated outside a court where one of its most senior officials was appearing on precisely those charges?
To top it off, Magashule suggested that the new guidelines had not in fact been adopted, but rather that they are being deliberated on by the “branches” and the “structures” of the ANC. The NEC, he claimed, was not empowered to take the decision to enforce the “step aside” rule, which was agreed on by these very same branches at the ANC’s national conference — its highest decision-making body. Confounding.
It’s almost as if Magashule is making up the rules himself as he goes along. Admittedly, this is not entirely unexpected: it’s pretty much the way he ran the ANC and the Free State government during his long tenure as chair and his stint as premier.
In 2018, ahead of Zuma’s court appearance, the NEC decided that those who support leaders facing charges in court should do so as “individuals” and avoid wearing party regalia.
Last week, Magashule said this decision was reversed “a long time ago”, hence the hundreds of supporters backing him outside court in their party gear. The back and forth is enough to give you whiplash.
But the image which perhaps most starkly exposes the depravity of the party is Magashule, one of its most senior leaders, propped up on a car seat, upper body extended out the sunroof of a vehicle, waving and giving his adoring supporters the thumbs up.
It was a bizarre spectacle.
Unfortunately, as the ANC ties itself in knots over the corrupt in its ranks, ordinary South Africans remain in the unrelenting grip of its mismanagement and larcenous treatment of the economy.
Stats SA delivered the sobering news this week that 7.2-million people are unemployed — and this excludes those who have given up their job hunt.
One wonders when it will dawn on this party of the certifiable that its political theatrics and intrigues are cold comfort to the millions of poverty-stricken South Africans.
Ordinary South Africans remain in the unrelenting grip of its mismanagement and larcenous treatment of the economy