All talk, no action on solving SA’s energy crisis
Eskom’s application for tariff increases a slap in the face for consumers
THE National Energy Regulator of SA (Nersa) round of regional public hearings that started on September 19, to deliberate on Eskom’s tariff application for the 2024 and 2025 financial years, has caused much anxiety.
Even those illegally connected to the electricity supply speak openly about their concerns. Once again, the concerns widely expressed by the majority of speakers were disappointing reminders that most political plans to restore the country’s electricity supply continue to go wrong, either because unforeseen events get in the way or because politicians in government ignore wholly foreseeable events.
South Africa’s ambitions to accelerate the addition of renewable energy sources into the national electricity generation mix belong in the first category. Most people couldn’t have known at the beginning of the year that the war between Russia and Ukraine would slow the induction of the renewable energy independent power producer programme to end South Africa’s power shortage.
Eskom’s tariff application is the second kind of failure. It forms part of its fifth multi-year price determination initially submitted in June last year, in which Eskom asked to be allowed to recover R293 billion in 2022/23, R335 billion in 2023/24 and R365 billion for 2025. If awarded, this would result in annual standard tariff increases of about 32% in 2023 and 9% in 2024. We must not downplay the scale of it just because it feels inevitable.
The figures sound a reset alarm bell, and that reset has triggered suggestions of last resort from civil society and businesses. These include drastic ways to reduce the fixed charges levied by Eskom to reflect the level of service that the utility can provide.
They also consist of radical ways to ensure that end-users are not liable for costs directly caused by the inefficiencies of the coal-fired fleet. These include higher diesel costs needed to run emergency generator units during coal-powered station breakdowns.
The audacity of Eskom to propose these unaffordable tariff figures is an act of insensitive zeal that has caused alarm among many people that the crowd-pleasing side of the Ramaphoria era does not like to see riled.
The tariff figures are a symbolic erasure of our collective confidence in the promised benefits of President Cyril Ramaphosa’s ambitious investment drive to raise R1.2 trillion in new investments in the economy over five years.
It is an erasure by a weak and incompetent political leadership in government that thinks there is nothing the long-term effects of the heavy yoke on the shoulders of the poor and unemployed can teach them that they don’t already know.
The government and Eskom can no longer ignore the evidence that the damage to our lives and sustainable livelihoods is irreversible, as 2022 has been the worst year for scheduled power cuts by Eskom, with power cuts on more than 100 days so far. The ongoing blackouts also contributed to the economy’s 0.7% contraction in the second quarter. Pumping money into Eskom at the expense of the heavily yoked citizens and businesses sounds like a weird move in straitened times, but that looks like part of The Plan.
Over the years, Eskom has received billions through tariff increases and government subsidies, and there have been no investment returns.
The threat is that the public will once more stoke the furnaces of Eskom locomotion failures with shrinking disposable incomes due to increasing interest rates, high inflation and tariff increases.
That increasingly appears to be just part of The Plan. Ramaphosa should brace for the political pain that comes with unpopular decisions. He should prepare to wear it as a badge of his Ramaphoria resolve.
He should expect an electoral reward when the illusionary economic growth dividend comes in, and his forecast foresight is vindicated. It hurt, but it worked, he might say, as South Africa roars into the 2024 national and provincial election – one that is not guaranteed to return another consecutive term of ANC government.
Investors need compelling commercial incentives to choose South Africa as a destination of choice for doing business. They aren’t going to do it as a favour to this country, no matter how “special” the relationship with South Africa is as a signatory to several bilateral and multilateral trade agreements.
Also, South Africa’s petulant unilateral abrogation of the responsibility to implement strong measures to combat corruption, eliminate investment red tape, and improve the country’s international credit rating have advertised the country as a vandal of business competitiveness space and a flaky trading partner.
And those are just the visible hazards, not considering the usual barrage of unforeseeable events. Ramaphosa is not afraid of tactical announcements of plans that quickly evaporate into the air. No wonder the DA lamented that despite Ramaphosa having announced an urgent “Energy Action Plan” in July, the public is “still in the dark” regarding its progress.
The government lifted the cap on self-generation projects from 1MW to 100MW in July, allowing the mining industry to accelerate more than R100 billion in investment in hydrogen, wind, solar and battery projects.
There was a plan to address the electricity problem since the early days of Ramaphosa’s presidency, but that had to change due to a lack of implementation. There is a new plan now, and there are reasons to suspect it will, like others introduced before, either change or remain unimplemented.
All this while many people are forced by unaffordable electricity prices and blackouts resort to unsafe energy sources.
I guess this will be the theme of Ramaphosa’s time in the Union Building: supreme confidence attaching itself to objects of impermanence in the form of the “new dawn” approach to his presidency that is in stark contrast with the administration of his predecessor, Jacob Zuma, whom Ramaphosa has publicly accused of overseeing “nine wasted years” of governance that brought about economic decline; an ANC arrogance with power that styles itself as visionary while stumbling on obstacles everyone could see coming, including careless statements that the recommendations of the Zondo Commission are not binding; always a bold plan of a better life for all, never a mission accomplished.