Let’s keep government out of business
Mr Anil Sardana, CEO and MD of Tata Power, a company involved in the construction of two wind farms in South Africa was quoted in Business Day recently saying something truly startling: he said construction of Medupi and Kusile had started two years before Tata undertook a project of equal size in India which has been operating for several years already.
Medupi has had only one of its six units commissioned, the rest will take more years and Kusile is still several years away. The power station in India needed a quarter of the money spent on Medupi, said Mr Sardana.
What is the difference between the two projects? The Indian project, one of the largest power stations in the world, was carried out by a branch of one of India’s biggest private sector conglomerates. South Africa’s Eskom project is being run by a state owned entity that needs constant bail-outs from public funds. Eskom has rid itself of the technical expertise to run large projects and has to contract with international firms to do the work. They are in turn hardly at arms’ length in that the ANC, through its investment arm, Chancellor House, has a big finger in the pie, earning money for the party out of state projects.
If Tata’s project had failed to meet budget and time targets, Tata and its shareholders would have suffered the consequences.
Here, the government simply uses public money to bail out Eskom when it has to. The public too, and business and mining and industry in particular, have borne the consequences of the ‘load-shedding, ’ meaning power cuts. The unconscionable completion delays have led to power shortages directly impacting on South Africa’s economy, lowering the growth rate and increasing unemployment.