The Congress of South African Trade Union is firmly opposed to Eskom's proposed sell-off of as much as 49% of its new Kusile power plant to private investors. COSATU has consistently maintained that privatisation is no solution to the financial crisis of the national electricity generator. Indeed a misguided, and ultimately failed, attempt to privatise Eskom in the 1990s was the main cause of the crisis which erupted in 2008.
The government at the time failed to provide Eskom with the funds which it needed for the capital cost of new generating capacity, despite its warning that without these funds, it would be heading for a crisis. That led to the power cuts of early 2008, as the utility struggled to generate power with inefficient, outdated plant.
Eskom has since tried to shift the cost of its new generators on to the backs of its consumers. It has already imposed increases of 13.7% in 2008 and 31.3% in 2009 and now wants a 35% a year increase for the next three years. COSATU has opposed all these increases and is currently intervening in NERSA's provincial hearings to fight against the latest series of hikes.
COSATU argues that tariff increases should only reflect increases in Eskom's running costs and that the consumers should not be burdened with the capital cost of new generating capacity.
The state must take responsibility for Eskom's capital costs, money which it failed to provide in the 1990s. Taxation, where the rich pay more, is a far more equitable way of raising funds than tariffs on individual consumers, especially as the tariff structure favours the biggest and richest uses with big discounts while the poor pay more per unit. If necessary there should be a special one-off tax targeting the wealthy, to provide the money Eskom needs.
Eskom now argue that the sale of Kusile could help fill the shortfall in funding for its R385 billion expansion programme, and it has been suggested that this could enable them to reduce its proposed tariff increases. It is a ‘solution' which makes the same fundamental mistake of seeing Eskom purely as a business, which needs to cut its losses and make a profit by whatever means possible.
It might raise some cash in the short-term but it would undermine Eskom's integrity and long-term viability. Eskom is part of our national infrastructure, a public institution which supplies an absolutely essential service to every South African citizen, public institution and private business. The 2008 power cuts were a grim warning of just how much we depend on it.
It is not a mere business, which exists to make a profit. The country cannot afford to depend on a private company, or a public utility that is run as if was a private business, whose policy is dictated by the vagaries of the market. Eskom must of course be run as efficiently as possible but as a vital public service not as a commercial concern.
Statement issued by Patrick Craven, Congress of South African Trade Unions national spokesperson, January 18 2010
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