DA governments will work to protect citizens from load shedding

18 June 2018

South Africans are again faced with the prospect of a cold and dark winter as Eskom announced that it will take 10 days for the national power grid to recover from the effects of the strike action by Eskom employees.

Last week, Eskom workers embarked on an illegal strike and requested a 15% wage increase. Eskom is cash-strapped and simply cannot afford this unrealistic wage increase.

Although the current load shedding has been exacerbated by the industrial action, the reality is that the years of mismanagement at Eskom lies at the root of this crisis.

Load shedding is the direct result of State Capture. For years, under the watchful eye of the ANC, ineffective executives streamlined dodgy contracts for the benefit of the Gupta family.

As a result, ordinary South Africans are now left to bear the brunt of this mismanagement.

In the end, poor South Africans are the biggest losers and our entire economy is at risk.

If we cannot secure an uninterrupted power supply, not only do we run the risk of losing jobs, but we will not be able to create jobs for the 9.5 million unemployed South Africans.

The South African economy is contracting, recently by 2.2% and this will have a direct impact on investor confidence which we can ill-afford. All this culminates in a serious threat to job security. Essentially, it is the millions of poor and vulnerable South Africans who will have to deal with more misery and deprivation due to the continued load shedding and ANC mismanagement.

Instead of bringing about tangible change at Eskom, we have seen the power utility stumble from one crisis to another. The ANC has used Eskom as its own cash-cow. Bloating the middle-management from 80 to over 400 people.

This weekend, President Cyril Ramaphosa admitted that governance across the country has failed due to the ANC’s inability to meet citizen’s expectations.

The load shedding, combined with the future electricity tariff increases, the recent VAT increase and unprecedented petrol hikes are further proof of the ANC’s inability to get this country back on track and providing for the needs of our people.

DA successes

In DA-led governments, we are working hard to alleviate the impact of load shedding on our residents.

In the City of Cape Town, due to past infrastructure investments, namely the Steenbras pumped storage scheme, residents of Cape Town are sometimes able to avoid load-shedding or remain on a lesser stage than Eskom has requested.

On Friday for example, due to spare generation capacity which we have made available through the Steenbras hydroelectric power station owned by the City, residents of Cape Town were spared the first two blocks of power outages, between 12:00-14:00 and 14:00-16:00 as these were applicable to off-peak times.

The City has also taken the Minister of Energy and NERSA to court to fight for the right to procure clean energy directly from independent power producers (IPPs). This is primarily because we believe that cities should be at the forefront of economic growth and development. Being able to break the Eskom monopoly and allowing cities to innovate by exploring independent power producers, we are able to shield residents from national government failures.

The CoCT wants 20% of its energy from renewable resources by 2020, by buying directly from IPPs. This will bring more power online for the City and will further help the DA-run City to shield residents from load shedding which will inevitably lead to job losses.

This model of IPPs supplying electricity directly to the grid needs to be replicated across the country in order to improve the competitiveness of this sector.

In addition to the IPPs, the City and US Trade and Development Agency have signed an R12.7 million grant agreement for a gas distribution network study. This feasibility study relates to the use of natural gas in the City which will strengthen efforts to provide a greater mix of energy sources.

Cape Town is also the only city ensuring that its residents have access to reliable information and access to accurate load shedding time schedules. In ANC run metros, many residents don’t know when the power will go off or can trust that the municipality will stick to the published schedule.

DA governments have prioritised investing in, maintaining and upgrading the electricity distribution infrastructure to provide certainty to residents and businesses. Over time we will bring other DA-led metros up to the same standard, despite being constrained by the maladministration we inherited from the ANC.

The Western Cape Government launched its Energy Security Game Changer project this year which aims to achieve a 10% contribution to the province’s electricity needs, in order to reduce the Western Cape’s dependence on unreliable Eskom. The project includes:

- Reducing energy consumption in public and private buildings;

- Enhancing load management by optimally managing the electricity grid to minimise the likelihood and impact of load shedding; and

- Rolling out of IPPs and Liquefied Natural Gas (LNG) to increase diversity of electricity supply in the Western by 2020.

The Western Cape Government has also introduced the Oil and Gas Supplier Development Programme which is aimed at supporting businesses operating in the Oil and Gas sector. The programme intends to address the supply side challenges faced by businesses through focused business development support services.

These contingency plans that we have in place in both the City and the Province are due to years of good DA governance and effective planning. We are only able to deliver this kind of service to the people of this province because of the DA’s record in governance.

As such, we will be engaging our government across the country on these initiatives. It is our goal to ensure where we govern, people are shielded from ANC incompetence and corruption which has led to massive governance failures.

The DA leader, Mmusi Maimane, will engage all our metro mayors on their plans for this turbulent period to make sure that -despite our limited mandate- we can better prepare for the collapse of Eskom when it happens.

Our plan for SOEs

The DA is the only party that can truly turn things around for Eskom and our other struggling SOE’s. The reality is that South Africa’s SOEs are in a crisis and have been for several years now. The combined profitability of state-owned entities, measured by return on equity, fell from 0.8% in 2015/16 to 0.3% in 2016/17

Overall, loss-making public entities totalled R53.7 billion in losses for the 2016/17 year-end, that is 38% of all entities. Together, SOEs represent a major risk to the financial standing of our country through a cumulative R466 billion in government guarantees as at the 2017/18 financial year-end.

Eskom accounts for the majority of these guarantees, totalling R350 billion.

We have formulated an SOE document that focuses on turning around the struggling and financially crippled SOEs in South Africa

Eskom’s long-lasting monopoly needs to be broken and the DA is working on a Private Members Bill to do just that with the ultimate goal of making the energy sector more competitive.

With more than 47 000 employees, with an average R662 282 per year, Eskom is a bloated dinosaur, compared to its African counterparts.

A World Bank assessment of African utilities benchmarked the number of employees at 14 200 at other utilities.

Eskom workers’ demands of a 15% increase are unrealistic and unreasonable given the latest inflation rate of 4.5% and the financial crisis faced by Eskom.

The risk of future load shedding is paramount if workers do not agree to the 0% or even a low increase offered by Eskom management with protracted striking that would cripple our economy and stymie any future economic growth

Given Eskom’s dire financial situation, any increases would most probably lead to future tariff increases to cover the salary bill, impacting negatively on the poor, threatening jobs and the economy.

Conclusion

Due to the years of poor management of Eskom, South Africans once again face a long and dark winter. State Capture, the ANC’s cadre deployment policy and Eskom’s monopoly in the energy sector have all contributed to the load shedding we face this winter.

The blame for the operational dysfunction at Eskom can be placed squarely at the feet of the ANC. The DA is the only party that can turn things around for South Africa.

Where we govern, we have shown our commitment to delivering services and have successfully implemented sound plans to protect our residents from the ANC’s poor governance.

The DA will continue to fight for ordinary South Africans and ensure that where we govern, residents have access to quality services. We will not waver in holding the ANC to account for in its inability to govern in the best interests of all South Africans.

Issued by Natasha Mazzone, DA Shadow Minister of Public Enterprises, 18 June 2018