Tariff hikes will place enormous burden on South Africans
The announcement today from the National Energy Regulator of South Africa that we will see electricity tariff hikes in the region of 25% over the next three years will place an enormous burden on ordinary South African consumers.
Though these figures are on the lower end of some predictions, they remain of serious concern. The impact will be felt by all South Africans, and particularly those in the working and middle classes.
The announcement of yet another hike demonstrates that the ANC administration has once again fallen prey to precisely the same misguided logic that has dominated the ANC's approach to parastatals over the last decade. Not for the first time, it is consumers who are being made to pay for the failures of the ANC government. The ANC government had ample opportunity to act. Instead, they sat by idly - first, by refusing to build new power stations, then by refusing to deal with the festering maladministration within Eskom. Instead of getting rid of their poorly performing cadres, they have protected them to the hilt. Jacob Maroga, as we learnt from court papers yesterday, is viewed by Eskom as "dishonest" and as having "failed to perform his duties". Yet the ANC went to extraordinarily lengths to protect him - in the process managing to affect the resignation of the highly regarded Bobby Godsell.
Now the ANC is at it again. Boxed into a corner by their own failure to build new power stations and address Eskom's capacity and management quandaries, they have now presented ad hoc tariff hikes as a fait accompli - as if there has never been any alternative, and as if South Africans should 'shut up and deal with it'.
The problem with this is that there was an alternative. Introducing Independent Power Producers (IPPs) would bring with it the efficiencies, technological advances and, most crucially, hugely needed capital funds, that our electricity production sector is currently crying out for. Now we are in a situation where, although the Minister of Public Enterprises and President have both recently acknowledged the potential of IPPs, the state is trying to go it alone on funding when faced with a capacity crisis of epic proportions. The ANC's hands remain tied by their obsession with a state-centred "developmental" approach, which in large part precludes the raising of capital for infrastructure via markets. The ANC government is now trying to raise nearly R400-billion for infrastructure development, in the space of just a few years, via a series of ad hoc tariffs, instead of by means of long-term loans or by securing capital via the markets. That, we believe, is simply an untenable approach.
The ANC government afforded Eskom a R60-billion bailout two years ago; they have received numerous tariff hikes - including a 27.5% hike in 2008, and a 31.3% hike in 2009. Yet at the same time as receiving such enormous funding windfalls, Eskom has lurched from one crisis to the next - culminating in the series of blackouts that hit South Africa in 2008, and the current capacity quandary we find ourselves in. Resorting to the same misguided logic to resolve the current crisis won't work.
Statement issued by Manie van Dyk, MP, Democratic Alliance shadow minister of public enterprises, February 24 2010
Click here to sign up to receive our free daily headline email newsletter
