Address by NUMSA Deputy General Secretary, Karl Cloete, to the Civil Society Conference on the Electricity Crisis, Booysens Hotel and Conference Centre, Johannesburg, June 2 2015
A Numsa Perspective
Greetings Comrades and Colleagues,
1. We are here today because there is a crisis in South Africa.
2. Our government has plunged the country into crisis and is incapable of solving that crisis.
3. The ANC Government has talked endlessly about the growth of the South African economy, but it has failed to make provision for the energy to allow it to happen.
We have to solve the crisis of energy in South Africa:
The crisis has many dimensions. As Numsa we want to focus on how desperate the situation is for South African industry and, because of that, for the South African people:
1. South Africa lost its competitive advantage in electricity the day Eskom handed over its coal mines to Exxaro, which are being mined for Eskom at cost plus three percent. What we have witnessed is the skyrocketing of the primary coal price.
2. 2016 power prices are already expected to be higher than power prices in China. South Africa has moved from having one of the cheapest costs of power in the world to one of the most expensive
3. Many energy intensive industries are already struggling due to higher power prices. The impact of these higher costs has effectively resulted in beneficiation moving from South Africa to countries with cheaper power such as China and Malaysia. We have seen South African companies building manganese smelters in Malaysia instead of South Africa simply because the power price there is now cheaper than prices in South Africa (the ore they plan to smelt will be mined in South Africa!).
4. The effect of this is that we are exporting jobs to countries such as Malaysia and China. We must seriously and critically note that;
- In 2002 South Africa was smelting more than 80% of the world’s ferrochrome and China was smelting less than 5 %.
- Today China smelts 45% while SA smelts less than 38%.
- This is a clear indication that beneficiation is moving from SA to China.
Eskom must be treated as a strategic resource for the economy as a whole
a) Our starting point as Numsa is our view of the economy. It is well known that we are fighting for a complete turn away from the neo-liberal policies of the ANC / SACP government and towards nationalisation of the Minerals Energy & Finance Complex and other strategic parts of the South African economy.
b) It is not necessary to be a revolutionary socialist to see that certain economic activities are fundamental to the operation and growth of the economy as a whole. Electricity is one of them. We would argue that steel is another.
c) Electricity is the core fuel of the South African economy. Its generation and supply are properly the function of the state – even within a capitalist state.
d) The growth of manufacturing industry depends absolutely on a plentiful supply of cheap electricity. Job creation depends on the growth of manufacturing industry.
e) One of the key problems with Eskom right now is that it is run as a commercial operation. In our view, Eskom must be a service to the rest of the economy. It must operate in for the benefit of that economy, not in order to make money for shareholders.
f) We were interested last week to hear Enoch Godongwana, ANC head of economic policy, proclaim on radio that it was evident that there was no crisis in Eskom because its finances were sound and it was heading to make a profit. This shows for all to see the mistaken criteria used to judge Eskom’s performance in its current commercialised state. Eskom is unable to produce electricity to power the economy and our homes, but as long as it is being run on sound financial lines we are OK.
In Numsa’s view we must fight against the privatisation agenda.
a) We know that capital would dearly love to see the break-up and privatisation of components of Eskom.
b) In this context we have looked suspiciously at the current chaos in the leadership of Eskom. We see it alongside the proposal to raise tariffs and the privatisation of Eskom’s supply chain.
c) We hear the calls from capital for privatisation and we know that this chaos we have been witnessing is designed to create a picture of incompetence of State Owned Enterprises which feeds into the privatisation agenda.
d) Privatisation of Eskom would entrench the problems of the economy, not alleviate them
We reject load-shedding
a) Eskom structures and leadership are responsible to supply electricity. Instead, they are imposing a regime of load-shedding which is a straightforward attack on the conditions of the working class and the poor. We reject their regime. They cannot transfer the problems they created onto us, the poorest people in society.
b) We demand that companies pay workers in full, with no deductions for load-shedding. If the companies want to recover their costs, they must demand it from those who are responsible – the state and Eskom. They must not take it from workers who are still victims of the apartheid wage gap.
We reject the proposed tariff increase:
a) In terms of the tariff increases we must say that it proves to us that Eskom’s strategy has completely lost touch with its supreme mandate – to electrify the country as called for by the RDP
b) As the single most important fuel of the economy, Eskom must serve the rest of the economy. It is only blind, dogmatic adherence to neoliberal principles that obliges Eskom to operate as a commercial entity whilst owned by the State and our people through their taxes to the State.
c) Another increase this month would lead workers to lose in both living conditions and wages;
- Already there is evidence that many people who have access to electricity cannot afford to use it. Their numbers will increase.
- An increase in tariffs will be an increased input cost to manufacturing industry, which will reduce the number of jobs rather than increasing it.
d) Eskom must be subsidised to produce the electricity required for the economy to grow, at a price that encourages industry to grow. It must stop chasing the balance sheet and start chasing industrial development and manufacturing in South Africa.
We must hold the leadership to account
a) In our view, both the minister and the board have acted in a reckless manner. Executives have been removed in the middle of a crisis, with no consultation whatsoever with the social partners. The basis of the suspensions is flimsy.
b) The very Chairperson of the Eskom Board, who initiated the suspensions, has himself been removed by the Board.
c) We need a credible and rapid judicial and community involved enquiry. To be credible, it must include the social partners. Our members and their families are suffering. Basic democracy would suggest that they have the right to know the real cause of their suffering.
d) We also need to be satisfied about the composition of the so-called ‘war room’. We demand full disclosure of the interests of everybody in the war-room. We need to know whose class interests they are serving. Why a “war room” and not a “Peace Energy Generating Room” involving all sector of society?
e) In Numsa we hold a view that as trade unions we must be represented on the Eskom Board. At the moment we watch from the outside whilst battles rage over the benefits of tenders and Eskom bonds are reduced to junk status. We cannot sit aside whilst such a national resource is destroyed by those who grasp for personal, individual profit. Eskom is public and therefore public interest must see us interested in the running of this state owned entity.
We demand that Eskom opens its books for public scrutiny:
a. We must see the details of Eskom’s contracts for fuel:
i. From 2008 onwards we have experienced massive increases in Eskom Tariffs. That represents massive increases in Eskom’s revenue. Yet when we look at costs during that period, we don’t see an equivalent rise.
ii. From 2008 onwards Eskom primary energy costs have increased at a far greater rate than the cost of thermal coal, its primary fuel. We wonder where the money has gone.
iii. We suspect that one of the problems is the purchase of fuel from BEE producers who charge inflated prices. We have heard of $430 a tonne for coal. We also need to see the contracts for Diesel. We have a right to know what has imposed this suffering on the entire country. We must know it if we are going to solve the problems.
b. We must see the details of Eskom’s accounts for projects such as Medupi and Khusile:
i. We need to know why it cost so much more than the original estimates
ii. We must understand why it is being delivered so late
c. We must see the details of the bonuses paid to Eskom’s Directors and Senior Managers while those same Directors and Managers impose restrictions on workers’ wages:
i. We know that since load-shedding began in 2008, Eskom’s top management has received a staggering R63 million in performance bonuses
ii. We need to understand what performance it was that was being rewarded.
d. The books must be opened down to the last detail so that we can see the evidence
We reject any threatened punishment of the working class and the poor through suspending service to their Municipalities
a) We need to know why these municipalities have not been paying.
b) All levels of government, together with Eskom, are responsible for this failure. Again they want to visit their collective failure on us, as the customers of the municipalities. It will be our lights that they switch off. And it will happen in the poorest communities, not in the leafy suburbs.
We demand that Eskom prioritise local procurement:
a) Recently, as Numsa, we have been involved in a desperate struggle to keep open a company in Atlantis which manufactures electricity meters. We would not have this struggle if Eskom required that its supplier prioritise local production.
b) At Medupi we failed to ensure local procurement. Steel was imported. Hitachi was awarded the contract for boilers.
c) As Numsa we demand that the provision of infrastructure for electricity must be done by South African industry.
We must fight together against the proposed nuclear strategy
a) The unilateral imposition of a nuclear energy strategy represents a major threat to the national economy.
b) No one in government has provided a reasonable estimate of the cost to build these stations but people are estimating it could cost up to R1trillion
c) The result will be huge electricity price increases which will lead, amongst other things, to the shutting down of smelters. Eight thousand direct jobs will be lost in Glencore alone. BHP Billiton, Samancor, Sasol, Arcellor Mittal SA as well as the mining industry are all companies that use large amounts of power and will also be damaged.
d) Companies will continue to mine but will export ore for smelting and in effect will export jobs.
e) All of this will contribute massively to employment.
We must require full consultation on all strategic measures including the proposed Carbon Tax
a. We as Numsa we have been at the forefront of promoting the green economy, with our promotion of a socially owned renewable energy sector
b. We reject the carbon tax proposed by the government. We must be fully consulted over any such scheme in order to ensure that it will preserve and create jobs and promote a sustainable environment, and not simply fill the pockets of capital or the coffers of the government.
In summary, we reject all solutions to the crisis that attack the working class:
(a) Numsa is very happy to work fellow trade unions and communities to attack the energy crisis
(b) Important to trace the history of the crises of the energy crises way back to 1996 (when we called for the re-capitalisation of Eskom which was ignored by the ANC government) and therefore the notion that Apartheid is to blame is a fallacy
(c) In 2012, Numsa’s National Conference on Socially Owned Renewable Energy offered very fundamental scenarios of how, in the wake of Eskom’s repeated failures, a different public institution might emerge from the mess:
i. Ownership of energy resources must be taken out of private hands and be put in the hands of the public through a mix of different forms of collective ownership, such as public utilities, cooperatives, municipal-owned entities and other forms of community energy enterprises where full rights for workers are respected and trade union presence is permitted. Energy entities that were privatized must be taken back and put under public ownership and control.
ii. When we talk about social ownership of energy systems we are referring to energy being a public or common good that is publicly financed and comprehensively planned. We want to roll back the anarchy of liberalized energy markets.
iii. When we talk about social ownership of energy systems we are expressing our determination to resist commodification of electrical power and our desire that energy systems should not be for profit but have as their mandate service provision and meeting of universal needs.
iv. When we talk about social ownership of energy systems we are speaking of a system where workers, communities and consumers have control and a real voice in how energy is produced and used. We are calling for constituency-based governing councils in place of boards of directors in all energy entities. Existing state or publicly owned energy entities that act as private companies and on the basis of a profit motive need to be “socialized”.
v. When we talk about social ownership of energy systems we are calling for the accrual of a large share of economic benefits of energy production and consumption to producers and owners of the actual means through which energy is generated, transmitted and distributed.
vi. When we talk about social ownership of energy systems we are referring to energy systems that respect our environmental rights, our rights for survival and those of future generations. Socially owned energy systems must prioritize renewable energy as part of respecting our environmental rights.17
vii. For us in Numsa these values hit bottom-up socialist and environmental justice buttons, and in this sector at least, should be the basis for a “Transitional Demand” strategy (that description is indeed being used by Numsa).
d) Numsa as a trade union will not co-operate in any proposal which causes suffering to our members or to the working class and the poor more broadly. That is why many of the proposals of Eskom and the government are unacceptable to us:
We reject shutting down municipalities which owe money, because it will affect the poorest people the most
We reject load-shedding, because it damages the lives and jobs of the working class and the poor
We reject the proposed increase in tariffs, because it will hit the living conditions and jobs of the poor the hardest
We reject so-called solutions such as an increase in peak tariffs, because the wealthy will pay the tariff and have electricity, while the working class will have to cook in the middle of the night.
We reject any change in working hours without full compensation of the workers.
In conclusion:
We are here to fix the electricity crisis from the perspective of the working class and the poor.
That means jobs, and it means availability of cheap electricity for everybody. Eskom and the government have failed to deliver on that mandate.
We must forge an alternative to their disastrous strategy of commercialisation, privatisation and corruption, and build a campaign to mobilise the masses of South Africa around that alternative.
Amandla
Issued by NUMSA, June 2 2015
