AfriForum: Gordhan acknowledges that lack of competition increased costs

29 October 2019

Pravin Gordhan, Minister of Public Enterprises, announced his plan to fix Eskom. The civil rights organisation AfriForum believes that the splitting of this monopoly – in clusters within Eskom that will compete with one another – is a step in the right direction, but that the entities responsible for the generation of electricity should be expanded to allow role-players from the private sector to participate.

Gordhan also said that the cost of electricity had increased by more than 500% over the last ten years. Dr Eugene Brink, Strategic Advisor for Community Affairs at AfriForum, says that the economy is unable to continue paying for these inflated costs. “More players can force Eskom to manage its affairs more effectively, and if it does not succeed, the private sector is ready to fill the gap.

The cost of coal should also be investigated urgently, seen in the light that seven entities make 100% profit by supplying Eskom with coal. “The Minister says that there will be negotiations with coal mines over the cost of coal, as this constitutes a major cost component of the tariff. It is imperative not only that coal is bought at lower prices, but also that its quality improves.”

Morné Mostert, Manager of Local Government Affairs at AfriForum, says that the plan proposes the establishing of a payment culture in which people who do not pay their accounts are cut off. “The best place to enforce this culture is at municipalities and other state departments who do not pay their own accounts. Municipalities receive money from National Treasury to pay for services rendered to indigents, but in the case of most municipalities who are in arrears, not even these national funds are paid to Eskom.”

According to Brink this is only the beginning of the restructuring and many details of the plan must still be made public. “We are looking forward to communicating with the Department to obtain more details and to give our inputs.” 

Issued Carina Bester, Media Relations Officer, AfriForum, 29 October 2019