Eskom - Such Great Guys….pfft!

 

 

 

 

Why am I not too terribly surprised that the mismanagers of our electricity utility, Eskom, have done it again?

 

It’s a wonder that these guardians of our national electrical infrastructure don’t have tails wagging from their foreheads and noses on their behinds. Yet again yesterday they demonstrated, to mix the metaphor slightly, that they can’t tell their elbows from their fundaments.

 

After the unprecedented introduction of unnecessary, random and widespread power cuts (‘load shedding’) throughout South Africa late last year, these mismanagers then proceeded inexplicably to relax those early this year – quickly followed by a programme of what they variously called ‘pre-emptive’ or ‘predictive’ scheduled periods of blackouts based on a two-week cycle.

 

So we all begin to think to ourselves “Great! At long last these guys have finally begun to show a little competence and professionalism by getting their act together and allowing us all to be able to plan our lives around a fixed timetable of power cuts”. Still a bad situation, but one now that appeared to be showing signs of being managed.

 

Then, last week Eskom announced that, owing to the fact that South Africa was to chaotically cram three public holidays into a single week (between 28^th April and 2^nd May), load shedding was to be suspended for that week because the bulk of energy-hungry industry would be closed and its personnel enjoying itself either on the coast, in the bush somewhere or cowering at home trying desperately not to spend the money they will be needing in the near future to meet the increasing costs of food, petrol and their mortgages.

 

This time we all think “Great! A bit of relief from having to juggle our lives to Eskom’s tune”.

 

Now, to cap it all, yesterday Eskom announced that, with effect from 4^th May (next Monday) they would suspend all future scheduled load shedding because they were confident that the bulk of what they claimed to be necessary in terms of saving electricity could now be achieved without imposing blackouts on the country.

 

Now I’m not one (normally) to look a gift horse in the mouth – even an equine of such doubtful pedigree and value as this. But the constant about-facing of Eskom over the past few months really takes the biscuit and reinforces my personal belief and assertion that every one of the board and senior managers of Eskom should be removed from their posts and put in a place of safety – ours, not theirs.

 

(Those of you wishing to have a look at my previous posts on this particular matter of the spleen can find them by back-tracking on this site. I’m sorry, but I haven’t yet figured out how to insert those sexy little links into my posts. Maybe I won’t anyway – I want to encourage as many people as possible to actually read the other posts on other subjects that I have, so far, managed to wrench from my keyboard. See – an ulterior motive for ignorance and indolence.)

 

So…what began as a crisis, with recriminations and screams of outrage flying in every direction, then eased, then escalated into punitive scheduled blackouts and now appears to have relaxed so much that one is tempted to assert that there never was a crisis in the first place.

 

Shortly after the ‘crisis’ began it became known that Eskom was exporting one full third of its total production to neighbouring countries. It has now been stated that those exports were sold at prices significantly below the cost of production.

 

In other words, the South African consumer of electricity was subsidising – to a considerable degree – the governments importing South African electricity. (I can’t believe for one moment that the end users in those countries benefited from that subsidisation).

 

Excellent economics, Eskom. What’s the betting you got some nice fat bonuses for that little sleight of hand? And, no doubt, some kudos (or, perhaps, something rather more substantial) for the ANC politicians from their buddies around the continent…

 

Oh, and by the way, we South Africans contributed directly to the repression of the population of Zimbabwe by Robert Mugabe and his henchmen.

 

Gee, thanks. That’s really going to help me get to sleep at night.

 

On top of all that, we now learn that the serious consumers of electricity in South Africa – the mines, heavy industry and business in general – have been paying tariffs some 275% lower than the domestic consumer.

 

Bulk discounts (not normally a feature of the South African business mentality) I can understand. But 275% less is not a discount – it’s an outright gift. Subsidised by the domestic consumer – again.

 

There is no way that the vast majority of the electricity produced in this country (and consumed by industry) is sold at a loss. The stated profits of Eskom cannot possibly come solely from the domestic consumer.

 

So the domestic tariff, less 275%, as charged to industry, is hugely profitable to Eskom.

 

But sauce for the goose should also be sauce for the gander. Why is the domestic consumer not charged tariffs which are very much closer to the industrial rates (or vice versa, if the lies of Eskom were to be made more consistent)?

 

Why is Eskom fighting tooth and nail for a 100% increase in tariffs over the next twelve months? For the domestic user of electricity that is a killer of a hike in rates, but for industry it will be verging on the insignificant.

 

If Eskom needs funds to expand its generating and transmission capabilities (now doubtful, given the revelations about how much electricity is exported across our borders at charity prices), then why do the mismanagers of Eskom seek to extract the cost of their own screw-ups from their captive South African domestic consumers?

 

What is wrong with requiring higher charges for both the foreign customers and local industry? Why, in the name of all that is accepted as good practice in economics and business protocol in general, should we in South Africa subsidise the inefficiencies and malpractices elsewhere on our continent? Why should South Africa beggar itself for the rest of Africa?

 

And why does Eskom have only a one-dimensional approach to the problem – namely raising capital through tariffs?

 

There are other ways, such as, for example, raising a bond issue or creating and selling additional shares in its business. At least then those who can afford to subscribe to the capital expansion of Eskom could do so and those who can ill-afford mercilessly higher tariffs could continue to use electricity without having to sell their mothers-in-law and children into slavery.

 

It is clear that neither Eskom management nor the ANC government has the skill or the imagination to run and operate our precious electrical generation and transmission utility.

 

And because Eskom is a strategic national asset it should not be privatised, either. We neither want nor need the dubious benefits of parity pricing and gross profiteering that would, inevitably, result from such a move. Witness other countries around the world which have trodden that particular route. Power and water are public service utilities designed for public benefit and have no role within the commercial sector; they are too fundamental to the well-being of our nation and its people to be exposed to the rapine of the highest bidding speculator.

 

Rather operate the public utilities much as the State Electricity Commission was run in Victoria, Australia back in the 1960’s and 1970’s. A public utility, set up as a government commission charged with operating as a business - but without profit being the underlying raison d’etre.

 

We are being served by maleficent incompetents who have lied to us, failed in their due diligence and are, generally speaking, a pathetically sorry bunch of unimaginative time servers anxious more for their own benefices that those they are charged to protect and enable.

 

Please go away – all of you. Find something else – preferably in another place - that you can pervert and destroy.

 

Allow us to find those who are operationally able to run Eskom without destroying it, under the guidance of commercially competent managers who can foresee and prevent losses within a non-profit organisation.

 

Spearpoint.

1^st May 2008