Happy Birthday, Mr. Mandela. And, By The Way, Please Don’t Die Yet.

 

Today is the 90^th birthday of Nelson Mandela (‘Madiba’) and the whole world has been sending their best wishes and thanks to him.

 

At the risk of being accused of jumping on the bandwagon, I, too, would like to extend my own personal greetings and wishes to him. Not that they are likely to reach him, of course – I very much doubt that the great man is a subscriber to this blog. And even if he were, I suspect that he might not wish to admit to the fact. Nonetheless, my wishes for his special day and for his continued good health and longevity are sincere and heartfelt.

 

However, today is not as joyous as it could perhaps be for far too many South Africans and, in light of that fact, I would wish to amend my birthday wishes to Mr. Mandela as follows: ‘Many happy returns of the day, Madiba, and please could you find the strength and energy to come out of retirement for a short while and put our country back on track’.

 

Ordinarily, the 21^st century political and government scene should, after all the lessons of the past few hundred years around the world, be one where the characters and characteristics of individual politicians and leaders (not necessarily the same thing, by the way), whilst important, should not, however, be dominant over the system of prevailing political and economic theory and practice.

 

Despite considerable fear at the time of the transition from the old South African order, Mr. Mandela proved to be an acceptable exception to the above statement. His humanity, compassion, statesmanship and deep discipline marked South Africa out as being a beacon of hope to many other countries around the globe – to say nothing of those people who had, directly and indirectly, suffered under the pre-1994 government. In so doing, Mr. Mandela bequeathed a bold and immensely valuable legacy to South Africa.

 

Which is precisely why today is not as happy an occasion as it could – and should – be as the great man and a significant portion of the planet celebrates the start of his 91^st year.

 

The stark reality is that the Mandela bequest to all South Africans has been defiled and squandered by those who took up the reins of power and influence after his departure. Sure, the words of those now steering our ship of state on to the political, social and economic rocks are filled with obsequiousness to the man and his vision; but the lip-service is cynical and self-serving when compared with the actions and motivations of those now with their hands on the tiller.

 

Some fourteen years after the 1994 transition South Africa appears to have progressed little towards those objectives set out and exemplified by Nelson Mandela.

 

South Africa still has the obscenity of innumerable squatter camps. Where housing for the poor has been provided it is invariably small, mean and inadequate for the needs of growing families and entrepreneurs. The squatter camps of the next decade and on will be the RDP and low-cost housing projects of the townships.

 

South Africa still has the obscenity of a gargantuan and permanent crime wave (now no longer excusable as a form of anti-Apartheid political action) which is, in terms of volume and nature, on a par – at least – with any war zone you might wish to name on the planet.

 

South Africa, far from leading the rest of Africa away from the stereotypes of the continent, has actively joined the club of banana republics in the race to grab the titles of the most corrupt and most politically expedient societies in the world. Political and social leaders vie with one another, it appears, to see who can extract the most money and power from the cookie jar of government service and public finance. Nepotism and cronyism are rife locally and internationally. Our foreign policies – most notably towards Zimbabwe, Equatorial Guinea, and Sudan (amongst others) – are an international joke and a domestic embarrassment.

 

South Africa’s education system (never noted for its egalitarianism or excellence) is collapsing under the weight of acute teacher shortages and administrative incompetencies.

 

Similarly, the South African public health system, under the leadership of a minister who denies the realities of HIV/AIDS and would prefer to treat those thus afflicted with beetroot, spinach and whatever local witch doctors might concoct from unprovenanced ingredients, is imploding from staff and skills shortages, graft and maladministration.

 

South African infrastructure is unraveling. The road system is (literally) breaking up under the traffic. No new major road or highway has been constructed since 1994. Public transport is so piecemeal as to be non-existent. Eskom and the electrical generation and distribution network under its care is a monstrous caricature of what the ANC inherited from its predecessors.

 

South African government is ceasing to work properly. Government departments are slothful and inefficient. Where once a passport would, routinely, be issued within ten to fourteen days, applicants now have to wait for upwards of six months. Driving tests and the issuance of licences, once accomplished within days can now – depending on the locality – take over one year.

 

South African public ethics and the moral fibre of the country are disintegrating. Public officials, no longer afraid of their subjection to the law of the land, openly – and oftentimes violently – compete for power. Politicians and government departments flagrantly flout or ignore court orders and rulings. The judiciary appears to be becoming enmeshed in political rivalries and factionalism.

 

At least 26% of all South Africans, from all racial and socio-economic groupings, are reported to be either in the process of emigration or are actively considering it.

 

So, Mr. Mandela, Happy Birthday.

 

But would you please at least consider coming out of retirement for a year in order to put our house back in some semblance of order? It’s a lot to ask and I’m sure you are tired. It would be appreciated – especially by those who are closest to your heart; the poor, the elderly, the sick, the young.

 

And – please – don’t die anytime soon. For then South Africa will have no-one with any political integrity or moral authority left to shield us hapless common folk from the predations of who are ambitious, greedy and ruthless.

 

Spearpoint.

 

18^th July 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

More on Food and Fuel Prices…

 

 

 

 

 

 

A thought occurs…

 

Eskom, as we are all probably aware by now, seems to be hell-bent on hiking their tariffs to the ordinary South African electricity consumer by 53% this year and by a similar amount next year.

 

I now wonder if, just maybe, we poor and long-suffering victims of the South African corporate and political robber barons might reasonably expect a small glimmer of light at the end of this seemingly endless tunnel of despair in which we find ourselves.

 

In the vein of any good communist or socialist government, it was recently announced by our inefficacious Minister of Health that certain (unspecified) interventionist steps were being considered on the present crisis over rocketing food prices.

 

Just to digress for a moment – why such an announcement should be made by the Minister of Health rather than the Minister for Trade and Industry or the Minister of Finance I find to be confusing. Whilst I am sure that there are public health concerns to be considered if the very poor cannot afford to buy their staple foods, I do feel that any interventions – even in the form of food stamps – would be better managed as part of an overall economic and financial strategy led by the Department of Finance and whose Minister has shown some reasonable degree of competence over the past few years.

 

Anyway, to get back to the point I wish to make…

 

Now, if the South African government is demonstrating a willingness to change its stance and to interfere with normal market forces on food prices then surely, in order to be consistent, it should also consider a similar intervention on fuel and electricity prices.

 

There are several ways in which considerable assistance could be offered to the consumer without necessarily distorting the market and its operations.

 

For example:

1.       VAT could be reduced or removed for all foods, fuels and power supplies;

2.       Eskom could be required to either cease the supply of one third of our total production of electricity for export at the ridiculous price of eleven cents per kilowatt or to export it at prices which would give a far better return, thereby obviating the need to impose punitive tariff hikes on South African domestic consumers;

3.       The fuel industry could be de-regulated so that competition could be allowed on the forecourt and so that supplies of oil could be sourced in a manner that would free South Africans from the artificial and arbitrary pegging of spot prices to the Singapore market;

4.       Introduce new trading rules to control and penalize the exorbitant profiteering in the various commodity (particularly foodstuffs and fuel) markets that results from the unfettered and unnecessary trading, re-trading and re-re-trading of essential goods and commodities.

5.       As previously advocated by Spearpoint, the government could also abolish all direct and indirect taxes (e.g. income, provisional, dividend, corporate, payroll, VAT, fuel levies, compensation, UIF, provincial, municipal, etc. etc. etc. etc….) and replace them with a single, simple “consumer” tax on all goods and services (excepting food, fuel and electricity) in various bands. Thus, incomes would be maximized and protected and the tax burden for individuals and companies would be defined by how much they spent within all sectors of the economy. The tax could be designed and collected on much the same basis as VAT, thereby saving vast amounts in collection costs and public service staffing costs.

 

I am sure that there are other ways in which commerce could be stimulated whilst making the sharing of the tax onus across the entire population far fairer than it is at present. It just requires a little imagination on the part of the government.

 

Most importantly, however, the government, through its own initiative on food prices, has now opened the door to the possibility of constructive intervention in other, critical, sectors of the market economy.

 

Now they must get on with it…

 

 

Spearpoint.

13 May 2008

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eskom’s “Commercially Sensitive” Information

Reports in the press today reveal that Eskom has asked that certain portions of its submission for a 53% tariff increase to the Energy Regulator (NERSA) be withheld from public scrutiny for reasons of commercial sensitity.

NERSA has, apparently, complied with that request.

This is completely mind-blowing.

How can a state monopoly, with no competetion whatsoever in the electricity supply and distribution market, possibly have anything it does not wish to have made known to those competitors (who don’t exist)?

Who are they trying to hoodwink?

Unless, of course, there are certain facts concerning the actual costs of their operations, their actual profit margins and their staffing costs and overheads which, if the South African public were to become aware of, would reveal just how any application for increases in tariffs is unjustified and, possibly, fraudulent.

Eskom, you are a public entity. You have no competition. Ergo, you have no commercial secrets in the normal sense of the term.

Moreover, Eskom since you are state-owned that means that every member of the South African public is – both by definition and default – a shareholder and, as such, it is illegal to withhold or to seek to withhold information regarding your operations and finances.

All you are entitled to withhold, Eskom, is information regarding the physical operational security of your enterprise since you are a national strategic asset which could be vulnerable to attack and sabotage – and the secrecy necessary on that topic alone must be subject to the oversight (God help us) of the Minister of Safety and Security.

NERSA, in its lap dog roll-over for Eskom and the government which, (contrary to ANC, COSATU and overall public opinion, approves Eskom’s attempts to gouge the people of South Africa), appears to abrogate its statuted role as an independent regulator of the energy industry. The tail would appear to be wagging the dog…

One wonders what crumbs are being offered where and to whom; what quid pro quo is being negotiated behind our backs?

Maybe I’m being paranoid.

But am I being paranoid enough? Is it my imagination, or have the ANC and COSATU suddenly become suspiciously quiet and retiring on the Eskom debacle in recent days?

Incidentally, other media reports today reveal that the government has reserves of some US$34 billion. Reserves are desirable things to have because, in times of crisis, funds can be made available to counter or remedy that crisis.

Has no-one in the ANC or government yet realised that the Eskom situation is precisely that – a crisis – and that this might be an opportune and appropriate moment to apply some of those 34 billion Dollars to fixing this monumental – and wholly avoidable – problem without penalising the people and industries of South Africa?

 

Spearpoint.

 

More Thoughts on the Power Crisis

I have already given voice to various criticisms of Eskom, its management and the role of the ANC government in the present electricity shortages in South Africa.

Consider them repeated and reinforced.

Further consideration, however, brings other things to mind.

I can clearly remember a sustained programme of Eskom advertising over a number of years which promoted and encouraged a continued growth in the use of electricity – a campaign which seems to have tapered off only towards the end of 2007. (Although why a state-protected monopoly working with a totally captive market should ever need to advertise its wares absolutely escapes me).

Despite having the knowledge – if we are to believe the words of the mismanagers of our beloved power utility – of an impending electricity crisis, Eskom continued to actively market their products and services to the public.

What complete lunacy.

It’s akin to the driver of a runaway truck, fast approaching an unfenced precipice in the mountains, suddenly putting his foot down hard on the accelerator instead of the brake pedal.

The management of Eskom, eager in their empire building and anxious for their revenue-related bonuses, ignored their own warnings about a looming power crisis to government and carried on as if all was normal and they had unlimited reserves of electricitry generation to play with indefinitely.

And, incidentally, concurrently running down reserve stocks of coal at all the power stations almost to the point of feeding such coal as was delivered straight into the furnaces upon arrival, blaming inevitable hiccups on “wet coal”.

Horse apples.

Where was the professional competence in such activities? Where were the planning skills expected of the executive and senior managers of a multi-billion Rand public enterprise?

How can these instances be seen, in any way that even a five year-old can accept and understand, as the directors of Eskom exercising their fiduciary resposibilities to the company and their shareholders?

And where, in all this, were the oversight mechanisms supposedly put in place and actively exercised by the Energy Regulator and the government?

Or were the various government ministers and their departments so besotted with the nice fat revenues pouring into the Treasury and SARS that they were too busy counting and planning how to spend the money to be bothered with anything else – such as making sure the goose providing those lovely golden eggs wasn’t being mistreated and starved by its handlers.

There is no escape from the inevitable conclusions to be drawn from the entire Eskom/power crisis situation as it presently stands.

The directors and senior management of Eskom – all of them – must be dismissed without benefit. Additionally they must be investigated and charged, if appropriate, under the Companies Act and whatever passes for a Treason Act in this country.

Moreover, the government ministers and senior departmental officers of the government departments concerned with the control, financing, regulation and oversight of Eskom should be immediately removed from office – without benefit – and, like the directors of Eskom, investigated and charged as appropriate.

And if the ANC decides to continue to protect these incompetents by hiding behind their infamous get-out-of-jail-free-card ploy of “collective responsibilty”, then the ANC must immediately recuse itself from government and let the country find more suitable candidates for the job.

 

Spearpoint.

More on Eskom

More about the bright sparks at Eskom…

 1.     Why doesn’t somebody from the police or – better yet – the Scorpions investigate Eskom management?

Where are the business ethics and duties to the shareholders and consumers of Eskom when the management can blithely negotiate coal supply contracts at exorbitant premium-plus prices and, worse still, when that management has done so in the clear knowledge that Eskom does not have the funds now or in the future to honour those contracts?

This has to be a blatant effort on the part of Eskom to force their desired 53% price hike through on the basis that when the stocks of coal are delivered there will be no money to pay the suppliers and the Energy Regulator will have no choice but to agree the price hike.

Such behaviour is cynical in the extreme. It is dishonest. It goes against every principle of good management practice in the book.

Unless, of course, regardless of the government and Eskom assuring everyone in South Africa that a full and proper public debate will be conducted, the decision on the price hike has already been approved on the quiet.

The Eskom board should be sacked forthwith and prosecuted for directorial malfeasance.

2.     The failure of Eskom to cut power last Monday as part of its coercive “predictive” (whatever that means) programme against the South African people, together with the patchy and inconsistent power cuts over the past few months, expose the lie that South Africa has a genuine power crisis.

A genuine power supply and distribution problem would see have seen a long period of minor power outtages rather than the sudden claimed shortage of 10+% resulting in huge areas of the country being blacked out. Such a massive shortfall could not happen overnight as it did last year. The demand for power could not have jumped so dramatically within a matter of a few days, nor could it have kept at the supposedly new high levels – even allowing for Eskom’s incompetence in maintaining its generating infrastructure. Our economy did not grow at such a pace in such a short period – and we still had more than enough power to export to every man and his dog elsewhere in Africa.

3.     The withdrawl of the US company looking to build a couple of power stations for Eskom on the grounds of the venture not being able to earn enough money is a further indication that both Eskom and the government are being less than honest with us regarding the reason for our purported power problems.

This is another straw in the wind indicating that the power crisis is a construct of the government and its lapdog, Eskom, to artificially raise the price of electricity in this country in order to make it sufficiently attractive to sell off an essential and strategic national asset to foreign investors.

For a communist/socialist movement and government the ANC sure seems to love the almighty Dollar…

Spearpoint.

Eskom and tariff hikes

Here we go – again.

 Don’t you just love the levels of professionalism and competence we have in South Africa?

1. Eskom removed the world-class skills base it inherited from its pre-1994 days by blindly following the ANC politically correct ideology of reverse affirmative action – it unceremoniously tossed out the white managers, engineers, technicians and linesmen who, rightly or wrongly, had comprised the bulk of expertise within the parastatal.
2. The removal of that skills base, whilst not done exactly overnight, took place over a very short period – too short to permit the recruitment and training of black replacements to the same levels of expertise, remembering that most of the white engineers and so on had served apprenticeships of several years followed by many years of on-the-job training and experience.
3. The ever diminishing numbers of competent personnel suffered increasingly low morale as the process continued and as they watched their world-class operation begin to disintegrate under the onslaught of unskilled time servers brought in through nepotism and racial quotas. “Hey, the government says we are equal and the only difference between us is that the whites have been privileged and we have not and, anyway, what’s so difficult about driving around in nice cars, having nice offices, having secretaries (oops, sorry, personal assistants), fat salaries, and so on. Skills? Aagh, we’ll pick those up as we go along – if we need them. Protestant work ethic? What’s that? We in the ANC and the new government of South Africa are socialist and communists – we don’t believe in that outdated and outmoded thinking since it is not politically correct (according to us) and, in any case, we are just taking over what was built up over generations by our predecessors.”
4. The new management of Eskom failed to understand and apply the concepts and lessons of investment in their inherited money-making machine. When, finally, the new management realised their mistake, they were too frightened of and politically indebted to their major stockholder (the ANC government) to be able to convey the severity of the developing crisis regarding the generation and distribution of electricity; nobody, it seems, was prepared to risk their lovely salaries, bonuses and related perks by being the too-earnest bearer of bad news to the powers-that-be that this wonderful cash cow was, in fact, on the brink of terminal starvation.
5. The ANC and its government officials failed to understand that the good days were on the point of coming to an end. The concept of long-term investment and re-investment totally escaped them. Things were going too well; the economy was proceeding nicely – how could anything be wrong? “To hell with these doomsayers – we, as the government have much more important things to spend money on. We must not delay, for example, spending hundreds of millions of Rands on re-naming towns, streets, municipalities. Anyway, if Eskom does need money later then we’ll look at it closer to the time – I mean, just how long can it take to build a few new power stations and the associated network? In the old days before 1994 we never seemed to have this problem, so how hard can it be?”
6. When, finally, the wheels came off the lumbering juggernaut that is Eskom, what happened? Because of the self-imposed ANC political perceptions of reality were far more important than the actual realities of life, both the government and Eskom, whilst simultaneously admitting a problem and downplaying the seriousness of that problem (admitting error is not a survival trait within the government, the ANC or Eskom), then proceeded to continue the export of substantial proportions of our power production to neighbouring countries – all previous allies to the ANC back in the days of the struggle against Apartheid.

Well, the chickens have well and truly come home to roost.

And in the process we have all been made to look utter fools to ourselves and the world at large. Once again we see that, with the ANC, its government and the various state utilities, style and spin are deemed to  be far more important and relevant that content. We can talk the talk but we’re buggered when we have to walk the walk.

 Now Eskom, with the support of the government, wants to hike its tarrifs by a stated 53%. Aware of the social and potential political fallout the ANC opposes the idea. As does COSATU. As do the bulk of businesses and private individuals. No great surprises there – except for the government’s stance.

Well, if the government is so supportive of the idea, then let the government pay for it.

1. The government is the main shareholder of Eskom.
2. The government failed (by its own – very surprising – admission) to respond in a responsible and responsive manner when, eventually, Eskom brought the problem to its attention.
3. The government has been deriving vast revenues from Eskom for years.
4. The government has failed to spend its budgeted allocations of those revenues through the inefficiencies and incompetence of many of its departments.
5. The government has been enjoying positive revenue balances for many years – partly because of Eskom’s contributions.

As with any other commercial or quasi-commercial enterprise – and especially in the case of a state monopoly – it’s all very well when times are good and you enjoy the huge dividends from your legislated market dominance, but there is an obligation to put your hand in your pocket when times are not so good.

The mere fact that Eskom is a state enterprise renders its revenues as indirect taxation. When that state enterprise turns a profit which is siphoned off into state coffers then that profit is additional (hidden) indirect taxation which is not declared as such. To have Eskom then to increase tariffs by a further massive 53% will subject the consumers of Eskom’s product (i.e. everyone in South Africa) to an undeclared indirect super-tax.

Forget the argument that South Africa has the cheapest electricity in the world. It is a spurious argument, at best. If we can produce electricity at the present price – and make a huge profit into the bargain – then let us benefit from that ability. If lower electricity prices can help to attract foreign investment into this country then let it be! We neither need nor want so-called parity pricing with other countries – it benefits absolutely no-one except traders, speculators and already well-established outside vested interests and whose secondary, derivative economic functions carry questionable economic value to anyone beyond themselves.

Let the government stump up the additional funds the Eskom now needs. The government has assumed the social role of providing the social service of electricity supply; it has enjoyed the spoils of that role and must now discharge its social duty of expanding that role at whatever cost is necessary. Moreover, the government has the moral obligation to the vast majority of its citizens who, even at current Eskom tariffs, can scarcely afford the minimum power they consume.

I just hope that the government has not seen this request for higher tariffs as an excuse to continue bilking the South African entrepreneur and consumer without exposing itself to losing those lovely revenues flowing into the Treasury…

Spearpoint.