The real victims of Eskom looting

For the most tragic victims of the great Eskom robbery, look to ordinary households

 

First published in BDLive

8 June 2018

The Eskom crisis is sometimes presented as a series of mild and victimless misdemeanours.

True, SA’s public finances have been imperilled and the country’s energy security has been threatened, but surely a revamped board will set the finances straight? And the nuclear sideshow has surely drawn to a close?

Most of Eskom’s looting beneficiaries remain remarkably sanguine about the results of their actions.

Many of the parastatal’s problems were highlighted two decades ago, when the then department of minerals and energy launched its vaunted energy white paper.

Governments around the world were moving away from vertically integrated and monopolistic power monoliths. The recommended pattern of reform was to separate power generation, the transmission grid and distribution systems.

Independent power producers (IPPs) would bring competition and cutting-edge technologies to generation. An independent grid would be overseen by a powerful regulator. Big energy users and regional electricity distributors, made up of aggregated municipalities, would purchase electricity in a competitive wholesale market.

Thabo Mbeki’s government at first seemed quite serious about these reforms. A national energy regulator was created in 2005. New electricity regulations, eventually promulgated in 2009, gave the Cabinet powers to plan the energy mix and to force Eskom to sign contracts with IPPs.

In the end, however, vested interests blocked change. High energy users, just 17 of whom accounted for half of all electricity consumption in 2010, lobbied to keep their cosy — and often seemingly corrupt — confidential purchase agreements with Eskom.

Municipalities fought to retain control of distribution. A recent report by Deloitte indicates that municipalities today earn a quarter of their total income (R22.5bn) from selling power. R15.7bn is paid to Eskom, and the R7bn surplus is used to cover general expenditure. Poor municipalities often stop paying at all.

Eskom managers battled to retain their generous salaries and benefits. Even before the employment and remuneration boom of the Zuma years, one parastatal manager defended her free golf lessons during working hours on the grounds that she was excluded, by her historically disadvantaged background, from participating in strategic meetings on golf courses.

The coal supply chain increasingly became a vector for patronage and elite profit.

With so many beneficiaries, it is easy to forget that there have been many more victims.

Prices have increased threefold in recent years, directly hitting consumers’ pockets. Unreliable and expensive electricity, moreover, discourages economic growth. Compelling research by Johannes Fedderke suggests that low growth directly drives high inequality in SA.

Meanwhile, the ANC’s economic transformation committee is still busy trying to work out how to convert public servants’ pension savings into Eskom debt — and the clever money is on them succeeding.

Despite all the hot air government exhales around the theme of small business development, some of the biggest constraints on small entrepreneurs are expensive electricity and low amperages that cannot support commercial refrigerators or power tools.

For the most tragic victims of the great Eskom robbery, however, we need to look to ordinary households. It is true that more than 85% of dwellings now have some access to electricity, up from 60% in 1996. Three-quarters of families use electricity for lighting, televisions and cellphones.

But, despite a free basic electricity allowance of 50kWh/month, the poor spend a far greater proportion of their income on energy than the rich.

Affordability, or rather unaffordability, is a real constraint on the uses to which electricity can be put by the poor.

By some estimates, electricity accounts for only 20% of household energy consumption. In rural areas, wood continues to be used for heating and cooking. In peri-urban areas, coal, wood and paraffin — and not electricity — remain the key energy sources for families.

The prevalence of coal generation has long resulted in generally poor air quality outside the breezy white suburbs. The use of wood and coal inside homes dramatically increases the incidence of lung diseases, especially among the women and children whose exposure is greatest.

Firewood collection is an arduous and costly burden, shouldered primarily by women. The ingestion of paraffin by children, and the 50,000 fires that occur annually in SA’s poorer residential areas, are responsible every year for thousands of deaths and an appalling number of horrific burns.

There have been crimes committed at Eskom, and there is no excuse for pretending they have been victimlesss.

• Butler teaches public policy at the University of Cape Town

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