OPPOSITION leaders, including Musi Maimane and Mosiuoa Lekota have called for an end to the anti-privatisation fiasco, but the solutions on the table need not entail the wholesale privatisation of state assets.
Moving South Africa forward to a better economic future could include the creation of an energy commons. In this scenario Eskom would become merely the operator of the national grid. Allowing the generation of electricity to form the basis for new enterprises, each of which could compete for access to the consumer, by providing a host of services, including the provisioning of technology.
Think of mobile phone companies and the convergence which has occurred on the Internet. New virtual electricity companies could provide consumers with choices including access to dishwashers, microwave ovens and other household technology — choices in renewable energy, women-friendly companies and other solutions that are just not available under the current system.
An energy commons that served as a repository of energy for the good of the nation, would allow greater competition at the same time as maintaining government control over the fiscus. Thus un-economical energy systems and bankrupt energy companies would be allowed to whither away and die. Only the most efficient energy providers would be allowed to survive, removing the need for annual bail-outs.
Essentially what South Africans (and especially small business) require the most, is cost-effective wattage hours. But doing this would require the removal of the inefficient, apartheid-era, extractive and exploitative sale of bulk electricity, the system which has been the backbone of municipalities since the days of race segregation. Under the current regime, Eskom sells electricity to local municipalities who in turn sell energy to the consumer, resulting in a profit pyramid scheme.
Creating a more horizontal energy system that is localised and avoids wastage associated with highly centralised projects and transmission over distance, (some 6-15% of electricity is lost this way) presents a number of gains for the consumer. Instead of draining our economy, we would see new enterprises, greater employment and a bigger tax-base.
Allowing municipalities to invest in new energy start-ups, in the same way as the government owns shares in Vodacom, could provide a way out of this cash cow problem. Instead, Minister Nene is now selling these “non-core stakes” to cover his administration’s bail-out of moribund and inefficient state-enterprises.
Think of the national grid as the backbone, and the energy commons as a pool of energy into which energy providers contribute, thus providing access to basic services, and then where value-added services are bolted to this mix, is one way of looking at the solution.
A 1998 White Paper, recommended that Eskom be split into separate generation and transmission companies to “assist the introduction of competition into electricity generation”. Reform of a bloated “vertically integrated” monopoly that controls electricity supply from start to finish has been stymied by labour demands that boil down to maintaining a dirigiste economy in the form of state capitalism.
South Africa inherited the apartheid state apparatus, which included Eskom and Telkom. These two monopolies are government-run corporate entities known as parastatels. Both are dependent on annual bail-outs from the treasury.
The cost of the latest Eskom bail-out has been included in the 2015 budget announced by Minister Nene at a whopping R23bn, and this comes upon rate hikes and increases in the cost of Eskom services to the consumer.
Nene’s rationale for maintaining the monopoly is exactly the same rationale as previous ANC administrations: “30% of South African’s do not enjoy access to electricity, Eskom is the only way we can provide them with services”. The policy of maintaining an energy monopoly which is responsible for most energy generation, while gradually opening up the market to a minority of new Independent Power Producers, has meant this figure has remained unchanged. In other words, like our unemployment figures, the percentage of South African’s without electricity remains the same, since enterprise development is not able to keep up with the countries increase in population.*
Another factor is the peculiar ideological focus of the ruling alliance. The ruling party is in reality a centre-left alliance of union and business factions. The ANC thus balances its business interests with the interests of unions and the SACP resulting in a beast not unlike Dr Dolittle’s pushmi-pullyu. The downgrading of Eskom’s debt and the inquiry into its operations (there is only one electrical engineer on Eskom’s board) all point to a crisis in South Africa’s energy sector.
At the end of the day it is the consumer who stands to benefit from greater choice in energy providers that would be provided by a more efficient energy commons.
* South Africa’s population grew by 15/5% since the ANC came to power in 1994. A one-child-per-family policy as implemented in China and the basis for the country’s current economic success, could prevent the increase of the population from 52 million to 100 million over the next two decades.