Dear Mr Gordhan, Eskom is a ‘public bad’, not a ‘public good’

IN A PIECE published in the Daily Maverick, Public Enterprises Minister, Pravin Gordhan appears to respond to an earlier piece written by myself and published here and in the Cape Argus. The example of Telkom deregulation which I have raised, on more than one occasion, is most certainly taken verbatim, and it is no coincidence Gordhan’s response occurred on the day my piece was published by IOL.

Electricity may be a public good, but when the only source of electricity for the majority of South African households is a government department or City billing system, the results will always favour the producers not the consumers.

Peter Fabricious reports that Gordhan responded to a question put to the Financial Times Africa Summit on Tuesday on “why South Africa needed Eskom at all?”

He says: “A member of the audience put it to him that South Africa had been ahead of the curve in 1993 and 1994 in licensing mobile telephone companies and that had changed the country’s telecoms landscape.”

“Given that history of trailblazing, why do you need Eskom?” was the question for Gordhan, who was participating in the London summit remotely.”

To which Gordhan responds by doubling down on his party’s statist rhetoric, that “Eskom is necessary because providing electricity is a public good and the state should be involved in the provision of public goods.”

Gordhan then goes on to suggest without any evidence, that “placing the provision of electricity into private hands in other parts of the world had not worked out well, including because it had increased prices” and this by falsely listing Britain as an example. Either he is a willing idiot, or totally oblivious to the accepted wisdom and economic consensus surrounding the rise in UK fuel prices.

It is no secret that Europe’s plan to deploy natural gas as a ‘transition fuel’ has encountered a major setback and has run aground due to the collapse of the NordStream Pipeline resulting from the war in Ukraine. There is thus a major gas shortage, where 80% of the increase in UK electricity prices has been due to soaring gas prices, resulting from the supply-side market contraction. The Economist provides reasons for soaring energy bills based on projections on the basis of wholesale prices for natural gas, and the problem has nothing to do with privatisation.

Even in Costa Rica where private companies are being criticised for failing infrastructure following a natural disaster in a situation where the state has failed to regulate on service quality, there is broad consensus that the previous regime under a single state-run operator, was far worse.

Instead of deflecting our attention away from deregulation, by providing us with a reasonable timeline for private sector participation in energy-to-the-home (ETTH) and actioning upon plans already in place to split Eskom up into competing entities, Gordhan insists on trotting out effete intellectual arguments that lack any substance, save to satisfy his party’s bizarre insistence that maintaining the solitary energy SOE as a mechanism for sheltered employment to reward its union partners, is somehow a ‘public good’.

The results are plain to see.

Far from engaging the private sector in the provisioning of energy directly to consumers, our government is maintaining a false energy monopoly, in effect a pyramid scheme responsible for rolling blackouts.

A flawed scheme based upon a shibboleth, a custom or tradition, which essentially bars the independent sale of energy directly to South African households and which is anything but an ‘energy commons’, derived from a ‘national pool of energy’.

My earlier piece outlines why the inclusion of inputs from Independent Power Producers (IPPs) will have no direct impact upon consumers, given the massive Eskom debt (currently 400 billion rand), and especially if the resulting model continues to be driven by government diktat — socialist-motivated centralisation and bureaucracy-driven, command-style economics, instead of the free market.

Even if our government were to roll-over the entire Eskom debt, the modus of the SOE is so far gone down the road of welfarism and bail-outs, that we are flogging a dead horse and expecting it to run. “Between 2007 and 2021”, writes Drikus Greyling “Eskom invested R680 billion to increase its generation capacity. However, after this huge investment, Eskom produced less power than when it started.

Gordhan’s response to the Financial Times Africa Summit must be rejected as nothing more than empty rhetoric, elegant-sounding political words, entirely lacking evidence-based research and clearly statements not based upon any empirical inquiry. His pronouncements need to be called out for the dangerous obfuscation and mendacity they truly represent.

published in part by Cape Argus 28 October 2022

Nuclear-bidder linked to apartheid government

AREVA, the French nuclear conglomorate, formerly known as Framatome, maintained close ties with the apartheid government and was responsible for the construction of Koeberg, a plant that continues to pump out toxic emissions that exceed European safety guidelines. South African Safety limits, in fact, had to be raised to accommodate the emissions of radioactive isotopes such as strontium-90 and ceasium-137, and defects in the design were thus erased with the stroke of a pen by the National Nuclear Regulator. 

With a majority stake held by the French government, and with close links to Westinghouse, the other bidder, the company will be showcasing its technology, along with trade mission headed by conservative French President Nicolas Sarkozy in South Africa later this year.

Areva-Framatome’s growth, according to Multinational Monitor, is rooted in the Cold War and the history of France’s Commissariat a l’Energie Atomique (CEA), a government agency set up by DeGaulle in 1945 in order to direct French nuclear research and develop an independent French nuclear weapons capability. Framatome’s licensing relationship with the U.S.’s Westinghouse Corporation apparently played a central role in France’s strategy of gaining access to U.S. reactor technology and integrating it with the centerpiece of France’s self-reliant nuclear program, the fast breeder reactor.

In 1975, Framatome negotiated the first major sale of a French-made nuclear reactor – to the Iranian government under the Shah. The $1.2 billion contract for two 900 megawatt power stations reportedly included supplying fuel reprocessing technology. However, the units were never built and the contract was eventually cancelled in 1979 following the Shah’s overthrow.

Barely five months later, Framatome won a contract to build South Africa’s first nuclear power reactors at Koeberg, edging out Westinghouse. Under terms of the seven-year contract, Framatome and two other French companies agreed to provide the nuclear technology, equipment, and fuel rods for two 950 megawatt units. ESKOM supplied the enriched uranium for the rods and funded construction. Financing came directly from the South African government and indirectly from transnational bank purchases of ESKOM bonds.

Areva’s projects have been marked by hefty cost-overuns and inexplicable delays. The company is busy constructing Finland‘s fifth reactor in Olkiluoto, since 2005. The reactor, which is one of the first of the new, third generation reactors (EPR – European Pressurized Reactor), was supposed to begin producing electricity in 2009, but the project has been delayed because of technical difficulties and quality problems. In August, 2007 the production start was postponed to 2010-2011 and the new plant is expected to cost over 3 billion euros.

In December 1982, the start-up of Koeberg was delayed when the reactor’s control system was damaged by bombs planted by MK.  Despite growing resistance to nuclear power, the ANC-NNP alliance recently announced an expanded nuclear programme, in part due to pressure from the Global Nuclear Energy Partnership (GNEP) a nefarious organisation made-up of nuclear interests which include Washington Group International and the World Nuclear Association.

The French government has been accused of ditry tricks and skullduggery in its efforts to silence its critics. On July 10 1985, French agents blew-up the Greenpeace flagship, Rainbow Warrior whist docked in the Port of Auckland, New Zealand, in retaliation against the group’s campaign against nuclear testing on Muruaua.

An entry in Wikipedia tells it this way: One of the twelve people on board, photographer Fernando Pereira, returned to the ship after the first explosion to attempt to retrieve his equipment, and was killed when the ship was sunk by a second larger explosion.The New Zealand Police immediately initiated a murder inquiry into the sinking. With the assistance of the New Zealand public and an intense media focus the police quickly established the movements of all of the bombers. On July 12 two of the six bombers, posing as Swiss tourists and carrying Swiss passports, who had operated under orders were found and arrested.

GREEN EDGE: Shortsighted Industrial Expansion set to push up Electricity Tariffs.

SOUTH AFRICA’S myopic development policies are creating increased demand for electricity and the quick fix solution contemplated by Eskom might do more harm than good. Already faced with the predicament of providing cheap electricity for new industrial projects such as the proposed Coega Aluminium Smelter, the national energy provider is contemplating several new energy projects, none of which fulfil the millennium goals for sustainable development as laid out at the Earth Summit.

Instead of reducing demand in an energy intensive economy, South Africans could see sky-rocketing fuel prices and increased electricity tariffs as the move from dirty coal to cleaner gas turbines merely shifts the problem of sustainable energy consumption. Already, two new gas-turbine power stations are planned for Mossel Bay and the Western Cape. Alternatives such as the pebble-bed nuclear reactor are considered too costly in terms of long-term sustainablity, with the price of nuclear power escalating over the course of production when factors such as decommissioning and disposal of spent nuclear fuel are taken into account.

Other solutions exist in the form of renewable resources such as wind energy, wave energy, energy from the sun and the earth’s very own ambient radiation that periodically surfaces in the form of volcanic activity. Environmentally-safe Wind Farms, Wave Platforms, Solar Arrays and Geothermal Projects promised at the Earth Summit are still “just promises”. With consumers footing the bill for new development, answers such as a vague proposal for one pilot Wind Farm near Malmsbury “sometime in the future” and absolutely no progress in the emerging market for Wave, Geothermal and Solar, would seem “too little, too late”, as far as environmentalists are concerned.

What would it take to develop a sustainable Geothermal energy programme? Technology such as the ability to harness the massive forces encountered underground by the mining industry exists, but has never been tested locally. Until Eskom starts addressing the issue of long-term sustainablity seriously, this country will continue to be faced with a crisis in which consumers are asked to cough-up, merely in order to supply big business with cheap power, in a development game whose real cost is measured in the form of indirect taxation and other kickbacks to industry.

In fact BHP Billiton which has aluminium smelters in South Africa and Mocambique has already acknowledged there is a problem with power supply. Aluminium smelting like other energy intensive industries, uses a vast amount of power and the entire industry is considered economically unsustainable unless a cheap source of renewable energy can be found. Instead of spending billions of rands of tax-payers money on white elephants such as the Pebble-bed modular reactor, Eskom could have solved the problem by simply committing itself to next generation sustainable energy, spending more on renewable resources and less on non-renewables such as liquified gas and coal.


Energy Crisis, what Crisis?

SOME economists at the national conservative daily Business Report seem to have their figures all mixed up. Take the feasiblity of the proposed Aluminium Smelter at Coega. Apparantly since China has turned down similar proposals for at least six smelters, the resulting shortfall represents a gap in the market. The price of aluminium being what it is, “the project is even more attractive” say the boneheads at Independent Newspapers who in the same breath tell us why China turned down the once in a life-time chance to pollute the entire region with foul smelling industrial odours — the high cost of electricity.

Now if memory serves me right, aren’t we experiencing an electrical shortage of our very own, at Eskom nogal? The figures just don’t add up, since the stupendously “low-price of electricity in Southern Africa” used to justify the project, that looks set to become yet another white elephant, no longer exists. Indeed, this country’s historical over-supply of voltage has simply fizzled into nothing but periodic black-outs, as more domestic homes come online, the townships plug in and we all get electrified over the seasonal purchase of new appliances.

No fear, say Eskom, instead of promoting energy efficiency, we’ll simply spend another couple of billion rand, kidding ourselves that the power crisis is going to go away in a hurry, along with the cost of heating furnaces. If the current price of oil is anything to go by, we could end-up having to use whatever extra capacity we can squeeze from the national power-grid simply to convert coal into gas. In fact we would all be better off redirecting power into the new hydrogen economy, that as it turns out is exceedingly electricity hungry.

Thankfully there are other power sources that seem far more sustainable, like biogas from maize, and geothermal energy, some of the more interesting green fuels, already available in some areas, but why kid ourselves that aluminium smelting is going to produce anything but trouble. If one takes the cost benefit and price of labour into account, the government will probably be spending in excess of R200 000 per worker on the project, and that’s before anybody gets paid. Better to simply give the money away. Environmental impact assessment:Burning oil with cheap energy? Come on guys, tell us another dirty one.