The truth about Eskom

Last Saturday morning, at about 8.30am, I drove past the Durban cricket stadium. It was a relatively sunny day and the stadium stood in silence, yet its four high-powered floodlights were shining brightly, eating up hundreds of watts per second.

I was outraged. How can electricity be wasted in such a shameless manner while South African households suffer from power cuts and are forced to “shed the load” as Eskom marketing jargon phrases it?

Much has been written and bemoaned about the increase in outages in recent months, but few have analysed why we are all of a sudden faced with insufficient electricity supply. Isn’t it quite curious that state-owned Eskom had no problem providing households with electricity for the past 12 years (that’s counting since post-apartheid)?

In 2006, “mysteriously”, the energy giant was unable to fulfil its mandate and, as a result, Cape Town suffered major power failures with the rest of the country following suit. Now, power cuts have almost become an expected part of our everyday lives. What happened between 2005 and 2006?

One theory would be that the South African government, as part of its poverty-alleviation plans, excelled in fulfilling its promises of connecting thousands of additional households to the electricity grid, which led to an exponential increase in electricity use. This might have played a small role, but I can promise you, that’s not at the core of the issue.

The problem is actually not caused by individual consumers of electricity — we are just the ones who have to suffer the consequences of a) bad planning, b) capitalism and c) greed. Why am I saying this? Because it is not necessarily lack of capacity, but rather poor management and entrepreneurial priorities that have led to our current situation.

Eskom, and thereby the government, is more interested in making big bucks by attracting foreign investment than in ensuring that South Africans have access to one of the basic services a country is obliged to provide to its citizens — as a big portion of our power supply is sold at cheap rates to (often foreign) industry.

For example, Eskom will supply electricity to Canadian aluminum manufacturer Alcan’s planned Coega Aluminium Smelter: 1 355MVA a year over 25 years. This is a significant commitment to just one foreign company: half of Cape Town could be supplied with this amount of electricity — yet ordinary South Africans are told not to “waste” electricity in their homes!

In a press release earlier this year, Earthlife Africa makes an important point on this issue: “For all we know, Alcan could be getting its electricity far below market cost and individual South Africans could be effectively subsidising the electricity usage of one of the world’s largest aluminium companies. In 2005, Alcan had a global turnover in excess of $20-billion. It should and can pay a fair price for any electricity it consumes.”

But Eskom remains silent and refused to disclose any details on the deal. This is not an isolated case. About 40% of Eskom’s electricity is sold for cheap to industrial giants based on preferential multi-year deals.

To make matters even worse for South Africans, Eskom plans to increase electricity prices by 18% by April 2009 and another 17% the following year, which financial analysts say will be disastrous for our inflation rates.

In the beginning of this year, Eskom admitted electricity rationing might become commonplace and it will not even meet baseline demand by 2010. That’s a frightening outlook for ordinary South Africans (and I don’t even want to mention the upcoming Soccer World Cup).

Yes, Eskom did promise to invest just less than R100-billion in new power plants and upgrades of old ones (probably partly financed through increased electricity prices) — but don’t these plans come a bit late? It takes years to build power plants, and who guarantees that Eskom will deliver on its promises?