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Poor will pay for state's negligence

By Tebogo Moatshe Ditshego | Feb 19, 2010 | COMMENTS [ 0 ]

ESKOM should be given an award for being the best twisters of the truth in 2009-10.

ESKOM should be given an award for being the best twisters of the truth in 2009-10.

Its sterling performance began when it fired its former chief executive Jacob Maroga, partially in order to misdirect public debate on their proposed 145percent electricity tariff increase.

This worked like magic. But they still needed a follow-up distraction strategy to hide their stubborn stance on increasing tariffs by 145percent. So the Eskom board and new acting chief executive, Mpho Makwana, decided to announce that a 35percent increase would be implemented over three years.

This looks like a decrease by 40percent from the initial 145percent but, unfortunately, it is actually 146percent in real terms - that is an increase by 1percent on their initial proposal.

Let me put matters into perspective. Hypothetically, let us say you pay R1000 a month for electricity. A 35percent increase will mean that you pay R1350 a month in 2011.

Then, in 2012, Eskom will implement a 35percent increase on your R1350 a month expenditure and that will bring your monthly bill to R1822,50.

Finally, a further 35percent increase will take effect on the R1822,50 monthly bill and as a result your electricity will cost R2460,40 per month in 2013.

If you calculate the percentage increase from R1000 in 2010 to R2460,40 in 2013 you will see that this is actually 146percent in real terms.

Judging by the National Energy Regulator of South Africa's lame duck decision-making of the past, it is likely that Eskom's tariff hike will be approved.

This will mean that the power utility will continue to rob the poor by creating a situation in which disadvantaged communities spend more than 50percent of their monthly income on electricity.

And they have been attempting to execute this since 1999 because from 1999 to 2009 electricity tariffs have increased by 264percent.

So what could be the solution? Well, firstly we must find out where the problem lies. This can be done by finding out how Eskom tariffs went from being one of the cheapest in the world to one of the most expensive over a period of 20 years.

The fault rests squarely on the shoulders of Eskom's board and government administrators. They ignored the need to build power stations and distributed Eskom's capital budget among themselves.

President Jacob Zuma said in his inaugural State of the Nation Address that electricity would be privatised. That will not assist the poor as we all know how price fixing by the private sector has ensured that consumers are charged high prices for many commodities and services in comparison to international standards.

So power stations need to be built. Consequently, the simple solution, as Cosatu's head of policy and Wits University associate economics Professor Christopher Madikane has suggested, is to nationalise the coal mines so that Eskom can use the country's natural resources at a very low price.

This will free up enough capital for Eskom to start building power stations in 2013.

The ANC has enough support in Parliament to effect such change overnight and it will only take an approved motion in the NEC and consultation with their legal team and treasury to get the ball rolling. But making the poor pay for government negligence is just asking for trouble where it can be avoided.

l The writer is a public relations management graduate and freelance journalist


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