Eskom the greatest threat to change in Johannesburg
A few weeks ago I appeared before the National Energy Regulator of South Africa (Nersa) and made an impassioned plea on behalf of the residents of Johannesburg, urging it to reject Eskom's obscene request for a 15% tariff increase for each of the next three years.
My argument was simple. The residents of the city, and indeed all South Africans, cannot be expected to shoulder the burden of Eskom's inefficiencies and the impact of years of looting and corruption.
In the same week that we saw the return of daily load-shedding, we were informed that Eskom is technically insolvent.
Despite their inability to provide the country with a stable supply of electricity, Eskom's tariffs have risen by a compounded 368% over the past decade. Were Nersa to grant their last request for a 15% increase over the next three years, the compounded increase since 2008 would amount to 608%.
Eskom is now approaching Nersa with the argument that the only way to save the entity from collapse is to increase the cost of energy to consumers. Eskom is now holding the proverbial gun to Nersa's head in an attempt to have consumers subsidise a decade of corruption and mismanagement.
As the mayor of the City of Johannesburg, my perspective is that Eskom has become the greatest threat to Johannesburg.
Earlier this week, the latest job stats released by StatsSA saw Johannesburg create 110,000 jobs net over the past year, resulting in a 1.1% decrease in the expanded unemployment rate. While I am encouraged by the progress we are making, I am mindful that we are having to reverse the staggering loss of 200,000 jobs in Johannesburg by the previous administration.
There can be no doubt that the reintroduction of daily load-shedding will only make matters worse. Load-shedding is job-shedding; no economy can grow with the rising costs of an unstable electricity supply.
When the multi-party government in Johannesburg took office in August 2016, we set the target of achieving 5% economic growth by 2021. Our ability to achieve that target will be greatly compromised if load-shedding remains and the tariff increase is granted by Nersa.
In addition to the impact that this will have on the pockets of the residents I serve - residents to whom I have committed to running a pro-poor government - it will also compromise the city's ability to address our staggering R170bn infrastructure backlog.
The city faces similar challenges caused by years of neglect by the ANC in Johannesburg with 27% of the city's transformer network beyond its useful life.
Over the past two years the city has made progress to address these backlogs by increasing its investment in basic infrastructure and housing from 58% of the total capital budget in 2016/17, to 69% in 2018/19. The reality, however, is that we still have a long way to go. One cannot address a R170bn backlog overnight. The progress we are making, however, will be stalled by load-shedding and increasing energy prices.
Businesses will shut down, jobs will be lost and the city's rates base will inevitably shrink as the economy declines. With less money available to the city to invest in infrastructure, it will be unable to provide the enabling environment required to attract new investment that creates jobs. The mutually reinforcing cycle of disinvestment and economic decline will continue.
- Mashaba is the executive mayor of Johannesburg