Their pronouncements have been proved to be less than truthful on more than one occasion. The first one being the stuck record, which for many months said we did not have an energy crisis. Only when the country was plunged into darkness for the umpteenth time did they admit it.
The other tune is, “The days of cheap electricity are over for South Africans”. Whoever said our electricity was cheap in the first place.
What they are rally saying is that we must pay more get Eskom out of the situation, their gross incompetence and mismanagement of the electricity supply, has put us into.
What about the other tune - “South Africa has the cheapest electricity in the world; it is time our prices came in line with world prices”. Maybe that is not so surprising, since we have amongst the biggest coal reserves in the world, which are on the doorsteps of the big coal fired power stations.
This is the same sort of logic that would say that the people of Saudi Arabia pay too little for their petrol and should start paying the same price as motorists do in London.
When Eskom took their “well conceived” decision to cut the power to the mines, they said it was because there was not enough electricity to go around. The real reason was that they supplied more power to our neighbours in January and therefore had to cut power to South African users.
The result of this act of stupidity was that the Rand took a tumble and never recovered – that has also had repercussions for the whole economy. There was a knock on effect on commodity prices that are linked to the dollar. This includes petrol, maize, wheat, coal, etc etc. And of course the inflation rate jumped ahead like a runner from the starting blocks.
On 17 February I wrote, “Given the fact that Eskom’s appeal to consumers to achieve a 10% reduction in power consumption, has been exceeded, it means that income wise they will be back to square one – do the maths. So where will the money for capital projects come from now? What will the next surprise be?”
Here we have it, Eskom is now calling for a 53% increase in the price of electricity – oh yes 53%. And it is supported by the government. This just reinforces my belief that those who are managing our electricity supply are grossly incompetent. How can you get your projections so wrong, that you go from a demand for an 18% increase to one of 53%?
They have said that one of the reasons is because the price of fuel and coal has risen, a factor to which Eskom’s poor performance has significantly contributed.
The reality is that consumers were asked to save 10% on their electricity consumption, which they did and are now to be penalized with higher prices.
What about the Eskom spokeman who made the claim on the radio last night that by increasing the price of electricity by 53%, they would benefit the economy as a whole and that this would result in growth. You see, our electricity is so cheap that it is not attractive for the private sector to invest in the electricity supply business. Give me a break! Eskom has the monopoly, there are other barriers to entry that far outweigh the cost of putting up new power generation facilities.
In the real business world you can’t come up with a bunch of feeble arguments to push up your prices by 53% - if you did, your business will shut down in no time at all. If you get into a crisis then you manage it in a way that ensures that the business remains a player in the market place. This happens through sound leadership - you cut costs, you innovate, you plan properly and execute your decisions effectively. In other words apply logic and sound management and business principles. I guess this does not apply to a monopoly.
A private sector executive who ran his business the same way Eskom is being run, would have been without a job a long time ago and would certainly not have been paid a fat bonus.