Analysis: The Eskom numbers that you are too fragile to hear are now out there – and it’s shocking.
- Branko Brkic
- 08 Oct 2009 (South Africa)
Government tried unsuccessfully to hide the extent of Eskom’s proposed tariff increases, but with different sets of figures now out there, it sits with a self imposed communications exile. This is now on top of the existing crisis of the proposed tariff increases themselves, which are shocking enough.
What do you do if you have bad news to tell? The first instinct of almost everyone is to try to hide the information. Hence, public enterprises committee chairwoman Vytjie Mentoor instructed Eskom to not tell the public enterprises committee the proposed increases because doing so would cause “public consternation”.
So, obviously, the increases have now been leaked. Are you ready for the numbers you are too fragile to hear? Wait for it, they are ... Actually, it’s complicated. The news is bad obviously, but how bad? It’s complicated by the fact that Eskom have forwarded to different tariff increase systems. The first is the “sock it to them” approach. The second is “give it to them slowly” approach.
It’s also complicated by the fact that there are two different sets of numbers now out there.
Reuters reported yesterday (Oct 7) that it had obtained a leaked copy of the application. According to the first option, the “sock it to them” approach, Eskom was proposing an increase from 33c a kilowatt hour to 75c a kilowatt hour. OK, that’s pretty scary, we are consternated now. That’s a 127% increase.
Eskom’s preferred option, however, was an increase of 22c/kwh a year for three years. That still means a 66% increase every year for three years, and the ultimate price per kilowatt hour ends up being more. And we are still consternated.
Business Day reported this morning a different figure: hikes of 45% or 66% every year for the next three years. Even at the lower rate, this is a big jump from the 31% increase granted this year which kicked in a few months ago.
Eskom has yet to confirm any or all of these numbers. It argument is simply that it needs the tariff increases to help fund its R385bn expansion plan which is designed to meet fast-rising demand.
The spokesman told Business Day that Eskom had made a commitment to the South African Local Government Association (Salga), the Treasury and National Energy Regulator (Nersa) not to make the contents public.
So now Eskom is in a double bind – not only are its precious figures out there, but they are prevented from providing the correct figures because of their prior attempt to cover up the figures that are now out there.
Ironically, this very situation was predicted by parliamentarians who pointed out that ultimately the application would have to be made to Salga and Nersa, at which point they would be public anyway. IFP MP Mario Ambrosini told reporters after parliamentary meeting he was baffled that Eskom was discussing these figures with municipalities through Salga but not with Parliament, which represented the people. Eskom will go to Salga in two weeks’ time to discuss the application. “Part of the discussions will include the release of the report,” he said.
So, is the fact that a whole bunch of different numbers are out there, a good thing or a bad thing? One argument is that government is just shooting itself in the foot by confusing the issue. The other argument is that when it come to bad news, sometimes confusion is better than the truth. Either way, it’s obvious the effort has been mishandled. Even if the confusion helps cloud the issue in the short term, the fuddled attempt at secrecy reflects badly on Eskom’s reputation in long term, which was pretty terrible in the first place.
By Tim Cohen
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