POWER FOR THE PEOPLE OP-ED
Privatisation of Eskom will worsen energy poverty in South Africa
As South Africa struggles with an energy crisis and concerns about a national grid collapse, the Guatemalan experience serves as a cautionary tale, highlighting the potential pitfalls of privatising energy to address an unreliable power supply.
The rolling blackouts crisis has disrupted the lives and livelihoods of South Africans, and some have called for the complete privatisation of the national grid to guarantee a reliable supply of energy given Eskom’s inability to ensure an uninterrupted power supply.
Several factors have hampered Eskom’s delivery of electricity including ageing infrastructure of power plants and insufficient maintenance which have led to frequent breakdowns and reduced generation capacity. In addition, years of mismanagement, corruption, and a lack of investment in new power generation facilities have hindered the utility’s operational efficiency, as has the ever-increasing demand for electricity, which has put enormous strain on the existing grid.
Fully Privatising Eskom is not the answer
However, privatising Eskom is not the answer because privatisation emphasises profit, which will likely result in higher electricity prices, making it less affordable for low-income households.
It can be expected that private companies will prioritise investments in urban and more affluent areas, neglecting rural or low-income regions, widening the service gap. These factors suggest that privatising Eskom will exacerbate inequality rather than promote equitable access to electricity for all South Africans.
Learning from Guatemala
In 1999, the government of Guatemala launched the Plan de Electrificación Rural (PER), a public-private partnership to bring power “to the most remote corners of our country.” Rural electrification was an important part of a peace dividend to be distributed to groups that had suffered disproportionately during the 36-year civil war, including indigenous communities in isolated high-elevation locations. Between 1999 and 2011, electricity access jumped from 700,000 households in rural areas to almost 1.4 million households. Among these newly electrified households were 40% of the Guatemalan population self-identifying as indigenous.
While the decision initially attracted investments and expanded coverage, it also resulted in a significant disparity in service quality and pricing between urban and rural areas. Urban households, which were more concentrated and numerous, enjoyed lower bills and better service, while rural customers, especially in indigenous communities, faced higher costs and had more frequent service complaints.
This resulted in a call by affected citizens for state intervention to provide affordable electricity.
Rural areas in various parts of the country considered the charge to be disproportionate and declared their refusal to pay. Then it became a bigger demand: that the state manages energy and sells it cheaply again. Now, the government pays $88-million monthly to subsidise those who consume less.
As South Africa remains in the grip of daily rolling blackout episodes, promoting privatisation as a solution to the energy crisis must be confronted to avoid the continuing disparity in access to electricity. DM
Vaclav Masek Sánchez is from Guatemala City and based in Los Angeles, California. Vaclav has a monthly opinion editorial in the Sunday edition of El Periódico, Guatemala’s leading newspaper, where he publishes articles on public sociology.
Amanda Hodgeson [They | She] is a queer feminist activist. Their work centres on developing, uncovering and co-creating the tools and practices necessary to design, build and embody non-normative societies, futures and states of being. Linda Daniels is a journalist and media trainer.
“rural customers, especially in indigenous communities, faced higher costs and had more frequent service complaints”
Welcome to issues that affect every single service in rural areas on the planet. Internet? Yes, it’s more expensive in rural areas. Water? Same story. Electricity. Ding ding ding, you win again!
The simple reality is that Eskom is essentially dying. No amount of “oh what about the poor people” matters when we simply don’t have enough power and Eskom is neck-deep in debt. It’s harsh but it’s the truth. As Eskom splits, generation will slowly die off or become a much smaller portion of what it is now with the private sector filling the gap. That’s the reality of where we are today.
Firstly. Maybe there is a difference in setvice between urban and rural but at the moment neither have any setvice.
Secondly. Proper regulation can determine pricing and service levels.
Thirdly. Nothing can be worse than the ANC running anything. Maybe in Guatemala the government is not totally incompetent and is run as a criminal enterprise where every decision is arrived at according to what can be stolen from the state
let’s rather take a look at places with competitive private supply, and the consequences.
If I run my factory power profile (basically when I use how much), through a supplier selection system in Dallas, USA the end result is that before the 1 July increase of 18% and using R19/dollar with no PPP adjustment, my factory electricity would cost 32% less in Dallas than in SA. My supplier there is one of several profitable vendors.
My daughter in Canada pays 40% less for her residential power than I do in SA, again before the next round of increases.
In reality within urban areas, poor people either pay nothing for electricity (when there is) by design of Free Basic Electricity, or through illegal connections.
I am sick and tired of the old communist narrative that having private sector do things that our corrupt, incompetent government fails at, will be worse than what we have right now.
If I took you to my town’s low income housing right now, I am certain most people would gladly rather pay R2.50 / kWh and have power than have no electricity that doesn’t cost the R1.20/kWh that they would be paying if there was electricity!
Kudo’s Johan. I fully agree that it is past time that we move on from narratives driving specific agenda’s and start dealing with the facts to fix this monumental service delivery and governance failure.
The bottom line is that Privatisation will eliminate illegal connections and unpaid usage as quickly as possible. It would be feasible however for the government to subsidise certain connections for the poor with taxpayers money should they stop feeding at the trough!
Agree, but there is other point to consider.
Political battles, political prices
None of the contenders for the next election are prepared to pay the price
We think that the ANC won’t get 50+1 but they are already negotiating with EFF.
Exactly those that are illegally connected are the ones that will vote for them, they isn’t a way out for them and if someone goes to disconnect, they are ready for violence
ANC+EFF will never privatize
If you think that something will change, unfortunately, you are dreaming
South Africa is not the first and certainly will not be the last country to face complex challenges,the solution to these problems have been overcome in countries who have been down the same dark road,choose the best solution available for our country,the answers are there,the world will help us as they have done in the past
The only way “energy poverty” can get worse right now is if it is turned off. True energy poverty is having none.
The other reality is you can simply strip off the word “energy” if we don’t get reliable energy supply and soon because economically ZA is on a hiding to nothing.
Another reality is better power => more jobs => more money to pay for electricity => better power… It’s called a positive spiral.
The private sector is only interested in “Profit” Funny, isn’t that what the ANC is interested in?
This article is Drivel! Privatisation has to emphasise efficiency, productivity and low cost production through best practices if it is to achieve profitability, and to achieve a sustainable supply at a low cost and reinvest in increased and improved infrastructure one has to generate a Surplus(Profit) to invest. To get Eskom back to being a world class supplier it has to be privatised.
Its not that there is a lack of electricity, It’s just that the base load of people has increased dramatically, what with the immigrants legal and none legal, and the birth rate since 1994, and everyone wanting electricity and most do not want to pay for it, that is the problem. Also the child benefits should only be for the first 2 children as per the UK, this would slow down the birth rate to an acceptable level.
Drivel!
I disagree totally. Because it did not work elsewhere, does not mean it cannot work in SA. The circumstances are quite different. Firstly, the network must remain a Government responsibility. They must ensure rural communities still get supplied. Secondly, private enterprises could take over individual power plants or build new generating capacity . They would reduce the costs by eliminating corruption, sorting out the logistics, introduce proper quality control, traning their employees and improving availability. They would also reduce employment numbers but unfortunately that is what is required to turn it around.
There could be dozens of different private producers using coal, wind, gas or solar.
Furthermore private household and business should be able to feed directly back into the grid and get full credit. If done now, this would immediately reduce load shedding by one or 2 levels during daylight hours which is when business most needs the power.
It’s not rocket science. It’s simple business best practice.