Opinionista Richard Worthington 1 November 2017

Opportunity in Crisis: Can the electricity system transcend Eskom?

Stop! Lift your awareness from the stream of evidence of wrongdoing to give some thought to what we could start doing right.

The sorry saga of State Capture must be scrutinised, but we must not ignore a major impact of corruption, and of the stories it generates: it draws attention away from systemic problems and can lead to immersion in what are more symptoms than root causes of the big-picture failings of our society. It reinforces short-termism and provides cover for perpetuating the status quo, as is exemplified in the way the energy sector has been used to create new channels for wealth accumulation.

It’s logical that the largest State-owned Entity would be the prime target for predatory machinations, thus the viability of the national electricity system is a major casualty of illicit rent-seeking, as procurement is usurped for the enrichment of a coterie of arriviste capitalists. Our response to the predicament in which this places the electricity system must consist of more than dismantling the shadow state and prosecuting the corrupt.

It is vital that we also attend to those things Eskom has neglected and turn our minds to how we will get them done. What institutional transformation or innovative vehicle may serve to deliver the outcomes we require of the electricity system? Beyond the clear rationale for separating the management and operation of the wires from the business of generation, what more can be done to apply democratic practice to the energy system?

This requires not just strengthening accountability and weeding out those breaking the rules. As so many investors say (often with a self-absolving shrug): “It’s the nature of the game.” Yet electricity systems around the world are undergoing disruptive change. We must question the nature of the game and how, in light of today’s technologies and knowledge, it can be changed to better serve all of society into the future.

We need to examine the utility and sustainability of the whole electricity system, including why the incumbent system has been so amenable to the illicit extraction of money, and what would make it a truly public asset, serving to reduce, rather than exacerbating, poverty and inequality.

Let’s take two socio-economic problems that Eskom has failed to address adequately – dysfunctions outside the scope of responses to corruption and Eskom’s capture by the new wannabes of monopoly capital:

  1. The physical and mental development of no less than a quarter and probably half of South Africa’s children continues to be impaired in ways that could be avoided through replacing domestic fuel use with electricity, even as the state-owned monopoly “utility” complains that it has to deal with a surplus of electricity supply.
  2. The means by which we generate most of our electricity is not an economically rational activity – it is not positive to inclusive economic growth, by any inclusive measure of social value or “net capital gain”. In simple terms: the negative impacts of coal combustion for electricity supply outweigh the value added, in any holistic analysis. Both the World Bank and Africa Development Bank now recognise that in our context new coal-fired power plants are a sub-economic proposition for development.

These problems do not originate with, but are exacerbated by, arrivistes inserting an additional layer of rent-taking within the extractive system of the incumbent electricity industry – which remains predominantly an extension of the coal industry, as it has been from its colonial origins. Illicit channelling of wealth from fossil fuel industries (including railway for coal) simply adds to the extractive nature of the game – an electricity industry that was designed “to monetise coal”, as a senior official once expressed it.

Even if all kleptocrats were identified and jailed, it would be irresponsible to imagine that Eskom would be prioritising these problems any time soon. That energy poverty remains a barrier to human development and participation in the economy in a mid-income country as endowed with rich renewable resources as South Africa, across the land, is a scandal that requires a dedicated and innovative public programme.

Inclusive economic development requires radical electricity industry transformation. We urgently need to rethink the purpose and design of the national system from the bottom up. This must not wait until Eskom is sorted out, but should inform how Eskom is sorted and its mandate more clearly defined, without deferring to the energy incumbency.

It is common cause that there is opportunity in crisis. The Free Market Foundation is offering its prescriptions for government to transfer more power to the private sector: the power of ownership, though the state would ultimately still underwrite most liabilities. Naomi Klein has clearly documented in Disaster Capitalism how crises like ours can be exploited by the elite (local and transnational monopoly capital) to further the concentration of wealth and ownership.

Where are the alternative propositions? Organised labour appears more interested in resisting a scaling back of coal consumption than in developing solutions to energy poverty or championing localisation of manufacturing of renewable energy technologies. Where local government is seeking a more responsible role in delivering electricity, or alternatives to coal-fired power, it faces resistance from the status quo.

When will we face where the interests of different elements of society do not just compete, but conflict? Where is analysis of how much the current electricity system entrenches inequality and exacerbates poverty, and of the public costs (healthcare, water treatment, road maintenance) that could be avoided through system transformation? Who studies the potential for decentralised renewable energy development to serve as a vehicle for empowerment and redistributive justice, as well as economic growth?

As for how we might pay for institutional innovation and developing new industries locally, finance is already a major problem for our top-heavy, centralised and coal-dependent system. It will be easier to identify responsible financing if we first deliberate on what we want to pay for: how our electricity system could serve as a vehicle for realising human rights (as per our Constitution) and as an avenue for “RE-industrialisation” – for inclusive development consistent with national air quality standards and climate change response.

Of course, we must chase individuals and companies directly involved in corruption, but we must also identify more generic stakeholder interests and sectoral dynamics, including industries or practices that benefit from the lack of rational and accountable decision-making along the electricity industry value chain. Interrogating the extractive nature of our energy system is not less, but more urgent in the face of corruption, which has aligned the interests of the political elite with those of a small component of the business class.

If we do not rethink and innovate at a systemic level – even as formal energy and electricity planning processes are due to reach Parliament at the beginning of 2018 – we will continue to neglect a leading opportunity to directly improve the quality of life of the poor and simultaneously increase the rate of employment in the energy system. DM

Richard Worthington is a freelance researcher, project manager and activist who has worked on energy and climate change issues in the South African NGO sector since 1996. After matriculating in Bloemfontein and a BA degree at Wits, be lived in a variety of countries before returning to join Earthlife Africa Johannesburg, then served WWF-SA for five years to 2013.