Umsebenzi Online, Volume 14, No. 21, 28 May 2015
In this Issue:
* Eskom privatisation must be a no go zone
Red Alert:
Eskom privatisation must be a no go zone!
By Alex Mashilo
The clarity given by ANC Secretary General Comrade Gwede Mantashe on Eskom
following the last ANC National Executive Committee meeting is very
important. It must be appreciated, especially against the background of
information that can only sow confusion on this strategic national asset but
also on the character of the second, more radical phase of our democratic
transformation of our society. The SG made it clear:
that there was no decision ever taken by any ANC NEC Lekgotla to privatise
Eskom!
To reiterate what the SACP said in its March 2015 Central Committee Plenary
Session statement in view of some of the airs of confusion that the SG
managed to deal with decisively:
"The SACP, in line with decisions taken at the ANC's NEC Lekgotla in
January, calls for the abandonment of the ISMO Bill which seeks to abolish
Eskom's role in transmission, fragmenting the integrity of our core energy
system in the name of "competition" and "market neutrality". With the many
challenges we face, we don't need a spurious "market neutrality". We need a
pro-active bias in supply and pricing towards our developmental priorities,
including re-industrialisation and balanced spatial development - sovereign
national public interest must prevail over private profits."
The SACP is strongly opposed to the privatisation of state owned
enterprises, including Eskom.
It is wrong to empower a few individuals, who will only exploit the workers
by privately appropriating their labour and continue to exploit the rest of
our society through sky-rocketing prices on public goods and services
including electricity for their own, private profit.
In order to solve the challenges that Eskom is faced with we must go to the
root. This will be radical.
"Hegel remarks somewhere that all great world-historic facts and personages
appear, so to speak, twice. He forgot to add: the first time as tragedy, the
second time as farce", said Dr Karl Marx in 'The Eighteenth Brumaire of
Louis Napoleon'.
South Africa cannot repeat decisions that produced the problems we are
facing and then hope to achieve solutions!
Back before 1994 South Africa had "surplus" electricity capacity. It was
amongst the cheapest electricity in the world. But this was electricity
supplied mainly to the mines and smelters and to white suburbs, while our
villages and townships relied on paraffin, coal and wood.
For about a century since the first electricity connection in South Africa,
there was no investment in power generation capacity to supply the energy
needs of the people as a whole on a non-racial basis. This is the root cause
of the problem we are facing today. The so-called surplus electricity that
South Africa had back before 1994 was only limited to the few it was meant
for on a racist basis.
This was exposed when the new government following the 1994 democratic
breakthrough drove a major electrification programme on a non-racial basis.
For the first time millions of black people who were oppressed, and as part
of this denied electricity by successive white minority supremacist regimes,
were connected to electric energy.
The first household electricity connections began in South Africa in the
early 1890s. Between then and 1994, only five million households based on
racism were electrified.
Compare this to the major electrification expansion programme rolled out
since 1994!
Seven million households were electrified on a non-racial basis. This means
that in twenty years only, our majority-rule democratic government
electrified more households - i.e. two million more, than it took successive
white minority supremacist regimes a whole century...!!
But then the second problem emerged and grew from the root problem motivated
by a policy thinking driven by the market logic.
While the massive electrification programme was implemented post-1994, the
government, under the neo-liberal influence of the 1996 Class Project guided
by the economic policy called "Growth, Employment and Redistribution" (Gear)
which was imposed in that year, neglected the task of building more
electricity generation capacity, the task, too, of refurbishing, and
expanding, the electricity transmission and distribution network.
It did not need any rocket science to see that more power generation
capacity to keep pace with the programme was needed. And Eskom engineers
warned of the approaching capacity problems. But their warnings were
disregarded by the 1996 Class Project, which believed that Eskom could be
privatised and that would solve future problems.
In the late 1990s and early 2000s there was a drive to sell off Eskom.
Instead of investing in power generation capacity, the privatisation logic
of capital accumulation left this important developmental imperative in the
hands of the private sector, including "Independent Power Producers". But
then there were no private sector buyers - for the simple reason that
Eskom's regulated prices and developmental responsibilities meant that there
were no fat profits to be made.
Valuable time was lost while the 1996 Class Project vainly tried to attract
buyers and private sector investment in building new generation capacity.
Eventually, this policy was shelved. But by this time many skills had been
lost in Eskom - the last major power station had commenced construction back
in the 1970s.
Then when it came to building major new power stations - Medupi and Kusile -
Eskom's own in-house construction and project management skills were
depleted. This has been part of the problem behind the delays and cost
over-runs at these sites. This in addition to the problem of under-developed
capacity to support the expansion of electrification inextricably coupled
with increasing electricity demand in the advent of our 1994 democratic
breakthrough.
The third problem which weighs heavily on Eskom's balance sheet:
A situation where, in order to boost its constrained supply capacity, Eskom
is forced to procure electricity at a higher cost than it produces it is not
sustainable. The negative impact such a situation has on Eskom's financial
position cannot simply be ignored.
As the SACP said in its March 2015 SACP Central Committee Plenary Session
statement, the development of IPPs, particularly in the renewables space,
requires much greater rigour in ensuring that pricing contracts with IPPs do
not - as in the first two window periods - lock us into excessively high
prices.
Of course, it is Eskom that is being blamed in the media, and obviously by
the opposition parties.
If privatised, Eskom will be used to feed the market logic of profit making
and profit maximisation.
If privatised, Eskom will be driven away from the social and energy needs of
the people.
Private capital accumulation vultures and their agents who want Eskom
privatised want to hollow it out. They want to leave it with ageing
power-stations, while its lucrative assets are conveyed to capitalist
private ownership of profit-seekers to enrich themselves.
We must not allow Eskom to be destroyed!
We must now take forward the important capacity that Eskom has re-built
through the Medupi-Kusile process, and through the refurbishment of older
power stations. We must not throw these capacities away, and lose another
twenty years.
Another root-growth problem:
Eskom used to have a mining licence, but its old mines are now in the hands
of the private sector, they were privatised to, and therefore, for-profit
mining companies.
Eskom must be given a mining licence for coal - so that it does not have to
depend on profit-maximising private suppliers.
In addition, alternative financing models must be found for municipalities.
Municipalities take Eskom electricity and then add not-inconsiderable extra
amount to the price charged to households and other clients. This has a
negative impact on poor communities.
Let us truly advance the second, more radical phase of our transition!
The second, more radical phase of our democratic transformation requires a
democratic developmental state that is capable of delivering its mandate to
serve the people. This cannot be achieved by weakening, or hollowing out the
state of the capacity it needs to stand up to the democratic developmental
role expected of it.
Tenderpreneuring, outsourcing and privatisation will only weaken the state,
and make it dependent on private capital accumulators for the procurement
and delivery of public goods and services. This will be a complete
contradiction, an anti-thesis, of a democratic developmental state that we
need to serve the people. It is in this sort of state-capital relationship
that corruption, which we must combat, finds some of its bases.
Related to all of these issues:
We need to defend our national policy sovereignty.
For example we cannot organise frequent elections to exercise our right to
choose government democratically but only to hand governance over to the
dictatorship of the market of the market forces and exploitative foreign
interests.
In this, the 60th Anniversary year of the adoption of the Freedom Charter,
let us reassert the clarion call that:
"The people shall govern".
That is, NOT the capitalist market, NOT the ratings agencies!
Period!
* Alex Mashilo is SACP Spokesperson, and writes in his capacity as
Professional Revolutionary!
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