Cdes, While we might all have a convergence in terms of structural ownership of our National Utility, we need to pause and reflect on the different policy pronouncement and Cabinet decisions regarding Private Sector participation in power generation industry. The fact of the matter is that SA has endowment of Coals for some considerable future and as such the larger chunk of generation will continue to come from coal. Why am I raising this view? Simply because the coal that Eskom rely on are sold on spot price to Eskom, which ought to factor that into the price model. It is just unfortunate that the full content of Eskom submission to NERSA was not shared with the public, the reality is that the Minister (by extension Cabinet) has the full picture before them, which demonstrate that unless you have Private Sector playing a vital role in generation through IPP, Cogeneration and other forms of Renewable, the National Utility will not be able to raise Capital to pursue the stated objectives. I have said some times back that Cabinet decided that 30% of the generations capacity will come from IPP, then the question is in what forms? Further Cabinet decided that we need to diversify our Generation Capacity by 2015 with 10 000 Giga Watt from renewables. None, and by extension the Liberation movement endorse this policy objectives and when its time to implement we have issues. What then? Now moving from a low price model that is based on the endowment of coal will make any private parties less attracted to Coal generation, because of environmental requirement to curb the emissions. Hence Medupi delay was to meet this requirement of Ministry of Environment by ensuring that gassification is done underground to minimise impact to environment. This means that additional capital should be raised to add to the original envisaged budget for the expansion programme and scholar of economics will argue that capital should be raised either through Bonds that requires Government Guarantee (Since Eskom is Government owned) or through Equity (meaning someone must have a stake) or through tax (which will put much burden to the citizen) or through loans to any Agency. Both these permutations have limitations in that Government Guarantees have limitations, tax level cannot be imposed on one sector of citizens or business and loans have conditionality. Then why only concentrate on one factor cdes? The Bonds were issues, Equity was issued and the Loan were acquired from Government (R60 Billion) over three years and other development entities like the World bank, African Development Bank also gave Eskom R5 Billion loan. Therefore it is not here nor there, the fact of the matter is that we need to look at the process in its entirety, as to what the World Bank said its immaterial as we need this cash to cushion our country against high prices going forward. By the way if we read Government IPAP2, you will understand that energy features strongly in our developmental agenda as a key driver to take this country forward. It might not be the case that the World Bank did not see Energy as area it has interest but as a driver to unlock opportunities in areas it has interests on. The World Bank has interest in Cuga Smelter and other IDZ and the reason why things are not moving is the vulnerability in terms of lack of Security of Energy Supply. I know this view which I am raising give platform for someone to label me an agent of capital which I am not. I am simply saying if we said Eskom go raise capital and our local markets seems not interested, do we then say no do not go to the liberal west? Did the Green programme failed? No, cde Gugu the programme has not failed, Eskom cannot produce but is in business of buying the Solar Water heaters, CFL for roll out. The DSM programme of Eskom to last year alone roll out 16 million CFLs and still need more? The Country does not have capacity to produce enough CFL's and then some fakes make way to the country. 2ndly the Country does not have capacity to produce the Solar Water geysers needed by the programme, hence the discussion with Ministry of Trade and Industry to remove some barriers are underway with SABS to check those that meet our standard from the country of their manufacturing. It is important cdes for all of us to appreciate that we do not want our country to be a dumping place for sub-standard products. Besides this short comings, as a country we are just pinning on the completion of the Manufacturing Centre for CFL in Lesotho such that we could deal with the demand side programme efficiently with efficacy. The test riggs for Solar Geysres are being developed in TUT (Soshnguve), in Stellenbosch University and other private sectors. It therefore very wrong to want to equate the loan process as a means to start stalling on effectiveness of the dedicated team of Eskom to manage our demand. In the statement of the SACP on NERSA decision amongst the main issue the Party called on us was to manage our individual demand and take responsibility. This statement meant that for us to deal with the effect of high electricity price will be for all of us to reduce our demand. Hence when we talk of the rollout we must understand that, depsite materials, we need to produce enough technicians to install and service the geysers, hence a programme has been developed to equip young people to play this role both by ESETA,SAEE and other Universities. Back to the issue of Whether Renewable is a solution to our crisis? The fact of the matter is that yes our level of Carbon footprint is too high as country and the main culprit are Eskom, Sasol and the Mining Houses. We therefore need to do everything in our part to reduce that level. Yes proponents of Capitalism call for green generation and it is worrying that what might be promised as solution might not be realised. The question is since 2005, why did renewable programme being so low in terms of uptake? The main answer to this has been the level of electricity being sighted as too low. Therefore with this high tariff of electricity, we have observed a change in attitude by capitalist and now are venturing into another mode, called green capitalism. To sustain such price at high as they are and projected up to 2026, will requires a change in funding model argue Eskom in its submission to NERSA. This means that conventional technology will have to be phased out. This means a range of mid-merit to full open-cycle gass turbines used instead of what we see in Mpumalanga. This means that those assets should earn return on their investment. This means that we must not see Eskom as Cost Centre like other Government Departments, whose task is to take away from Government, the reasons behind why Government gave Eskom a Loan and not cash injection as shareholder. Why did PIC not takea stake in Government (Eskom), because money will be circulating within. In conclusion, my view here cde Gugu and the forum is that the problem is not with Eskom, it is with our Government (which in its character and action is Capitalist) in nature. Government do intervene by injecting capital to SAA and other entities and when it come to Eskom is loan eventhough it was Government that approved the Expansion programme of Eskom. Why do you approve and not question where the money will come from. If we are serious, we must confront our ANC lead Government and raise these views. By the way we are all represented at NEDLAC and all these matter do come to the fore, its just unfortunate that we are preoccupied with who should lead while decisions are being made. Lets talk
>>> Gugu Ndima <[email protected]> 3/17/2010 1:27 PM >>> YCLSA REJECTS WORLD BANK LOAN FOR ESKOM 17 March 2010 The Young Communist League of South Africa (uFasimba) is flabbergasted by the continued efforts of the Ministry of Public Enterprises on behalf of the South African government to secure a $3, 75 billion loan from the World Bank. We are strongly opposed to this World Bank loan because it will feed into capital’s agenda of privatising energy generation. The loan is the first stage of putting Eskom into the hands of monopoly capital and private control. Even though Minister Barbara Hogan argues that there are no conditions, the World Bank’s own ‘Fact Sheet’ about the loan claims that by 2013, there will be 1,667 megaWatts of renewable energy available ‘led by the private sector’. YCLSA believes strongly in replacing coal with renewable energy but insists that this is a job for the state because making profits and caring for the environment are often incompatible. Already, Eskom has been so oriented to commercialization that it has failed miserably in its stated intention of producing one million solar hot water geysers; only a few thousand have been produced. Numsa has re-iterated that a “Just Transition” will involve metalworkers moving into Green Jobs including production, installation and maintenance of passive solar geysers, wind and wave turbines, and many other clean forms of energy. The World Bank and Eskom are the wrong agencies to rely on for loans and investments, history has proven. Moreover, the costs of repaying the World Bank loan will stagnate the economy and lower the living standards of South Africans, because of exorbitant tariffs and the shedding of quality manufacturing jobs. The cost of paying the loan will rise as the Rand falls in value, and in any case, the Bank’s 2008 Country Assistance Strategy already says clearly, “South Africa is a unique client for the Bank within the Africa region. It is a large middle-income country with sizable own revenues and no need for significant external financing.” The Bank then admits that it should not be involved in energy financing, because “Going forward, therefore, Bank assistance to South Africa must focus on those areas in which the Bank has comparative advantages acknowledged and valued by Government” and amongst those listed, energy is not one. We call on both the Ministries of Public Enterprises and Energy to convene public hearings across the country to solicit a popular public view on the loan. This call is consistent with the Freedom Charter’s injunction that the ‘people shall govern’, as opposed to “government must govern”. Failure to heed this call by our public representatives will reinforce our beliefs that our leaders are betraying the people’s mandate and aspirations. Alternatively, we call on the Ministry to subject this process to a parliamentary process and debate to ensure that our representatives engage with this issue. The mandate that this government should remember comes from the 1994 Reconstruction and Development Programme: “Relationships with international financial institutions such as the World Bank and International Monetary Fund must be conducted in such a way as to protect the integrity of domestic policy formulation and promote the interests of the South African population and the economy. Above all, we must pursue policies that enhance national self-sufficiency and enable us to reduce dependence on international financial institutions.” For these reasons, we reiterate our rejection of the loan from the imperialist World Bank, which thrives on imposing neo-liberal and capitalist policies to suffocate the lives of the working class and the poor of the world. As the YCLSA, we call on the Cabinet to rethink this matter. We are not convinced that all funding possibilities were considered before the decision to approach the World Bank was made. For more information Contact Gugu Ndima National Spokesperson – 076 783 1516 -- Gugu Ndima +27 76 783 1516 -- You are subscribed. This footer can help you. Please POST your comments to [email protected] or reply to this message. You can visit the group WEB SITE at http://groups.google.com/group/yclsa-eom-forum for different delivery options, pages, files and membership. To UNSUBSCRIBE, please email [email protected] . You don't have to put anything in the "Subject:" field. You don't have to put anything in the message part. All you have to do is to send an e-mail to this address (repeat): [email protected] . -- This message is subject to the CSIR's copyright terms and conditions, e-mail legal notice, and implemented Open Document Format (ODF) standard. The full disclaimer details can be found at http://www.csir.co.za/disclaimer.html. 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