The Times
*Power panic 'chased off investors'* *René Vollgraaff, Sunday Times Business, Johannesburg, 18 March 2012*Economist Mike Schüssler was furious when he heard the announcement by Eskom and the National Energy Regulator of SA on the next electricity tariff increase.
He had told Eskom and the government two-and-a-half years ago that excessive price hikes were not necessary.
"Eskom initially asked for three annual tariff hikes of 45%, which would have compounded to a total increase of 204% over three years," he said.
"Now [after being awarded an increase of 16% for this year] they are happy with a total increase of 82% and they are still making money and still able to build and pay for the new power stations.
"We were lured into a false sense of panic because at that stage we had gone through an electricity crisis. I do not think any modern economy should be held over the barrel of an electricity gun the way that happened to us with Eskom.
"We were told by a company, that we as the public effectively own, that we will have a 204% increase in electricity tariffs, or the lights will go out. They came down to 35% [a year for three years] and then Nersa awarded them 25% a year, but even that was not necessary."
What worries Schüssler is the big fright Eskom's initial demands and Nersa's initial award of increases gave businesses and investors.
"They used to look at South Africa and see cheaper electricity prices as one of the advantages of coming here. If you told them we were going to increase electricity prices by 82% over three years instead of what was initially looming, a lot more may have stayed or brought their business here."
Electricity prices are still rising at more than double the inflation rate this year. This means the beneficiation plans of ministers Rob Davies and Ebrahim Patel to create more jobs and ensure SA's mineral wealth benefits more people are dead in the water, said Schüssler.
"If a company can buy cheaper electricity in China or the US or Latin America, it will simply rather take its business there."
The price increases affect consumers directly. They have less money to spend on consumption and that in turn affects the broader economy, Schüssler said.
"Every administrative price is going through the roof and electricity seems to be leading the charge. It is very unfortunate that a company owned by the people have to be told by the president not to give government a dividend in tough times like these to ensure it does not have to increase prices that much.
"But when we as the people ask for that, it does not listen, or when Nersa - which is supposed to represent the people - cannot get to that result, then I do not think Nersa has done its job to start with."
Schüssler has also researched the planned Gauteng toll roads and butted heads with officials on this issue over the past year. After initially announcing a toll fee of 66c/km for use of the improved Gauteng freeways, the government is now planning to implement the system on April 30 at 30c/km, less than half the initial planned charge.
"The top management of Eskom and Sanral are competent people," he said. "But it is as if they want to pay off everything they build in as short a time as possible. In most other countries big infrastructure projects are paid off over 20 or 30 years.
"It is like a home owner who pays off his house over 20 years. It might cost more in the long run, but the longer period makes the payments more affordable."
As with Eskom's initial planned tariff hikes, the toll- road controversy affects the confidence of people in government and state-owned enterprises.
"In both cases state institutions told us the initial charge is what we will have to pay and is the best they can do, but it turned out it was not the best they could do."
But why does Schüssler, who started his research firm Economists.co.za in 2005 and worked for Transnet at one stage, get involved in these sticky issues?
"In the case of Eskom I simply felt we as a country were being cheated. It may have been egotistical, but it was also heartfelt that it was wrong.
"With the Sanral issue I was asked by some organisations to do the research, but I could already see all was not well. So it was egotistical, heartfelt and I got paid.
"And the more Sanral swatted at this, the more organisations joined in the public outcry."
High government salaries are another of Schüssler's pet peeves."According to Stats SA's data on non-agricultural farm payrolls, government salaries are on average 34% higher than the private sector," he said.
"If we pay government employees the same as the private sector we can, without increasing taxes, build two power stations and seven Gauteng freeway improvement projects in two years."
*From: http://www.businesslive.co.za/southafrica/2012/03/17/power-panic-chased-off-investors*
** * * -- 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] .
<<inline: TheTimes.jpg>>
