Ditching public-interest mandate cause of Eskom’s woes

Eskom has been implementing load shedding over the last few years. Picture Henk Kruger/Independent Newspapers

Eskom has been implementing load shedding over the last few years. Picture Henk Kruger/Independent Newspapers

Published Feb 18, 2024


By Prof. Patrick Bond

ELECTRICITY Minister Kgosientsho Ramokgopa appears to have failed society since taking the position last March.

The current evidence is a return to extreme levels of load shedding thanks to boiler tube leaks at nine coal-fired power plants and pumped-storage generation mismanagement starting, on February 8.

But the decline of South Africa’s electricity sector dates not to tripped units at the brand new Medupi power station minutes before President Cyril Ramaphosa’s back-slapping State of the Nation Address where he promised “the end of load shedding is finally within reach”.

Or to a sudden surge in blackouts since 2019. Or to the Zuma administration’s many 2010s failures. Or to Eskom’s extremely slow acknowledgement that abundant sun and wind could be harnessed to the national grid by the utility (not just by foreign private firms).

Or to the fateful 2007 decision that Hitachi and the ruling party’s Chancellor House should get the bulk of contracts at two new coal-fired power plants, Medupi and Kusile, adding economic pain to our future generation’s climate-change victims – pain which the World Bank, Western governments’ credit agencies and banks, the BRICS Bank and China Development Bank should by now have relieved by writing off that ‘Odious Debt’; that is, loans they should never have granted given the Hitachi bribery everyone knew about by early 2008.

We could go back to the dawn of democracy for more clues. Eskom once had enormous potential to roll out electricity to low-income households – annually reaching 350,000 during the late 1990s along with 150,000 new municipal connections – and do more to boost renewables with internal resources than its brief 2011 flirtation with geyser solar heaters (timed to make the country look good when hosting the UN climate summit in Durban that year).

But when Nelson Mandela took office, Eskom was a fully-fledged state agency with a public-interest mandate. As neoliberalism and New Public Management ideologies crowded out the Freedom Charter and Reconstruction and Development Programme, Eskom fired 30,000 of its workers and transitioned to a public corporation with a profit motive.

Much higher tariffs were then imposed on residential customers, and the rural electricity grid’s expansion was slowed. Then came widespread disconnections – affecting millions annually – of households which fell into arrears on inflated bills, leading to resistance not only including marches and protests, but soon enough illegal reconnections that in Soweto alone reached 86% of all households the utility was supplying.

Recalling those mistakes may seem like crying over spilt milk – but lessons can still be learned, even if Ramokgopa and Mineral Resources and Energy Minister Gwede Mantashe would not appreciate these, judging by their new Integrated Resource Plan for electricity generation.

It remains overweight in coal with slower retirement of skorokoro plants like Kusile, in turn threatening loss of the West’s pilot project for decarbonisation known as Just Energy Transition Partnership ‘concessional finance’ (that is, more unnecessary hard-currency loans – especially given a $165 billion foreign debt and an enormous surplus of local financial liquidity bubbling speculatively within the stock market).

It’s evident that Ramokgopa and Mantashe are committed to many more electricity megaprojects, including dangerous nuclear plants and high-emissions methane-gas generation, drawing from controversial offshore-SA sites and from the Mozambican war zone where South African troops protect TotalEnergies and ExxonMobil.

Yet when in 2020, the National Planning Commission took a hard look at mega-project cost and time overruns, its researchers Ron Watermeyer and Sean Phillips declared nearly all were far in excess of originally estimated costs. For instance, Medupi and Kusile were 293% more expensive than expected and were eight years behind schedule, leaving the economy reeling, with more lost output due to load shedding.

The Planning Commission did not even mandate the researchers to consider other costs of coal-fired power: local pollution (killing hundreds annually) and global climate implications, which in 2026 will include trade sanctions by Europe and Britain against the very high embedded CO2 in South African steel, aluminium, petrochemical and exports.

Nor did they consider the merits of retaining fossil fuels for future non-combustion uses, as hydrocarbons that future generations would not consider burning but instead utilising for lubricants, synthetic materials, pharmaceutical products and tarmac.

But even if ignored by Ramokgopa, Mantashe and national planners, these are crucial factors that lead to sovereign wealth – or ‘natural capital’ – depletion if coal continues to be mined and burned here or via 50 million tons of exports, in overseas plants (even Israel bought R1.9bn worth of South African coal in 2022).

Such factors should logically affect the way losses from last year’s bouts of extreme load shedding are calculated.

Intellidex and the SA Reserve Bank estimated a 1.8% decline in Gross Domestic Product in 2023 due to Eskom’s failures, to PwC’s 5%. What GDP does not help with, however, is assessing the resulting lower levels of pollution and greenhouse gas emissions, or how much wealth in the form of mineral resources was saved – all of which were simply ignored by Intellidex, the Reserve Bank and PwC.

In contrast, environmental economists use a ‘Hartwick Rule’ to judge whether the non-renewable resource base of a country – especially our platinum, gold, iron ore, coal and manganese (the five main commodities that are mined) – are being depleted too fast, in relation to ‘beneficiation’ opportunities to add value to the minerals, and to reinvest revenues into new capital, education and other social infrastructure.

Ironically, Ramaphosa agreed with his party’s youth wing in the January 8 statement, that “we are tired of being a country that exports all our mineral resources without beneficiating them”.

But the current structure does the opposite, while the (transnational-corporate-dominated) Energy Intensive Users Group brags, “Our members currently account for over 40% of the electrical energy consumed and collectively contribute to 22% of the South African GDP.” Jobs are fewer than 5%, given the 27 firms’ increasingly capital-intensive operations, for example in power-guzzling smelters.

Again, GDP is useless to measure the damage being done. According to the World Bank’s (partial) natural capital accounts, South Africa has been losing vast amounts of wealth because too much depletion and pollution occur without reinvestment and beneficiation.

If GDP were corrected for these factors (and World Bank accounts leave out platinum group metals, manganese, chrome, vanadium, titanium and diamonds), the country’s measurable wealth would be shrinking by at least -5% annually.

The point is, that if due not only to electricity load shedding but to EU-UK climate sanctions or the probable expulsion of South Africa from Washington’s African Growth and Opportunity Act as punishment for Pretoria’s principled position against Israeli genocide, we may continue to see vast swathes of our deep mines and smelters without overseas markets.

The silver lining would be much more electricity thus freed up for labour-intensive industry, small businesses and households (where women are particularly in need of power for cooking due to patriarchal divisions of labour).

I have not yet seen a political party – aside from the Climate Justice Charter Movement which plans to contest elections – address this profound contradiction. Given the ruling party’s addiction to a coal-based black empowerment elite (Ramaphosa included, since for years he ran Shanduka mines alongside the infamously-corrupt Swiss-based Glencore) and just as pro-fossil parties to the ANC’s left and right, the future of our youth, our environment and potentially-cleaner politics may rely upon civil- and uncivil-society activism.

*Bond is a University of Johannesburg distinguished professor and Director of the Centre for Social Change.

**The views expressed do not necessarily reflect the views of Independent Media or IOL.