Watch Special Assignment on SABC 3 at 21h30 on Tuesday, 2nd May 2006.
Will our towns and cities be plunged into darkness regularly this winter? Will power outages bring factories to a stand-still? Are we heading for a winter of discontent?
Towards the end of last year, the Western Cape was thrown into chaos on several occasions because of power outages. The public were outraged, but have been warned that this could be the pattern throughout the winter. According to some experts, many other parts of the country also face the prospect of long, cold nights without power.
This Tuesday Special Assignment talks to experts in the field to find out what the consequences of outages are likely to be. There have already been reports that some entrepreneurs have pulled out of investing in South Africa, because they cannot be assured of regular supplies.
Power has major implications for a countryís economy. South Africa needs to grow at six percent if we are to make a dent in unemployment. Experts tell us that electricity growth should at least match, or ideally double that. Eskomís planned increases seem to be way below this figure, something that alarms many independent engineers and business forecasters.
We talk to the labour unions, engineers and Eskom to plot the way forward. We try to establish where things have gone wrong or to what extent we are still on track. Eskom assures us that we will have a warm winter but that supplies will be tight. Independent experts and the unions tell us to prepare for a winter of discontent in many parts of the country, but especially in the Western Cape. Who are we to believe?"
Eskom wants out of distribution
April 25, 2006
By Mzwandile Faniso
Johannesburg - Eskom wants to end its involvement in electricity distribution, saying yesterday that it did not want to be part of the six regional electricity distributors (REDs), which will be established by the country's metros to consolidate the industry.
The government has decided to restructure the industry, which is marred by inequalities that stem from different tariffs charged by municipalities and poor service delivery caused by lack of capacity in less fortunate local governments.
An initial plan put together by Electricity Distribution Industry Holdings (EDI), a company established in 2003 to oversee the restructuring of the industry, suggested that Eskom would own equity equivalent to the assets it contributed to the entities after they had been established.
The plan indicated that the 187 municipalities currently licensed to distribute electricity would each take shares equal to the assets they contributed.
But Eskom said yesterday that it did not want to be part of the metro REDs.
Mongezi Ntsokolo, the managing director of Eskom's electricity distribution division, said it was not necessary for the parastatals to be part of the REDs as the country's six metros had enough money and capacity to run them.
Eskom would transfer its electricity distribution assets to the REDs but would need to be "fairly compensated" to avoid sending bad signals to its bondholders and financiers about changes in its balance sheet.
It wanted to be compensated in a way that would ensure that it registered no loss as the result of the transfer through interest bearing financial instruments or asset lease agreements, Ntsokolo said. The company would negotiate the agreements with individual municipalities.
The power utility would transfer the assets with liabilities as well as customers, contractual obligations and staff.
But it would keep its key industrial customers.
The company's stance drew protests from the Gauteng MEC for local government, Qedani Mahlangu, and the chief executive of the country's only established RED in Cape Town, Saleem Mowzer.
Mahlangu said Eskom's decision not to be part of the metro REDs implied that the company did not realise its broader mandate of being part of all the government's social development goals.
Mowzer complained about Eskom's demand for compensation, saying consumers had already paid for the assets through tariffs paid to Eskom and "it would be unfair to ask them to pay again" as the REDs would be forced to recover the money from residential customers.
Ntsokolo said Eskom would maintain cross-subsidies between customer segments and geographic regions. It could also be part of a seventh national RED, which would be established to accommodate municipalities that said it might not be in their best interest to join the metro REDs.
Ompie Aphane, the department of minerals and energy's chief director of electricity, said the cabinet would announce a decision about Eskom's participation in a few weeks.
Johnson Clearance, an executive member of the SA Local Government Association, raised concerns about possible taxes during the transfer of municipal assets as well as the revenue of the REDs, which some municipalities saw as a lifeline.
Phindile Nzimande, the chief executive of EDI, said the treasury would work out legislation that would ensure that the REDs would not be taxed if taxation would adversely affect operations.
The deadline for the establishment of all six metro REDs is June next year, but Johannesburg and Ekurhuleni have indicated that they would be ready to establish the entities before the end of this year, while Tshwane would be ready in March next year.