Are South Africans paying more for electricity to fund Eskom’s expensive diesel burning?

Issued by Ghaleb Cachalia MP – DA Shadow Minister of Public Enterprises
09 Dec 2021 in News

Please find attached soundbite by Ghaleb Cachalia MP.

Electricity prices for South Africans have skyrocketed over the years and this is set to continue as Eskom applies for yet more tariff hikes. The question is how much of this is due to an inability to maintain the baseload supply resulting in diesel is increasingly used to meet demand.

Eskom’s Chief Financial Officer, Calib Cassim, recently admitted that Eskom spent more than R1 billion in the month of November alone to power emergency generators. With aging power plants, frequent maintenance requirements and sabotage, it is highly likely that Eskom will be burning billion diesel to keep the lights on for the foreseeable future.

This is patently unsustainable and it is unconscionable that Eskom transfers the diesel burning cost to overburdened consumers through high electricity tariffs on an apparently unending basis. According to the National Energy Regulator’s (NERSA) timelines to process Eskom’s fifth multi-year price determination revenue application, Eskom’s tariff application will see the entity generate revenues amounting to R279 billion, R335 billion and R365 billion in the 2022/23, 2023/24, 2024/25 financial years respectively.

With such high revenue projections, it is imperative that Eskom provides a breakdown of the amounts that have been earmarked for diesel to power generators and whether it thinks it is ethical for the entity to transfer such a cost to consumers. Moreover, a transparent timeline that details projected shortfalls and the measures required to mitigate these must be produced for all to see so that carefully costed solutions can be found with the involvement of the private sector. Additionally and importantly, it would be useful to know the cost of diesel supplied to Eskom, the source of this supply and the differential to market prices.

At current electricity prices, the majority of South Africans are struggling to afford keep lights on in their homes. Eskom’s current actions and trajectory will result in restricting access to electricity to an elite while shutting out the poor who are already facing the brunt of high unemployment and the rising cost of living. Let’s not forget that the utility’s mandate is to provide affordable and available electricity.

The public mudslinging between Eskom and NERSA over the former’s revenue application is just a sideshow that should not distract from the burgeoning cost implications on consumers. An ethical conversation about future supply, costs and plans to make electricity both affordable and available together with the ministry of Energy is long overdue. We need a permanent and independent Electricity Commission to oversee this.

In the interim Eskom should be spearheading the drive to procure electricity from Independent Power Producers to lower the cost burden of electricity at the point of sale.