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PRIVATISATION OF ENERGY PROVISION ACCELERATED

In a statement addressed to the nation on Monday night (25 July 2022), President Cyril Ramaphosa unveiled plans to increase the pace of energy privatisation. The DA and Big Business continue to score victory after victory when it comes to neoliberal economic policy, under the leadership of the African National Congress.

 

We want to state upfront that the South African Federation of Trade Unions (SAFTU) was not consulted by the government. In fact SAFTU – like many other working class formations rooted in working class communities, such as those which formed the Cry of the Xcluded coalition – have never been consulted on state policy, even during the period of the coronavirus pandemic.

 

SAFTU, the second-largest workers organisation, and home of the biggest private sector unions – was not consulted by the Ramaphosa administration when it comes to the supposed social compact promised several months ago as a top state priority.

 

Coming to the contents of the new policy, the President premised his plans on five areas:

 

  • improve the performance of Eskom’s existing fleet of power stations;
  • accelerate the procurement of new generation capacity;
  • massively increase private investment in generation capacity;
  • enable businesses and households to invest in rooftop solar; and
  • fundamentally transform the electricity sector to position it for future privatisation.

 

What we witnessed yesterday is a culmination of the process that was started by the ANC in 1997 when they refused to invest in apartheid’s ageing infrastructure, ignoring desperate calls by Eskom executives and many other experts who were then becoming aware of South Africa’s enormous renewable energy capacity. There were numerous warnings that without refurbishing infrastructure, the country would soon experience load shedding. This is exactly what happened. It reminds of US left scholar Noam Chomsky analysis: “that’s the standard technique of privatisation:  defund, make sure things don’t work, people get angry, you hand it over to private capital.”

 

Last night, came the announcement of measures to do just that – privatisation of generation of energy! Soon this will be joined by privatised transmission and distribution. How do they plan to do that?

 

  • scrapping licencing requirements for private energy projects that feed into the electricity grid. Until August 2021, all energy generation facilities of more than 1MW required a licence. Then, the cap was lifted to 100MW – which led to more than 80 private sector electricity projects with a combined planned capacity of over 6 000MW.
  • accelerating an existing programme to buy electricity from Independent Power Producers which are effectively being subsided by Eskom, since the utility’s incompetence and favouring of foreign corporations meant far higher prices than prevailed elsewhere – instead of developing internal Eskom renewable energy capacity.
  • allowing Eskom to buy power from existing private generators such as mines, paper mills, shopping centres and other private entities that have surplus power.
  • importing power from Botswana and Zambia, which have more electricity capacity than they require. Before the ANC collapsed Eskom, the firm used to export – and not import – electricity.
  • using using locally manufactured inputs for green energy projects. The amount of new generation capacity procured through Bid Window 6 for wind and solar power will be doubled from 2 600 MW to 5 200 MW. Further bid windows will be released “on an expedited basis.” While localisation and renewable have our support, of course our standpoint is that this should be achieved through Eskom’s transformation, not by the private sector which has generally proven unable and unwilling to make the leap to renewable energy.
  • introducing special legislation in Parliament soon to address legal and regulatory obstacles to new generation capacity “for a limited period”.
  • encouraging businesses and households to install rooftop solar and to connect this to the grid. We are worried that only wealthier households will have the capital resources – typically more than R150 000 for a standard 60-ampere connection – to do so and they will therefore escape the necessary cross-subsidisation that the world’s most unequal country needs.

 

We, more than anyone else, are desperate to end load-shedding. But under the current Eskom management, load shedding may one day end, but the prices of electricity will be subjected to the rules of profit maximisation. As California and Texas experiences conclusively show, profiteering can be catastrophic for energy supply. So electricity will become even more of a commodity that can be accessed only by those who can afford exorbitant prices.

 

SAFTU rejects this DA and Big Business plan with the contempt it deserves. SAFTU reiterate its historic demands that:

 

SAFTU demands:

1)  We support the move to renewable energy; but electricity supply must be socially-owned. The badly-designed REIPPP programme currently puts electricity supply in private hands, mainly from foreign companies. Down the road, they might charge ever higher prices or deploy electricity not in the interests of the working class.

2)  We demand a deep transformation of the current economic system of production and consumption, while at the same time including protecting workers’ shop-floor concerns. The interests of workers in energy – related industries and those of the working-class communities facing the impacts of climate change must be balanced and complement moves to a Just Transition.

3)  The development of a genuine Just Transition – or Green New Deal – that aims to create at least 3 million jobs immediately, to ensure the next wave of infrastructure provision cuts back our economy’s carbon addiction and improves our ability to survive the climate crisis, and ensures our export economy is not subject to climate sanctions such as the European Union’s Carbon Border Adjustment Programme.

4)  A “Radical Green New Deal” would be introduced to reflect the 1930s era of public works and mass employment programmes, as a matter of urgency.

5) SAFTU reiterates its demand that Eskom’s high-carbon debt – e.g. on Medupi and Kusile coal-fired power stations – must be declared as an Odious Debt because the greatest beneficiaries of it were capitalist corporations such as Hitachi and the cronies in the ANC through corruption successfully prosecuted even in the United States in 2015. The World Bank, bilateral lenders and commercial banks must cancel this debt.