No one is better at playing the stick-and-carrot game than Eskom. After years of using electricity cut-offs as a ”stick” to punish households that do not pay their bills, Eskom now offers the ”carrot” of debt write-offs to 10 townships in the Johannesburg area.
Totaling R1,4-billion, the write-offs are an attempt to ”encourage consumers to start paying for electricity”. A nice gesture, but so full of contradictions as to make it not only ineffective but downright hypocritical.
Let’s start with the political optics. Rather than negotiating with the Soweto Electricity Crisis Committee (Secc) or the Anti-Privatisation Forum (APF) — the two organisations that have fought the longest and the hardest against Eskom’s cold-hearted cut-off policies — Eskom chooses to announce that it has brokered this write-off deal with the South African National Civics Organisation (Sanco).
All but moribund 12 months ago, Sanco has suddenly come to life with resources and influence from political heavyweights in national government, determined, it would seem, to counter the growing influence — and anti-neoliberalism — of Secc and the APF.
But politics aside, the more substantive economic questions are also troubling. First, the write-offs apply only to electricity bills accumulated between April 2001 and August 2002. Not an insignificant time period, to be sure, but this sum constitutes only a portion of the outstanding payments that will continue to hang like dead weights around the necks of pensioners, single mothers and the working poor. Many arrears date back more than a decade, with some low-income households on the books for as much as R30 000.
It is not that people do not want to pay their arrears. Debts have accrued largely because people cannot afford to pay their electricity bills. Herein lies the crux of the problem: the Eskom write-offs do not change the underlying structural inequities of electricity pricing in South Africa.
In Soweto, for example, the price of electricity went up by as much as 400% as the pricing system moved from ”flat rates” to ”tariff structures” (the more you use, the more you pay). Worse yet, new tariff structures are often regressive, with residents in townships and former homeland areas sometimes paying more per kilowatt hour of electricity than suburban residents and industry. In 2001 rural South Africans were paying as much as 48c a kilowatt hour while industry paid as little as 3c (the cheapest industrial rates in the world).
Until incomes rise, or effective electricity prices fall, low-income households will continue to be plagued by arrears, leading to yet another round of stick-and-carrot antics. As if to anticipate this, Eskom has warned that it ”intends taking tough action against customers who do not pay” after the write-off period.
Meanwhile, Eskom posted a 46% increase in net profit after tax of R3,7-billion in 2003 with revenues of R29,7-billion, and announced bonuses worth R6,56-million to directors of the board for their ”sterling” work. African National Congress Minister of Public Enterprises Jeff Redebe (also on the national executive committee of Sanco) then accepted a promotional ”dividend cheque” on behalf of national government in the amount of R549-million, as the sole shareholder of Eskom.
And what of ”free electricity”? Eskom promises to start delivering on this three-year-old pledge soon but there are still many financial and technical issues to be worked out. Even if it does start delivering, the 50kW hours in the national agreement is considered by critics to be inadequate, satisfying only a small portion of the 500 or so kilowatt hours that it is estimated low-income households require for basic needs.
Prepaid meters are no better, effectively forcing low-income households to cut themselves off by buying only as much electricity as they can afford, regardless of what they really need (and often at higher per unit prices than metered electricity). This is why the APF has begun a campaign to resist and remove prepaid electricity meters.
What would a true ”carrot” from Eskom (and national government) look like? First, it would need to engage all ”stakeholders” in a meaningful way — not just those with whom Eskom/the government can score political points — with a moratorium on all cut-offs until a satisfactory agreement has been reached.
Second, there would need to be much deeper arrears write-offs in order to address the full financial burden of low-income households. Third, there would need to be a significantly larger free block of electricity, followed by more steeply rising block tariff rates. The latter would help to curb wasteful and inefficient consumption in upper-income households and industry, while at the same time generating better cross-subsidy potentials. Fourth, there would need to be a discontinuation of the installation of prepaid meters.
Last, and perhaps most important, Eskom would need to be kept publicly owned and operated. Despite its problems, at least the public still has some control over Eskom policies. Selling a 30% interest in electricity generation to private concerns — as government plans to do in the near future — with the possibility of a private company eventually taking controlling ownership, will likely drive up the cost of electricity and make it that much more difficult to introduce poverty-alleviating energy policies.
Private companies are not interested in subsidising the poor or trying to reduce the consumption of the rich. The deep structural inequalities that plague South Africa’s energy sector can only be addressed by a more accountable and more transparent public energy provider.
David McDonald is co-director of the Municipal Services Project