President called out for after calling for Eskom tariff hikes to be put on hold

President Cyril Ramaphosa’s attempts to twist Eskom’s arm into delaying the electricity tariff hike due in April has been met with serious criticism, as “executive overreach” into the regulatory realm.

This comes after Ramaphosa yesterday reiterated what he said over the weekend that he had asked Eskom to hold off on implementing the 18.65% tariff increase, a week after saying his hands were tied on the matter.

Ramaphosa jetted to the governing party’s provincial conferences over the past two days where, instead of calling a “family meeting” and addressing the nation as head of state, he addressed the energy crisis in public for the first time since cancelling his trip to Davos for the World Economic Forum annual meetings.

Closing the meeting of the KwaZulu-Natal ANC’s provincial executive committee (PEC) yesterday, Ramaphosa reiterated what he said at the Free State’s elective conference on Sunday, that the Eskom board needed to postpone the tariff hike until load shedding had been minimised.

“What I have said to the board (of Eskom) is that in light of the load shedding that our people are experiencing now, I would propose that you as the board consider postponing this (increase) so that it must not be implemented now and negatively impact on our people,” Ramaphosa told ANC KZN PEC members in a televised address.
So I have put that as a proposal… It has to be discussed by the board because I do think that it can soften the hardships that our people are going through. Right now people don’t have electricity and on top of that they have to pay more. So I just said the two just don’t go together, and that is why I have put this proposition to them.”

However, Ramaphosa’s utterances did not go down well with independent energy expert Lungile Mashele, who said Ramaphosa had no right to put the Eskom leadership under pressure.

Mashele said Ramaphosa’s remarks, if they were true wreaked of “political interference” and were “scandalous in terms of corporate governance norms”.

“We have had all types of political interference in the past and despite the Zondo (Commission) and all Justice Zondo’s recommendations, it looks like it is still continuing,” Mashele said.

“It’s unheard of and there’s actually no such governance-wise… At that point the rule book should have been thrown at him, just to say you don’t do anything of the sort.

“Otherwise then why do we have the regulator, why do we have the Department of Public Enterprises as a shareholder, why do we have the Department of Mineral Resources and Energy if the president knows what he is doing?”

Mashele said if Ramaphosa had an issue with the energy regulator’s decision to grant Eskom a tariff increase, he should have requested Nersa to provide him with their decision documents and then challenged that in a court of law like anybody else would if they were not satisfied.

Investec chief economist Annabel Bishop said delaying Eskom’s price hike would be detrimental to its cash position and could possibly lead to higher stages of load shedding.

“The electricity utility faces high and rising costs from its usage of diesel to fuel open-cycle gas turbines, and desperately needs cash injections to pay for the diesel costs, absent which the stages of load shedding will rise,” Bishop warned.

Meanwhile, Eskom yesterday said evening load shedding is to be maintained at Stage 4 daily at 4pm to 5am while Stage 3 load shedding is to be implemented daily at 5am to 4pm, until further notice.

Unplanned breakdowns of Eskom’s coal-fired power fleet currently amount to 15 797MW of generating capacity while 6 018MW capacity is out due to planned maintenance.

Ramaphosa yesterday said that South Africa must be realistic about electricity challenges and about what it is going to take to fix them, and admitted that the government cannot end load shedding overnight.

Eskom over the weekend said it would take at least two years to improve the energy availability factor (EAF) from the current 58% to 70%.

Old Mutual Wealth investment strategist Izak Odendaal said the simple reality is that Eskom’s ageing and ailing power stations cannot cope, and the new mega-plants, Kusile and Medupi were so badly built they were not faring much better.

“The reality is also that the government did not do nearly enough to supplement Eskom’s supply with alternative sources over the years, despite the obvious need to do so,” Odendaal said.

“It is a series of bad decisions that got us to this point, and it cannot be unmade. All that counts now is that policymakers make the right decisions for the future,” he said.


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