5 June 2020
In its recent written submission to Parliament’s Appropriations Committee, the Southern African Faith Communities’ Environment Institute (Safcei) warns that it is critical that certain issues be addressed before any more funds are allocated to Eskom. Hearings on the proposed Appropriations Bill are taking place today.
Safcei’s Executive Director Francesca de Gasparis says, “R112-billion is the total amount that has been set aside for bailouts for Eskom for the projected budget periods 2020/21 to 2022/23, so far. These are funds which should have been spent on education, health and other areas where it is badly needed right now. It is very concerning that as the bailouts continue, issues such as the lack of accountability for ongoing poor decision-making and high levels of secrecy, still persist at the utility.”
Safcei’s submission is the result of a thorough analysis of government’s energy plans, with particular emphasis on examining the economic impacts of the coronavirus pandemic and the implications these will have for the future of South Africa’s energy sector.
“We expect Parliament to be rigorous in its constitutional oversight mandate, particularly in respect of proposed large capital projects in the energy sector. The public has the right to know what financing mechanisms will be used and should have access to the full costings for these infrastructure projects, such as new nuclear projects. This is particularly important, because of the past, weak governance and short-sighted decision-making from the Department of Mineral Resources and Energy (DMRE) and Eskom which resulted in the current energy challenges.”
De Gasparis says that the multi-faith NGO wants to see more evidence of meaningful public participation, rather than the kinds of tactics that were seen used by Minister Gwede Mantashe when engaging with citizenry in Xolobeni.
“Since our fiscal capacity has decreased, it is fortunate that we are also in a possibly extended period of decreased electricity demand, due to the decrease in economic activities during the Covid-19 lockdown. By early April, less than a week into the lockdown, Eskom had already reported that electricity usage had plunged by between 7 500MW and 9 000MW, roughly one-third of the country’s average daily usage. Even post-contagion, the demand for electricity is unlikely to return to previous levels. Too many businesses were unfortunately unable to survive the lockdown. This must be considered and factored-in to future energy plans. Previous demand modelling is no longer relevant,” she adds.
“It is therefore quite concerning that not only does the Energy Minister want to push ahead with big energy projects such as the plant life extension for Koeberg, which many experts are questioning, as well as another 2500MW in new nuclear. In addition to this, South Africa is also committed to importing costly electricity from the DRC’s Grand Inga hydroelectric project. Why are we thinking to import hydropower across three countries to South Africa, when we have so much potential for solar?” says de Gasparis.
As a major public entity that is meant to be financially independent of the fiscus, Eskom has instead become a major drain, haemorrhaging taxpayers’ hard-earned contributions for more than a decade. In the past 12 years, state owned entities have been bailed out to the tune of R162bn, with Eskom receiving 82 percent of this. The extent of Eskom’s annual bailouts, at the same time as tariff increases for electricity, continues to have a negative impact on citizens’ ability to pay for the electricity they need. This not only raises the cost of living but also the cost of doing business. South Africans have lost all faith in Eskom.
Here are just two examples, from the submission, of how the bailouts took away from other spending. In the February 2020 budget, R4 billion was cut from health funding and it was announced that the National Health Insurance would be phased in slower, as original cost estimates were no longer affordable. This cut came at a juncture when Covid-19 was already affecting other countries placing enormous strain on public health facilities. In the same budget, expenditure cuts of R260bn over the next three years were announced.
Citizens need to know that public entities are being held to the conditions of the bailouts or loan guarantees as set out by Treasury. Compliance should be monitored as part of Parliament’s oversight role, and those officials not meeting the requirements should be held publicly accountable.
Issued by Natasha Adonis, on behalf of Safcei. For more information, contact Natasha on Natasha@safcei.org.za or 0797-999-654 (also on WhatsApp).
Note to Editor:
South Africa still has no permanent solution for all the high-level radioactive waste sitting at Koeberg Nuclear Power Station, which continues to grow by 30 tons per year.