Talk of shielding the poor from high electricity rates

Government is looking at ways to shield poor sections of the South African society from the sky rocketing costs of electricity.

This can be taken from expressions made by the minister of public enterprises Malusi Gigaba yesterday.

Speaking during the Convention of the Association of Municipal Electricity Utilities in East London, Gogaba said “The provision of electricity to all should improve the quality of life of South Africans, especially the marginalised, and as such, the “unaffordability” of electricity to households with no income should be addressed”.

His statement follow a wide spread lament over rising electricity rates of the past few years. Eskom has been allowed to raise electricity tariff by rates that are far above the inflation rate to allow the state owned utility rake cash for its infrastructure development programme.

Gigaba said “Government intends to counteract the adverse impacts of electricity price increases through the provision of subsidies and the continuous improvement of the effectiveness of the free basic electricity (FBE) programme”.

Telkom explains the FBE in its website as follows: “FBE is the amount of electricity, which is deemed sufficient to provide basic electricity services to a poor household. This amount of energy will be sufficient to provide basic lighting, basic media access, basic water heating using a kettle and basic ironing in terms of grid electricity and basic lighting and basic media access for non-grid systems”.

Gogaba added that government is in the process of investigating ways to improve the free basic electricity programme to ensure that every poor household is catered for.

“Continued collaboration between the three spheres of Government in ensuring improved service delivery to all South Africans is critical in this regard”.

On Universal Access

Gigaba said government’s infrastructure development drive will contribute towards the objective of universal access to electricity.

“Electrification has both economic and social functions in that it stimulates economic activities, creates employment opportunities and provides basic energy services for households”.

He noted that “Over 4.2 million households are now electrified since the inception of the electrification programme.

This means that the ANC-led Government has electrified more households in the last nineteen years than the entire colonial and apartheid regimes did in over three hundred years of their illegal and criminal existence”.

However, we note that there are still challenges towards meeting the universal access objective, and I hope that part of your deliberations will consider how we address these challenges”.

“As you aware, the South African economy is highly energy-intensive, and heavily dominated by the extraction of raw materials and primary processing. As the demand for energy grows, the energy sector is expected to play a central role in acceleration of the country’s economic growth and development”.

He said Eskom’s capital investment programme will add 17,000 MW of new electricity generating to the national grid.

“I am happy to report that all the previously mothballed plants have been returned to service and almost all the units are operational. Despite the challenges in the construction of the new electricity generation plants, there has been significant progress and we are on course to receive first power by the second half of next year at Medupi unit 6”.

He said the increase in generation capacity is complemented by Eskom’s large investments to expand and upgrade the transmission grid.

Both Eskom and municipalities are investing in distribution infrastructure to replace or upgrade out-dated equipment”.

Through improved cooperation and coordination within the various spheres of Government and other key stakeholders, it is possible to arrive at cost-effective, integrated and sustainable solutions to address service delivery challenges in South Africa and the region”.

However, said Gigaba, the challenge for electricity utilities and other SOC will continue to be how they raise funding their capital investments, particularly during this very constrained global economic environment which is expected to get even tougher as the US persists with the tapering off of its quantitative easing programme”.

On the Role of Municipalities 

Gigaba added that “Whilst significant effort has been put to improving capacity on the electricity generation side, the present worrying state of our electricity networks, particularly at distribution level, remains a threat to the security and reliability of electricity.

There is therefore a pressing need for enhanced investment and maintenance of distribution and transmission networks to improve the reliability of power supply in the region”.

In the South African context and I suppose the region too, municipalities play a key role in the provision of electricity and hence it is critical that they possess the requisite capability and resources to deliver on this role”.

This is in view of the concerns we have noted in relation to some municipalities having challenges with the provision of reliable and quality electricity, a matter that needs to be resolved as a matter of urgency before it becomes a culture”.

Some of the contributing factors to this include the high turnover of key municipal staff; poor revenue collection; misalignment of tariffs that Eskom charges to those charged by municipalities; revenue losses through energy theft and meter tampering; misalignment of financial year-ends between Eskom and municipalities; amongst other things.

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