Friday, July 01, 2011

Eishkom: Electricity Hikes May Prove Too Much for Industry

Disclaimer: Keep your tongue firmly in cheek before reading further. OK?

Ouch! I just read this one and nearly fell on my hands and knees. If you live in SA you will be paying nearly double for your electricity this month than you were paying two years ago, with lots more increases on the cards to come for a long while yet! Crazy stuff.

To add insult to injury, Eskom is actively encouraging and even forcing consumers to use LESS electricity..Talk about cognitive dissonance...

How did it come about though?

Put on your tin foil hats and gather round now, I've got a theory that will explain it all...

Let's start off with an indisputable fact: The ANC is plundering SA's wealth...In fact, I'd think it fair to say that the ANC has been doing it since the word GO. The R60 Billion Arms deal proves it...Show me the results of the official investigation into that travesty of a money raising scheme?

But the arms deal was a crude effort, a blunt tool to kickstart the ANC's personal-enrichment-fund-for-cronies in the short term. It was soon exposed for the fraud it was (which is why the ANC has never launched an official investigation into it) and it did not cater for a later crop of bootlickers and kingmakers (not to mention a luxurious retirement for the original "freedom fighters" Well, at least not according to their liking)

So they needed to come up with a more cunning plan...Something a bit more sustainable. Something that would benefit the cadres and the leedas over many years, perhaps decades, even into the golden twilight years of ripe old age.

Enter Eishkom.

The perfect Money Raising scheme.

Collapsing infrastructure. Coal supply margins down from weeks to just days...Platinum smelters on hold....Rolling blackouts for months on end...

Emergency Overdrive!

Eish! We need money to build new powa steshuns pronto!

Oh yes, plenty of money to be made. Plenty of tenders and lucrative contracts in the making. In fact, a veritable GOLD mine for at least a decade.

If the arms deal was a scheme to buy a plaster for a wound that did not exist, then Eishkom may just have been break-a-bone-on-purpose in order to pay for the plaster cast to fix it...

Sound a bit far fetched?

You haven't put on your tin foil hat yet...Do so now.

Hark back to Thabo Mbeki's apology when the above scenario played out in SA in 2008. When Chinese imported generator sales soared, jokes crippled corporate email servers, Passports were hastily retrieved from dusty drawers, business leaders revised plans from long term to short term and Leon Shuster made some money out of it in his usual style.

Now ask yourself - Why did Thabo, a man educated with an Economics Degree from an English University not see it coming? Did he not have advisers that mapped out future growth and development plans for him?

If his Sussex degree is worth anything then yes, certainly he saw it coming and he must have hearkened to the urgings of economic advisers. He was more than adequately informed. Yet he chose to ignore the warnings of trusted and astute advisers and even his own education.

He ignored Eskom. Totally.

He had no plans to build any new power stations in line with the growth of SA's GDP....

What a fool?

No, what a Maestro!

This was a great game plan...As long as it was carefully managed, the total collapse of infrastructure would not take place...Business interests would not allow that to happen, at any cost. This then provided the perfect pretext to launch MASSIVE increases in the medium term for much needed power stations. The cost of which would have been absorbed IN LINE WITH THE GROWTH OF SA'S GDP anyway, had the proper planning been done.

The quick fix that is now in place stands to benefit only the tenderpreneurs who are sitting well placed to receive it, and with a willing and thoroughly rattled white middle class prepared to foot the bill.

This is orders of magnitude above what the crude Arms deal has achieved.

Mbeki was sold short of course. The kingmakes and bootlickers did not support him for a third term as president. But the Faustian deal had been done. Others will reap what he had sown.

Perhaps this is the real legacy of Mbeki, AIDS denialist, philosopher clown, myopic Machiavellian and failed economist.

So, is my theory cranky-loon or is there perhaps a grain of truth in it?

You be the judge, but when you pay July's electricity bill, remember to ask yourself:

What am I paying for, exactly?

Zara Nicholson

Experts have warned that industries would not survive the proposed hikes in electricity tariffs over the next few years and they would be “devastating and disruptive” to economic growth.

Today households will be paying almost 20 percent more for electricity, the third major increase imposed by Eskom since 2008.

To maintain and build power stations, Eskom has been allowed to increase tariffs by 25 percent each year until 2014 and possibly 2016.

This means that by the end of 2014, the price of electricity will have increased by 400 percent over six years, the Cape Chamber of Commerce has said. This would “devastate the economy”.

Economist Dawie Roodt agreed, saying the rise would lead to “huge increases” in almost all goods and services.

In a statement, chamber president Michael Bagraim said: “I don’t think any industry could get away with tariff increases of 400 percent in six years and survive.”

Two years ago the selling price for electricity was 24.4 cents a unit. It will be just over 50 cents this year.

“When the proposed increases are added to those already approved, the average price would be nearly R1 a unit in 2014,” Bagraim said.

Peter Haylett, chairman of the Chamber’s Industrial Focus Portfolio Committee, said present and planned increases would make Eskom electricity more expensive than some forms of alternative energy.

“Some companies are planning to generate their own electricity using solar and wind power and we can expect to see this trend grow,” Haylett said.

“These high electricity costs will also make it more difficult for manufacturers to compete with imported products and exporters will find that their ability to compete in the global markets is being eroded.”

Roodt said

the increase in electricity was likely to push up inflation and interest rates.

“This is going to be extremely painful and will disrupt the economy.”

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