NEWS & ANALYSIS

Oh, the joys of running a state monopoly! – Cape Chamber

Janine Myburgh says Eskom, in its own eyes, is a sacred cow

Oh, the joys of running a state monopoly!

19 February 2021

The comfortable mind-set of those running our State-Owned-Enterprises was made clear in the magisterial media release Eskom issued following its triumph in getting the High Court to approve its demand for a 15% increase in its prices.

Headlined “Eskom notes and respects the order by the High Court on the tariff adjustment for Financial Year 2021/22”, it announcedbarely stopping short of using the “Royal We”.

It then proclaimed that “This order will result in an average price increase of approximately 15% in the electricity tariff for standard tariff customers….”

This side-stepped mentioning lesser beings like ordinary householders or shopkeepers who will pay much more than an extra 15% once the municipal bureaucracies add their cut.

It then proceeds to say that thanks to its victory (over another government department), the State can now spend more taxpayers’ money on “other priorities”.

That makes it quite clear. Not said, but clear as day: Eskom, in its own eyes, is a sacred cow. Ergo, anyone riding on its back like its 30% surplus staff, is also protected.

For more examples of this innate belief in its superiority, Eskom’s Chief Financial Officer, Calib Cassim, was quoted as welcoming the decision.

As well he might. It will give Eskom a tidy sum. This the wonderfully-named Eskom Media Desk, took pains not to mention.

Only a small cloud on this otherwise happy day (for Eskom) was Mr. Cassim’s point, buried deep in the text: To this bonanza will soon be added further increase (s) allegedly owing to Eskom from previous years.

You see, dear electricity customer/Eskom slave, you have been failing to pay the full amount Eskom deems necessary to pursue its lifestyle (its management, staffing practices, salary and wages policies, bonuses, company cars, expense accounts, and so on).

Unlike managers in Eskom, private sector managers of corporations use such things as zero-based budgeting and get fired if they fail.

This comfortable immunity from market reality is so engrained that it reveals itself even in department titles such as   “Media Desk” -- a description that befits a government ministry more than a public relations department.

The written word can be more revealing than its authors intend. The media desk person says the 15% jump in the cost of electricity “Allows Eskom to recover efficiently incurred costs”.  In another sentence, the justification is described as enabling Eskom “to recover prudently incurred costs”.

The 15% is also justified by the Eskom scribe by misquoting the “user-pay principle”, usually a phrase to describe polluters, but never mind. It makes the point that if you run a monopoly your customers are compelled to take it or leave it.

That sums it up. Eskom is a monopoly. It has customers at its mercy. It is a quasi-governmental organization spending taxpayers’ money. Operating it efficiently as demanded by all organizations competing in the private sector, is not high on its list of priorities.

Compare Eskom with any private business with shareholders. If its product is too expensive, customers will not buy it. If its overheads are too great, it has to shed them or go bust. Competitors will step into the breach.

Trouble is, no one competes with Eskom. It’s THE problem. The solution stares South Africa in the face. Privatize it. Make Eskom (and every other feather-bedded SOE) compete in the marketplace, instead of behaving like a spoiled rich teenager with indulgent parents.

Which is what it is.

Issued by Dean Le Grange, Media and Digital Co-ordinator, Cape Chamber of Commerce and Industry, 19 February 2021