NEWS & ANALYSIS

Rollback wrong policies that contributed to Eskom crisis – SACP

Party says decisive action must be taken against everyone who was involved in looting of power utility

SACP statement on the occasion of the COSATU national day of action against retrenchments and for decent work

13 February 2019

National energy security and the central role of Eskom

The SACP has noted the discussion and proposals about saving Eskom from going under. As usual, right-wing and reactionary bourgeois elements and forces are pushing their single idea of privatisation as the so-called solution. They behave like alcoholics who insist on solving the problem of alcoholism by drinking more alcohol.

It is a fact that it is privatisation, through tenderisation, the parasitic model of the so-called Independent Power Producers (IPP) and poor quality work, for example at Medupi and Kusile, that has created the crisis of national energy insecurity that we are faced with today as nation. It must particularly be noted that the corruption, fraud, looting, governance decay, mismanagement and maladministration that have contributed significantly in plunging Eskom, our national energy utility into crisis, are concentrated in the sphere of privatisation.     

As the SACP we want a holistic approach to the problem of the heavily indebted Eskom. The approach must be anchored in the objective of ensuring national energy security. While we cannot stand opposed to progressive measures that will improve the situation, save Eskom and ensure security of energy supply, there are principles we that wish underline.

Consensus-seeking consultation

Firstly, all proposed measures must be subject to consensus-seeking consultation. All the reports, facts and data underpinning every proposal must be disclosed and open to scrutiny.

Decent work rather than retrenchments

Secondly, South Africa has a crisis level unemployment rate. We do not support any measures that will aggravate the problem. We therefore do not want the hard working Eskom workers to be retrenched.

In the same way, we are opposed to retrenchments in the mining and manufacturing sectors, in industry as a whole as well as in the public sector. We want the creation of decent work to radically reduce unemployment, inequality and poverty.

These are some of the reasons why as the SACP we are behind Cosatu’s legally protected action against retrenchments and for employment creation.  

As the SACP we will continue to advance the struggle to end the system of capitalist exploitation and replace it with the sustainable solution of socialism. We therefore reiterate our ever standing invitation to all workers to be actively involved in this broader class struggle because workplace and sectoral struggles alone, while important, can only produce immediate remedies but not a long-term solution. On this score let us recall what Karl Marx, a revolutionary social scientist, said about the struggles of the workers within the confines of the exploitative wages system: 

“…and quite apart from the general servitude involved in the wages system, the working class ought not to exaggerate to themselves the ultimate working of these everyday struggles. They ought not to forget that they are fighting with effects, but not with the causes of those effects; that they are retarding the downward movement, but not changing its direction; that they are applying palliatives, not curing the malady.”

Therefore, as Marx proposed, the working class should not be exclusively absorbed in the unavoidable exploitative wages system fights incessantly springing up from the never ceasing encroachments of capital or changes of the market. We must build wider unity and fight for the overthrow of the exploitative capitalist system. This is one of the reasons why as the SACP we resolved, at our 14th Party Congress, to develop leadership role to forge a Popular Left Front.  

Public ownership and expansion of Eskom

Thirdly, we want Eskom in its entirety to remain wholly state owned, to expand state ownership in the field of clean and renewable energy, to improve operational efficiency and achieve optimum organisational effectiveness to serve the people.

Having underlined the preceding principles, let us now look at some of the structural drivers and forces of the crisis at Eskom.

What exactly happened?

Eskom was deliberately plunged into governance decay, mismanagement and maladministration. The corruption of corporate capture of the state contributed in no small measure to the Eskom crisis. The crisis affects all of us as South Africans and therefore goes beyond Eskom but is a national energy security crisis.

Decisive action must not only be taken but must be seen to be taken against everyone who was involved in the looting of Eskom.

All the unexplained payments made from Eskom, as well as fruitless and wasteful expenditure and material losses, must be accounted for and recovered. This includes, the widely reported one billion rand that was paid to a United States based multinational corporation, McKenzie & Company, and the 596 million rand that was paid to Trillian Capital.  

Dealing decisively with the corruption, fraud, money laundering, governance decay, mismanagement and maladministration that plunged Eskom and other public enterprises into financial and structural crisis is crucial.

In addition, we must rollback the wrong policies that contributed to the generating the crisis. Among others such policies coalesced into suppressing the growth of public enterprises as a productive sector in favour of promoting private companies.

For instance the model that was adopted to support the so-called IPPs was designed in a manner that is destructive to Eskom. The model compelled Eskom to buy power from the so-called IPPs at a price more than double its selling price. In the first semester of 2016 for example Eskom spent 6.64 billion rand to buy power from the so-called IPPs at an average price of 214c—218c per kilowatt-hour, while its average selling price was 83c—86c per kilowatt-hour.

During the same period Eskom incurred an estimated loss of 4.27 billion as a result of the self-destructive IPP purchasing programme. This model does not build Eskom but has contributed to its financial crisis. In other words the model was designed to milk Eskom and use the money lost by Eskom as a subsidy for the profit of the private companies, the so-called IPPs, for wealth accumulation by their individual owners.

The privatisation of renewable energy generation through the destructive IPP model is a typical example of building the private sector and promoting private companies by means of measures that destroy publicly owned productive assets. Eskom did not receive any ownership, in full or in part, of any the IPPs which it has been financing. This must be addressed retrospectively.

As the SACP we want Eskom to become a premier producer of clean and renewable energy instead of being destroyed among others by the parasitic IPP model. Supported by the development of social ownership and therefore the building and expansion of the social sector, Eskom should take centre stage both now and in the future in the development of clean and renewable energy. This should find profound expression in our country’s definition of what is meant by a just transition to clean and renewable energy.

Our national approach should include manufacturing expansion in the energy sector to localise components production including the production of clean and renewable energy components. The revitalisation of Eskom and the transition to clean and renewable energy, with Eskom as the centre of gravity for energy production, transmission and distribution, should create sufficient jobs to keep the current Eskom workforce employed and create new jobs based on the principles of decent work to contribute to the direly needed radical reduction of the critically high unemployment rate that we are faced with as a nation.

While working on ensuring that the transition to clean and renewable energy becomes just and successful, we must simultaneously resolve the problems of coal supply to Eskom. It is unacceptable that the coal that we need to support Eskom is mined in our country for export markets for private wealth accumulation. In terms of the Mineral and Petroleum Resources Development Act, all the minerals found in South Africa are the collective property of the people of South Africa as a whole, and the State is the custodian of the people.

We cannot allow the custodianship of our minerals by the State to be subverted in the interests of private profit and wealth accumulation. The custodianship of our minerals by the State must be exercised in the interests of the people as a whole and to safeguard our national energy security. The present situation with regard to coal supply problems experienced by Eskom leaves much to be desired. Trade in coal must be regulated in the national interest in line with the Freedom Charter.        The SACP is therefore calling for legislative measures to ensure that the coal of South Africa first and foremost looks after our national energy security and other development imperatives.

Sixth democratic general election

As the SACP we maintain our commitment to our national democratic revolutionary front in the form of the Alliance. However, as we resolved at our 14th Party Congress held in 2017, the manner in which the Alliance is configured and its modus operandi are outdated. If not reconfigured, the Alliance will, going forward, not be able to stand the test of time. This is what our 14th Party Congress said.  The Congress thus resolved that our approach to the next elections should be guided by the imperative of a reconfigured Alliance.

It is in this context, as directed by the Congress, that we opened engagements within the Alliance to agree on, and implement the reconfiguration. We are already campaigning to achieve a victory in the forthcoming general election under the single banner of the Alliance with the ANC as our electoral formation. We are following the approach because we fully recognise that the reconfiguration of the Alliance is not an event but a process.

However, we equally recognise that the reconfiguration cannot be locked into endless engagements if it is to become a reality. This is why our 14th Party Congress adopted the resolution to forge a Popular Left Front for the dual purpose of moving our national democratic revolution on to a second radical phase and future working class electoral contests in the event the Alliance is ultimately not reconfigured after everything humanly possible has been tried. To this end the SACP welcomes the support pledged by COSATUat its last National Congress.      

Let us continue working together to campaign for a decisive victory of the ANC as our electoral formation in the coming general election in the context of the process to achieve a reconfigured Alliance. In addition, we should make sure that our collective victory in the general election is not turned into a victory for the elite or the forces of economic exploitation and privatisation. Our victory must be a victory for the people, the majority of whom is the working class!

Let us deepen our efforts to tilt the balance of forces on the ground, in every key site of class struggle, in every significant centre of power that exists in our society, in favour of the working class and a reconfigured Alliance.   

Issued by Alex Mohubetswane Mashilo, National Spokesperson & Head of Communications, 13 February 2019