William Saunderson-Meyer writes on the giddy response to Ramaphosa's Eskom crisis plan
It is a measure of how low South African expectations have sunk. A last-gasp intervention to avoid the total collapse of the national grid and the economy’s final, despairing act of hara-kiri, is being hailed as an act of remarkable presidential statesmanship.
From the media applause, one would have thought that President Cyril Ramaphosa had singlehandedly discovered the Holy Grail and the Philosopher’s Stone, as well as plucked Excalibur from Arthur’s Stone to lop off Jacob Zuma’s head. ___STEADY_PAYWALL___
But doing the obviously necessary at the last possible moment, after years of procrastination and prevarication, is not statesmanship. It’s the desperate moves of a weak and embattled head of state — one hesitates to use the word “leader” — who will act only when there is not a single other option.
Make no mistake, President Cyril Ramaphosa’s announcement on steps imminently to be taken to ease the Eskom power crisis is to be welcomed. The plan allows Eskom to speedily acquire more generating power by doing all the things that were previously verboten: allow large-scale private and small-scale domestic generation; bypass incapacitating local content regulations and tariffs; and employ staff according to skill, not race.
None of this is new. What is now being called the Ramaphosa plan is no more than a tarted-up version of what Eskom, the Democratic Alliance, and various energy experts have been proposing for at least a decade.
A “crisis” is, by definition, a sudden, decisive point. As Eskom pointedly noted in its statement welcoming Ramaphosa’s announcement, this “crisis” is now 14 years old. That makes it more of a congenital abnormality inherent to the ANC’s behaviour, than an unexpected emergency.
For eight of those years, Ramaphosa, then SA’s deputy president, was head of Eskom’s ambitiously named “war room” that was set up to address the developing problem of outages. Instead, under his watch, a problem developed into a crisis, with calls, including from within his own party, for the declaration of a state of national disaster.
In his 2019 State of the Nation, Ramaphosa stated that Eskom was “in a crisis” and it was time for “bold decisions and decisive action” to fix the utility. “The consequences may be painful, but it may be even more devastating if we delay taking action,” Ramaphosa said.
Eskom would “without delay” be broken into three parts — generation, transmission and distribution, to open them to private sector funding. The unions baulked at the job cuts implicit in such a plan — between 6,000 (Eskom’s estimate) and 14,000 (outside estimates) jobs would have to go — and Ramaphosa folded without hesitation. Nothing happened.
If the new plan is implemented as announced – failure to act is always a major factor with any African National Congress government policy announcement – it has great merit. It’s a rare concession by the government that the tripartite alliance’s ideological obsession with finding a state-driven solution (preferably paid for by private enterprise) is being abandoned.
The plan has the potential effectively to privatise power generation in South Africa. It is a tacit acceptance that Eskom, burdened as it is with R400bn in debt — most of it as a result of ANC looting — cannot possibly find in state coffers the up to R1.4trn that it needs to develop capacity over the next half dozen years.
This aspect, privatisation by stealth, is one of the reasons why it has taken so dangerously long for Ramaphosa to act.
He knows that any move to curb the undue influence of the unions in Eskom will encounter stiff resistance. And since the unions and the SA Communist Party are key allies in his increasingly ragged campaign for a second term, he must have hoped that the country could have limped through until after the December leadership election.
Unfortunately for Ramaphosa, that’s not how it’s worked out. Events, his enemies, and even his nominal allies, have conspired against him.
He was hit by a double whammy. The increased power demand that winter brings coincided with a campaign of sabotage of Eskom’s infrastructure, from both inside the utility by staff and from the outside by unknown actors.
The immense pressure that the national grid was under was compounded by Ramaphosa’s union allies. In response to the essentially bankrupt utility’s planned zero per cent wage increase to a workforce whose wages have increased way beyond inflation for at least a decade, the unions implemented a violence-ridden illegal strike.
Unsurprisingly, with the economy staggering and the national grid at the point of total collapse, Ramaphosa folded. The unions got a 7% increase, an increase of R400 per month in the housing allowance, and assurances of natural attrition of staff rather than lay-offs. In total, another R1bn onto the already bloated wage bill that Eskom cannot afford.
This approach is similar to that which the Ramaphosa administration used to try to resolve the crippling challenges facing South African Airways. It involves running a malfunctioning state-owned entity into the ground and then picking up and trying to reassemble the pieces in a more efficient configuration than previously.
At SAA, that didn’t work out particularly well. The once-proud national carrier is a shrunken shadow of itself and the fumbled reconstruction — “Insert Wing Tab A into Fuselage Slot B…” – delivered a biplane instead of the jet that depicted on the assembly kit. It is clear, too, that this time around the unions will not be so gullible.
On the other hand, if Ramaphosa pulls off his Eskom magic trick it is not only his immediate survival that is assured. With more than 700 state-owned entities deep in the dwang, there’s enough there to keep an ANC president going for several terms.
It’s unlikely, however, that country’s economy can survive the party’s legerdemain for that long.