PARTY

Our plan to end load shedding - Helen Zille

DA leader says PSC should investigate how Eskom executives were able to award themselves R17m in bonuses in 2013

The DA's plan to end load shedding

Thursday's nationwide residential load shedding was the first widespread electricity blackouts in South Africa since 2008. Eskom has indicated that load shedding is unavoidable for several months if not years to come, or at least until Medupi Power Station is operational.

Load shedding has a devastating effect on the economy, especially in labour-intensive industries. In 2008 the blackouts cost the country an estimated R200 million per day. The cost is likely to be nearly double that amount today. 

But what is worst about the present energy crisis is that it was entirely avoidable. Indeed, for several years South Africa has been told that excessive electricity price increases were necessary precisely to avoid further blackouts. There is a further 8% average increase in electricity prices scheduled for 1 April 2014. While Eskom and government do not deliver on their mandate, consumers have no option but to pay ever higher electricity prices.

There is also a less well known, but equally damaging side to the rolling blackouts that we experience. Often, to prevent blackouts, Eskom pays SA's biggest electricity consumers (productive businesses) to shut down production - just at the time that we need economic growth most. This means that precious public money is being poured into private enterprises to compensate them for not being productive, and for not creating jobs. 

With sound leadership, government could have acted to prevent a repeat of the 2008 crisis and supply South Africa with the energy it needs. Minister of Public Enterprises, Malusi Gigaba, Eskom executives and ultimately President Jacob Zuma have not provided decisive leadership on this critical issue. They have consistently shifted blame - most recently blaming wet coal - and have failed to get key projects like Medupi back on track.

The DA has a plan to end load shedding. A DA-led national government would act decisively to ensure South Africa has the energy it needs for the economy to grow and thrive.

What we can do now:

1. The DA will request a full Public Service Commission investigation into the bonuses awarded to Eskom executives in 2013.

Eskom executives awarded themselves R17 million in performance bonuses in 2013 and R14 million in 2012 - a total of R31 million in two years. We believe these bonuses are entirely inappropriate and undeserved. As the last week has demonstrated beyond doubt, Eskom has failed in its basic mandate.

We have already called on Eskom executives to repay these bonuses, but we also believe that the Public Service Commission should investigate how such bonuses were ever awarded.

The DA has also launched a public petition to put pressure on Eskom executives to repay the R31 million bonuses. In just two days this petition already has 6 794 signatures.

2. The DA will request a full National Energy Regulator of South Africa (NERSA) investigation into the causes of the current electricity supply shortage, including recommendations of who should be held accountable.

NERSA conducted a full investigation into the causes of the 2008 crisis. That investigation was helpful in identifying Eskom's specific failures and also in pinpointing those who were culpable. A similar investigation is needed now.

3. We will ask once again that Eskom provide us with all documentation and contracts relating to the Medupi power station project. If they do not accede to this request, we will consider legal action to gain access to this documentation.

In July last year the DA submitted a PAIA application for access to all the contract documents. Eskom requested two extensions, and for the sake of reasonableness, we acceded to those requests. However, we have still not received the documentation and have now submitted an appeal.

The Medupi Power Station project has been one of the most significant failures of Jacob Zuma's administration.

The Medupi project was initially planned to be operational by the end of 2012 but has since had its commission deadline shifted three times, with the latest extension scheduling completion for mid to late 2014. Medupi's initial R90 billion price tag was roughly triple the price per megawatt of most new coal-fired power stations being built around the world. The final price tag with financing costs looks set to come in at around R150 billion.

4. The DA tabled a motion in Parliament last week to have the Independent System and Market Operator (ISMO) Bill placed on the order paper for debate and decision. If this motion is defeated, we will table the ISMO Bill ourselves as a Private Members Bill.

Since the 2008 crisis, the DA has been calling for policy and legislative amendments to dismantle Eskom's monopoly as the sole purchaser of electricity in South Africa. This would allow Independent Power Producers (IPPs) to feed into the national grid, or to feed power directly to consumers, thereby reducing pressure on Eskom's generation capacity.

The ISMO Bill has been consistently blocked from being processed in Parliament by President Zuma and Minister Gigaba. The ISMO Bill would remove the operation of the electricity grid from Eskom and locate it in a new independent entity.

Last week the ANC in Parliament rejected a DA motion to revive the ISMO Bill and place it on the order paper for consideration. We will do so again this week.

5. We will request Parliamentary hearings to review the preferential supply agreements that South Africa has with neighbouring countries. There is no good reason why these agreements should not be put on hold, or cancelled, immediately to alleviate our current energy shortage.

It is unacceptable that we continue to supply electricity to neighbouring countries when we cannot supply our country sufficiently.

South Africa currently supplies power to Botswana, Namibia, Lesotho, and Swaziland on a regular basis. We also supply to Zimbabwe and Mozambique when their grids require it; as well as to a number of large private industrial clients outside of South Africa.

In reply to a DA parliamentary question, government revealed that Eskom was contractually locked in to the following supply agreements:

 

 Types of contracts

(a)

 Commencement

(b) (i)

 End Dates of contract

(b)(ii)

 Botswana

 Firm supply contract

 January 2007

 2012*

 Namibia

 Non-firm contract

 July 2006

 June 2017

 Lesotho

 Firm supply contract

 October 2006

 Indefinite

 Swaziland

 Firm supply contract

 December 2001

 December 2024

 Motraco

 Firm supply contract

 December 1997

 December 2025

 Skorpion

 Firm supply contract

 August 2000

 January 2018

 Namdeb

 Firm supply contract

 October 1986

 Indefinite

* Eskom has confirmed as recently as two weeks ago that it still supplies Botswana with electricity.

Eskom reportedly exports 5.9% of its total generating capacity - more than 2000 MW, or enough to have prevented the large majority of last week's blackouts.

6. The DA will seek assurances from Chancellor House that it has not profited from the sale of its stake in Hitachi Power Africa. If this were so, as we strongly suspect it is, then the ANC's election campaign is being funded from the profits of a company at the centre of this crisis. We are presently consulting our lawyers to assess what legal remedies are available to us should they refuse to provide that written assurance.

Hitachi Power Africa was until recently partially owned by the ANC's business front, Chancellor House. When Chancellor House paid R6 million for its stake in HPA in 2009, it seemed a questionable investment. At the time HPA was a newly formed entity and had no contracts, no clients, and no track record.

Curiously, just a short while later, HPA was awarded a R38.5 billion contract for the installation of boilers at Medupi. In February Chancellor House sold its stake in HPA for undisclosed amount.

The DA maintains that this is corruption, plain and simple. The ANC in government awarded a massive contract to the ANC in business, the profits from which flow directly to the ANC's re-election fund.

Not only did the ANC benefit from the contract, but Hitachi's work at Medupi has been a major source of the delays, and therefore, a significant contributor to our present power emergency. 

7. We have already asked National Assembly Speaker, Max Sisulu, to schedule a debate of national importance on the energy crisis.

8. We will put questions to the President asking him to break his silence on this matter and accept responsibility for the crisis

9. Finally, we will submit parliamentary questions to establish the full extent of Eskom's payments to large industrial energy consumers. Eskom needs to tell us which enterprises are being paid, how often, for how long, and how much they have been asked to scale down production (and therefore energy usage).

A DA-led national government would:

1. Ensure proper accountability in the management of South Africa's electricity generation capacity and distribution grid. We would end exorbitant bonuses for executives who fail to execute their basic mandate. We would hold contractors accountable for shoddy work and delays.

Both Minister Gigaba and President Zuma have made and broken several promises on our energy supply, especially in relation to Medupi. After the Medupi project was delayed a second time, Minister Gigaba assured South Africa that "heads would roll" if any further setbacks were experienced. When the project deadline was extended a third time, the DA called for the Minister to honour his promise and fire the responsible parties - no one has yet been held accountable for the indefinite delays in the Medupi project.

During a sitting of Parliament last year, DA MP Natasha Michael asked the President about government's plan to prevent rolling blackouts. The President denied that there was any energy crisis. 

The culture of avoiding accountability for failure will end under a DA government.

2. Invest in adequate electricity infrastructure

The DA has committed to investing the equivalent of 10% of South Africa's gross domestic product on infrastructure. This massive investment in infrastructure would include new electricity generation capacity, and would ensure that the economy is adequately supplied.

3. Dismantle Eskom's monopoly by creating a Transmission Service Operator to own the grid and which would be entrusted with energy modelling and procurement of energy from both Eskom and IPPs; and by allowing for "wheeling" through the grid so as to allow companies to procure electricity directly from Independent Power Producers.

Conclusion

These rolling blackouts will have a major impact on our economy and will inevitably result in job losses. With our economy already growing so slowly, and facing many internal and external pressures, these blackouts should rightly be considered a national crisis.

South Africans deserve answers. It is unacceptable that six years after the last energy crisis, Eskom has still not managed to adequately increase its capacity to supply the energy that our economy needs.

President Zuma's administration must accept accountability for this failure.

The DA has a plan to stop load shedding both now and in the future, and we will ensure that there is accountability for this latest crisis.

Statement issued by DA leader, Helen Zille, March 10 2014

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