Just maybe the National Energy Regulator of SA hearings will awaken Eskom from its long sojourn in lala land as respected voices have now weighed in with intelligent submissions on Eskom’s outrageous demands for multiple tariff increases.
We are told that a significant component of the demands is to accommodate depreciation on Eskom’s assets as essentially revalued by the ANC, a body not known for its accountancy skills.
But we must maintain the principle that power stations cannot be ordinarily depreciated as they are (or should be) permanently maintained and updated, and the asset values are only of interest for insurance purposes or to a would-be buyer. They are unlike ships and aircraft, which are eventually unmaintainable and outdated.
Another false component of tariff escalation is the government’s unreasonable expectation of Eskom to achieve a minimum net return on investment of 5 percent. It is the public’s investment and the only return the public demands is a reliable, and properly priced, supply of electricity. As pointed out by Lance Greyling, private investment in power utilities worldwide only achieves 4 percent net return on investment, but that is private investment, not public.
Of course Eskom should make a profit, rather than a loss, but not at the cost of public credibility. And it has no need to try to achieve an “investment grade” credit rating as its credit rating can only be the same as that of the country, that is, not good, and not made any better by an over-stretched and expensive power supply.
Further, we have heard that Eskom’s fuel supply is a major source of power price inflation. Eskom only burns very low grade coal, typically 25 percent ash and totally unsuitable for export. Therefore, the coal mines that supply Eskom are essentially dedicated to that purpose. The mines and Eskom are interdependent, with prices completely insulated from those governing the international coal market. Or so economic logic would demand.
For whatever reason, Eskom is apparently paying an export-related price for its coal, probably to accommodate unreasonable demands from so-called emerging mining firms: maybe it is another illicit compact with BHP Billiton, apart from the other major mining firms, who then pay off the politicians.
Irrespective, Eskom has indulged in peculiar, cost-plus, coal supply contracts rather than fixed-price, long-term contracts, but we should expect nothing else from this inept entity and its determination to destroy the country’s economy.
After many PR years, so little has changed
I largely agree with Tamra Veley’s piece “Local PR industry needs to act to rescue its own reputation” (Business Report, January 17) but the sadness is that this could have been an extract from a 1970s publication. I know because I have been practicing that many years.
I have avoided fast-moving customer goods and other high profile consumer-led industries and concentrated on technical and engineering communications and been an editor in this field. While not so glamorous, it does make it easier to differentiate fact from fiction and distance oneself from the emperor’s suit of clothes syndrome.
Skills required to write a release or article that will appeal to a reputable technical or industrial magazine not only require good grammar but a concise grasp of the subject matter and engineers do not suffer fools (or hack journalists) gladly.
Poor standards lie not just in poor education. Certainly, as Veley states, there are low barriers to entry into the PR profession but this is surely symptomatic of the skills of the people that employ them.
If so-called communications managers perceive PR to be all balloons and lollipops and are unable to differentiate between high standards and mediocrity then the situation will perpetuate. Someone has to sign off what the PR person writes, after all.
Then there are the editors, sub-editors and media owners who allow this rubbish to be published. When you couple a high profile client with a big advertising budget to mediocre media that regards editorial as filling the spaces between the ads, you have what we have now, and had 40 years ago.
Barriers to entry in the media business are not that high either, and it is a rand and cents business after all. Fortunately there are some that get it right and there are media that achieve consistently high standards of editorial excellence… but they pay better for better quality journalists.
Then there’s the reader… perhaps there’s no need to cast pearls before swine.
Shabangu and miners must face the music
I have been thinking a lot about former Anglo American chief executive Tony Trahar with all the problems in the mining industry and how Thabo Mbeki was so infuriated by Trahar’s comment to an investor meeting in New York that there remained a small risk to investing in Africa. I was wondering how to find that article when I read Wiseman Khuzwayo’s piece (Opinion and Analysis, January 17).
Trahar was correct, as has been confirmed in recent times, and now, as every action has a consequence, the miners and Mineral Resources Minister Susan Shabangu must face up to the fact that firms are in business to satisfy their shareholders firstly. Also, they have every right to protect that business in whatever way they can. If the minister wants to threaten Anglo, she must understand that her actions could have a further detrimental effect on mining in general in this country.
Her silence while all the problems were going on only made matters worse.
I feel sorry for miners who may lose their jobs but they should have thought of such an event while causing mayhem.
Deryk A Champkins
Mount Edgecombe, KZN
Use SAA bailouts to keep electricity cheap
Why is it that the government continues to use masses of taxpayers’ money to prop up SAA (R15 billion and counting) and yet Eskom has to stand alone (at ever increasing direct cost to the taxpayer)?
These funds should be used to help fund Eskom. Surely it is far more important to South Africans to have electricity supply at reasonable cost, rather than an airline that flies around the world at a continuous loss.
Mining lay-offs don’t come as a surprise
I am afraid that I do not understand the “shock” with which the Angloplat announcement has been greeted.
Wages are raised 22 percent. What was profitable is no longer so and shafts are closed because they no longer make a profit, and 25 percent of the workforce lose their jobs.
What is so surprising? It is inevitable.
G C Wigram