Planning Minister Trevor Manuel became the first minister to publicly stick his neck out on power price hikes when he declared yesterday that the proposed massive increases were unacceptable.
He also pledged yesterday that the government would be tackling its Achilles heel – its supply chain management – by using its massive economy-of-scale bargaining clout to ensure that services, including health services, provided by the state were better and cheaper.
The minister called for moderation in administered prices – prices driven by the state and its parastatals – including electricity tariffs.
This follows opposition at the ANC’s national executive committee lekgotla last month to Eskom’s five-year tariff plan.
It was reported that Public Enterprises Minister Malusi Gigaba had been asked “to attend to the matter”.
Yesterday, speaking at a briefing on the National Development Plan, Manuel said that while he did not have an off-pat answer to the dilemma of high energy prices, “we have to demonstrate that we are doing all in our power to moderate the increases requested”.
In the midst of hearings by the National Energy Regulator of SA (Nersa) on the multi-year price determination for electricity from state-owned Eskom, Manuel said: “We have to guard against rapid increases in administered prices… of which energy is one.”
Manuel acknowledged that the government faced a conundrum. It had to deliver an ever-expanding service to the public while also having to balance fluctuations in the exchange rate of the rand.
He also realised that any decision on price increases would have to take into account Eskom’s obligations and “ensure that Eskom is not bankrupted”. He said: “There is a huge job we have to do.”
At the ANC national conference in December, he called for an energy indaba to flesh out solutions. Nersa is scheduled to announce its determination by the end of next month.
Industry and trade unions have been united against the price increases, which the National Union of Metalworkers of SA has noted would boost the price from 61c per kilowatt-hour (kWh) to R1.28/kWh by 2018, a 110 percent increase.
Last Thursday, President Jacob Zuma in his State of the Nation speech steered clear of the controversial terrain of the massive electricity price hikes sought by the power monopoly.
Eskom wants five years of 16 percent annual price hikes to help cover the costs of its coal-based power station projects Medupi and Kusile and other capital spending projects.
Eskom’s outgoing chief financial officer, Paul O’Flaherty, told Nersa recently that the monopoly needed the tariff increase to maintain revenue and cover operating costs.
Noting that the president had made commitments to reduce carbon dioxide emissions, Manuel said that in the US “people [are] doing amazing things with solar energy… what they do is rent space on people’s roofs”. That energy was fed into the grid. In South Africa similar strategies should be “a no-brainer”.
However, the costs of solar power were still punitive in South Africa. He argued that there was “a bit of constipation” with regard to the role played by independent power producers on renewable energy.
Meanwhile, Manuel also hinted that the government would be taking the nation into its confidence by cracking down on public servants who ran their own businesses as a sideline, while it would incentivise the good work of public servants, particularly teachers.
There would also need to be a crackdown on public servants who did not do their jobs, and on teachers who did not teach but drew salaries.
Speaking in a debate on the president’s State of the Nation address yesterday, Manuel said the government “must raise the consequences for those [public servants] who do not perform the functions required of them”.
If teachers got paid, he said “even when they haven’t taught our children, it’s wrong, and there should be consequences”, Sapa reported.
When pressed on whether mathematics and science teachers would receive incentives, as proposed in the National Development Plan, Manuel said he would not like to be drawn on specifics as much of the detail would emerge in Finance Minister Pravin Gordhan’s Budget speech
next week.