Eskom sinks ever deeper as we pay for its errors

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We all thought that the National energy Regulator of SA (Nersa) had finally reined in Eskom’s unjustified demands, but we continue to be reminded daily of Eskom’s ineptitude, scarcely credible of a major entity with an average annual salary bill of R500 000 a person.

At those heady levels of income they could afford a decent spin doctor while, in fact, they seemingly only understand the spin of a roulette wheel, much less the spin of a power station turbine!

Lately, Eskom has derogated to Nersa its responsibility in the now public and illegitimate contract with BHP-Billiton’s aluminium smelters: Nersa was not a party to this sinful arrangement and all the signatories to it are probably now on lucrative BHP-Billiton pensions.

BHP-Billiton’s recent protestations on the threat to their precious smelters indicate their serious sensitivity: they state that they’ve invested over R60 billion in the plants, while they’ve probably consumed much more in South Africa’s effective power subsidies, and already generated enormous profit from South Africa’s silly generosity. Instead, they should take note of Rusal’s recent decision to abandon their Nigerian aluminium smelter after non-delivery of cheap fuel gas.

Meanwhile, we learn that only 70 percent of Eskom’s coal is delivered by major mining houses (including BHP) on fixed-price contracts, which infers that emerging mining houses supply 30 percent of their coal, but on a cost-plus basis. The resultant price of “emerging” coal then justifies the major miners’ demand for increased prices for Eskom coal for which they have no other customer. Not only does the “emerging” coal finance the ANC, but BHP’s profits yet again while the public, which pays for all of this, has no access to the terms of Eskom’s clearly irresponsible contracts.

Eskom is in the serious selling business. But they have given away so much of their product, or are incapable of maintaining their production capacity, that they must now buy back what they have sold to supply their major stakeholder, the South African public. Now we are told that they have exhausted their ability to make the buy-backs, yet more idiocy while, more seriously, the real engine of the economy continues to contract rather than grow.

The ineptitude continues with project management on the new power stations. We are told that Eskom is blaming serious delays in completing the first Medupi unit on problems with their principal contractors, even threatening the involvement of Hitachi (boilers) and Alstom (turbogenerators). Plant engineers would liken this to changing a plane’s engines in midair! And, horror of horrors, Chancellor House might miss out on its profit share from Hitachi, or maybe Megawatt Park has also derogated its project management to Luthuli House.

One would naturally expect Eskom to have sharpened up after all their experiences. However, there is every indication that they are becoming increasingly inept and the impending departures of chief executive Brian Dames and finance director O’Flaherty can only be awaited with trepidation. Maybe they will reappear on Billiton’s board, remunerated by profits from expensive coal and cheap aluminium!

Roger Toms

Hout Bay

Cheap shots taken at those with solutions

Jeff Rudin in “Pathetic wages mock constitution’s guarantee” (April 2, Business Report), repeats the union argument that business wants a low wage regime just for its own selfish profit. And that a “living wage” enables workers to spend, offering business an expanding home market.

By that argument, why not pay workers R10 000 a day and the economy should soar? What in fact would happen – as it is happening currently because of relatively high wages in South Africa – is that there would indeed be strong retail demand, but because of uncompetitiveness the goods would be imported. Warehouses would multiply while factories closed, as is happening. Facts emerging from the Walmart saga show that almost 100 percent of goods sold at Game, for instance, were imported.

If in certain labour-intensive sectors such as clothing manufacture and agriculture, wages were allowed to be determined by supply and demand, those sectors could absorb many of the unemployed who are not getting a living wage, or anything. Fuller employment would be good for them (though they obviously wouldn’t have to accept the jobs) and for the economy.

The likes of Rudin and the unions have no real suggestion on how unemployment can be reduced so they are reduced to cheap shots about the humanity levels of others who do have suggestions.

Maurice Talbot

Bryanston

Major changed needed to dig us out this hole

The daily commentary by economists and others about the movement of the rand is laughable and can only possibly be given any credibility by those who accept without question what they are told.

The rand’s movement has zip to do with the euro, the dollar or the tough global conditions as stated with regular monotony, but is mostly, if not all, to do with South Africa’s performance and how short-term investors in South Africa see the security of their investments – and this is precisely how the rating agencies see it. Do we not notice that the dollar is appreciating because trading conditions are improving in the US, that the pound is devaluing because England’s economy is suffering, that the euro is weak because Europe’s economies are suffering?

Our country’s situation is deteriorating daily. At our present rate of borrowing, which should be giving the government sleepless nights, and the directionless plans of how to invest these borrowings in a meaningful way, coupled with curbing of the wilful squandering of funds that allows them to end up in the pockets of a few corrupt people, or the funding of white elephants, we will in no way control the destiny of the rand, and our future could easily end up following Greece and Cyprus, except that we do not have the support of the euro and our printing press will have to run overtime.

Whatever the analysts say, unless there is a major change to get our economy out of this hole, we can look forward to the rand trading down to about R12 to the dollar within five years, and watch another 30 percent to 40 percent knocked off the value of our savings.

David Milne

via e-mail

Entire country should follow Cape example

I note that Cape Town has introduced austerity measures that have cut a whopping R103 million from the budget – wonderful news for ratepayers and residents!

If only central government could do the same – but with all the ANC incompetence, corruption and theft from the public coffers, that seems just a dream these days.

The Western Cape must surely be the best run province in the country, while all the others are in dire straits.

I wonder how long the country can continue under the vicious and merciless jackboot of the ANC regime?

Edward Dale

Durban

More states must sign arms ban deal

Not since the nuclear disarmament treaty of a few years ago has the world managed to get consensus on an issue that has been the greatest single reason for conflict globally. This ban on arms sales, ratified by about two-thirds of the UN General Assembly with the “usual suspects” abstaining, just needs about 50 signatures to give it muscle, and hopefully see a world where peace can reign amid the many war noises emanating from the Korean side, and the ongoing strife in Syria.

With the US a global player in this business, and greatly affected, there will also be the question of redeploying the many armaments personnel to other spheres, so as to ensure continuity and not further dent unemployment statistics, which are already showing a record 12 percent mark among euro zone nations.

AR Modak

Johannesburg


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