EDITORIAL: Eskom, we need to talk about the abuse

The only thing more infuriating than the cognitive dissonance from power albatross Eskom is the mealy-mouthed equivocating by President Cyril Ramaphosa on the energy crisis.

This week, that cognitive dissonance hit stage 6 as Eskom subjected SA to more hours of blackouts over a weekend than ever before — even as it filed a smug demand for a 32% increase in electricity prices. 

It was as if Eskom has sauntered through the front door drunk, slapped you around, then rifled through your wallet while you were nursing your bruises, before crashing the family car trying to find a new bar.

Citizens were aghast at Eskom’s audacity, and lack of basic emotional intelligence, or EQ.

The Organisation Undoing Tax Abuse (Outa) described it as “outrageous” that Eskom wants more money for services it isn’t delivering. “Eskom seems to assume that electricity consumers are a captive audience from which it can demand money while failing to supply a service,” it said.

Outa took issue with two things in particular. First, Eskom wants to hike its “fixed cost” — the amount it gets even if it provides zero electricity.

Second, Eskom wants higher tariffs to mitigate its looming R15bn loss. “It appears that part of Eskom’s rationale for its tariff application is a desire to pay profits to government,” says Outa.

On Tuesday, Eskom CFO Calib Cassim argued to the National Energy Regulator of SA (Nersa) that even if its R400bn debt is stripped out, the utility still needs a hefty price hike to reflect its “costs”.

That’s disingenuous. 

Consider that for the year to March 2021, Eskom made R204bn in revenue, and R6.68bn in profit, before finance costs. But because it has to repay a gargantuan R31.5bn in debt costs, Eskom tumbled to a bottom-line loss of R18.9bn. 

So, but for the debt, it would have made a profit. Now, it’s true that energy input costs this year have soared — diesel particularly. But we cannot have a situation where costs stabilise and its debt is parcelled off to some unlucky institution — and Eskom turns a chunky profit, having crushed consumers. 

This is especially when you consider that Eskom paid R32bn last year in salaries (and R129m in bonuses) to a workforce that, according to the World Bank, is vastly bloated.

So when Cassim beats his breast about Eskom’s need to levy a “cost-reflective tariff”, consider how padded these “costs” are. Nersa shouldn’t fall for it.

In a pointless act of showmanship, Ramaphosa flew back early from the UK, presumably to show “solidarity” with citizens dealing with power cuts of nearly 12 hours a day.

Two months ago, when blackouts spiked, Eskom blamed strikes. So what have Ramaphosa and his cabinet, particularly mining & energy minister Gwede Mantashe, been doing since vowing to bring the situation under control since then? Sweet nothing.

In July, public enterprises minister Pravin Gordhan reiterated a pledge from May to bring in old hands to fix the stuttering grid. Yet this week Gordhan made headlines for saying the same thing.

It’s an indication of the disdain with which Ramaphosa’s government treats the public: repeat empty promises, do zip, and ramp up taxes to prop up an ineffectual government, even if it crushes consumers.