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Zille: Break Eskom monopoly or it breaks SA

Cape Town - Keeping Eskom’s monopoly and control is more important to the ANC than solving this crisis, DA leader Helen Zille said in her newsletter SA Today.

She based this view firstly on the fact that Eskom briefed cabinet about the risk of a nationwide blackout.

Should this happen it means the electricity grid as a whole has failed due to load shedding alone not having been enough. Everything will then shut down.

To avoid this catastrophe, it is inevitable that SA will face heavy load-shedding for the foreseeable future, according to Zille.

Secondly, the ANC had decided, at its annual lekgotla, to abandon the Independent System Market Operator (Ismo) bill. This is legislation that would have taken the management of the national power grid away from Eskom, allowing far greater involvement of independent power producers (IPPs).

She expects President Jacob Zuma's upcoming State of the Nation Address (Sona) on February 12 likely to be "several pages of 'good news' factoids, cherry-picked from reams and reams of not-so-good-news. But there will be no fooling those of us who live here. We know this is not the true state of our nation".

Zille pointed out that, among other things, a third of the municipalities are in financial distress and unable to deliver the bare minimum of basic services.

Half the children who enrol for Grade 1 don’t end up writing matric and more than a third of the adult population is unemployed.

READ: SA to sell assets to raise R10bn for Eskom

Business obstacles

According to Zille the unstable electricity supply is the biggest obstacle to SA's ability to grow the economy, to start and sustain businesses, to attract investment and ultimately, to create the job opportunities needed.

The damage to SA's economy, since load-shedding began in 2008, is estimated to be around R300bn and SA has lost an estimated million jobs to load-shedding.

"If Eskom says we should brace for another five years of interrupted power supply, you can be sure that this is not a worst-case scenario. They mean at least five years," Zille cautioned.

If Zuma was serious about ending the electricity crisis soon, there are a number of steps he could announce right away to start turning the ship around, in Zille's view.

The first step is "to recognise that the biggest threat to a stable and steady supply of electricity in SA is the stifling monopoly of Eskom enjoys" - 95% of SA's electricity supply comes from them.

Next is what she calls "the revolving door of unqualified cadres deployed" to run Eskom.

She would like to see SA's electricity grid opened "in a meaningful way" to independent power producers.

"This is exactly what we need – not the gargantuan coal and nuclear projects that take decades and hundreds of billions of rand to bring into service," she said.

"Connecting these projects to the grid is the next challenge, as many of them would be in remote locations. And, unfortunately, investment in the expansion of the grid is another area where Eskom has dropped the ball badly in the past two decades."

READ: Eskom lifts veil on doom at cabinet briefing

Infrastructure spending

Another aspect which worries Zille is that government's infrastructure projects - in her view "Zuma's only apparent plan to spur growth and create jobs" has halved from 2013 to 2014.

"It is crucial that we invest in the expansion and maintenance of the grid so that we can tap into the massive potential for private electricity generation and connect these projects," said Zille.

"It is equally important that we take the management of the grid – the buying of electricity from producers and selling to distributors such as municipalities – out of the hands of Eskom. This is precisely what the canned ISMO bill would have done. We need competition, not a protected monopoly."

Energy mix

Secondly, Zille said SA needs to re-look at its ideal energy mix, with far greater allocation to renewable energy sources.

In 2011 the Integrated Resource Plan (IRP) was drawn up. This is a long-term (20 year) framework that sets out goals in terms of capacity as well as the ideal mix of electricity types.

In drawing up this plan, it was stipulated that it should be reassessed and revised every two years.

"It took three years for the first revision (2014), and this revision has subsequently been rejected. The result is that we’re now working off a plan that is completely outdated, in an energy landscape that has changed significantly in recent years," warned Zille.

"When the original IRP was drawn up, renewable energy was still relatively expensive compared to coal and nuclear power, but since the start of the process to procure private investment in renewable energy projects (64 projects to date totalling R120bn), the price of wind power has dropped by 42%, and solar power by an incredible 68%. And the latest developments in biogas look even more promising."

The energy from the first wind and solar projects is estimated to have saved diesel and coal to the value of R3.7bn.

Demand has also dropped significantly from what was projected in the 2011 IRP, and SA is currently using less power than it did in 2007, she said.

READ: Eskom CEO: SA's reserve tank almost exhausted

Nuclear deal

Thirdly, SA must abandon the R1trn nuclear deal, in Zille's view.

"Given our immediate need for power, the falling cost of renewables and the revised projection of our demand, it is sheer madness to persist with the nuclear procurement programme," she said.

'Absurd bonuses'

A fourth option, according to Zille, would be for the Eskom executive "to return the absurd performance bonuses paid out to them".

"Since load-shedding began in 2008, Eskom’s top brass has received a staggering R63m in performance bonuses. In 2012 and 2013 alone, the nine members of the Eskom board received R31m in vested 'performance shares'," said Zille.

"The salaries of the directors and group executives in 2014 amounted to R60m - up from R57m the previous year - of which R24.4m went to its top three executives."

Former CEO, Brian Dames, received R22.8m when he left, of which R5m was simply for terminating his contract.

""All of this as the blackouts returned. Everybody who hears about these huge amounts has the same question: Bonuses for doing what exactly?" asked Zille.

ALSO READ: Corruption alarm in nuclear deal

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