This article was written by the Amandla Collective for Amandla! Issue 13 in March 2010; after it was announced that the electricity tariffs would increase.
The 25–26% increase in electricity prices over the next three years is a bitter blow for South Africa’s poor and working people, who are already struggling to cope with the million jobs lost under the recession.
On a global scale, the South African economy is uniquely dependent on electricity and is uniquely electricity intensive, with levels of consumption comparable to those of rich industrialised countries like Britain. Yet, household consumption constitutes a fraction of electricity use. Most electricity is consumed in mining, mineral processing and related industries.
The cost of the tariff increase is disproportionately spread. Industry has obtained secret tariff agreements with Eskom. They pay much lower rates than consumers. BHP Billiton, which owns aluminium smelters, still has apartheid era Special Pricing Agreements in operation that provide the world’s lowest electricity prices. Whereas ordinary household consumers pay an average of 35 to 40 cents per kilowatt-hour, some of the largest industries pay as little as 5 cents to 11 cents per kWh.
A “pro-poor” government’s first step would be to cancel these agreements. It would also consider shutting down these electricity-guzzling smelters. They are a drain on our foreign currency reserves and aggravate our balance of payments problems.
The electricity tariff increases are intended to fund Eskom’s massive expansion programme. Two huge coal-fired power stations are being built, and possibly additional nuclear power stations will follow. At the same time, we are deep in the era of global warming caused by the burning of fossil fuels. South Africa is the twelfth biggest emitter of greenhouse gases, principally through burning coal for electricity.
This alone should force government to shift and invest in renewables. Eskom’s expansion programme, which will cost more than R350 billion as well as force the country into its first post-apartheid World Bank loan (and who knows with what conditionalities), is being undertaken primarily to service the needs of the mineral energy complex.
Electricity and mining are mutually reinforcing, and their fortunes are tied together. It has also become clear that the price increases are a pre-requisite for the entry of “independent power providers”, i.e. capitalist firms that will be able to make profit from electricity generation.
It is also probable that future funding for Eskom from the World Bank is dependent on the opening up of the market to private corporations. The unions are correct to point out that government has begun opening up the industry for privatisation. As in the gold industry, the coal sector has undergone a process of mergers, acquisitions and name changes over the past few years.
Three major coal producers and exporters have emerged, viz. Anglo American Coal (Anglo Coal), Ingwe (a BHP Billiton subsidiary) and Xstrata (Glencore). Various black-owned companies have entered the coal mining industry. They are linked to the major multinational corporations that dominate mining internationally. All the usual suspects are involved: Sipho Nkosi of Eyesizwe, Patrice Motsepe of African Rainbow Minerals, Tokyo Sexwale’s Mvelaphanda. Even the ANC’s investment arm, Chancellor House, has got into the coal-mining act.
Eskom is fed by cheap coal, and its expansion programme requires a massive growth in coal mining. It is estimated that R100 billion must be invested in coal mining, and 40 new mines must be devoted to supplying Eskom. The multinationals and the BEEs will be the major beneficiaries of Eskom’s build programme. Revenue from Eskom’s increased tariff s will be going into their pockets.
Chancellor House already stands to profit through the Eskom build programme up to R5.8 billion through its 25% stake in Hitachi Power Africa that will supply the boilers to the new power stations. South Africa is in desperate need of a break with its export orientated “growth path”. The diversification of the economy away from minerals, energy and heavy chemicals requires a break with BEE.
As a junior partner to big capital, BEE reinforces the apartheid industrialisation path. It is not just jobs that are sacrificed. We have to consider the environmental consequences of coal-fired electricity. We cannot hide behind the African continent’s low levels of emissions. SA is one of the worst polluters because of coal.
An alternative path, where the money that is currently being channelled to the mining magnates is diverted to renewables, could create many more thousands of decent jobs. “Power to the people” means breaking the power of the mineral energy complex. A red–green alliance of labour and social movements needs to lead this charge. If not, we shall be reduced to having to “cry for the beloved country”.