Opinion by Valentia Baloyi – Following the president’s address on the energy crisis presented more than a month ago in July, numerous strategies have been proposed with a central focus on improving Eskom’s existing fleet power, private investment in generation capacity, procurement of new generation capacity, and enabling business and household investment in rooftop solar.
This address was urgently treated following stage 6 load shedding, where Eskom sheds 6000 megawatts of power and 6 hours of blackouts per day. The latter resulted in an economic loss of over R4 billion per day.
The energy crisis in South Africa has now become a riskmultiplier that not only deteriorates the economy further but has sparked much civil unrest that comes with the disturbance of the social order. Regrettably, the risk of load shedding has established a less than conducive environment for small and medium businesses to thrive.
The same companies harnessed to combat the unemployment in the country and grow the economy.Due to the entity’s operating on debt and insufficient capacity, its possible default can risk the downgrade of out credit rating which will sharply increase electricity crisis, which can breed protests and riots such as the national shutdown, and not overlooking the business and economic disruptions and losses incurred by the rolling blackouts. world.
It has been established that the current energy crisisstems from numerous overlapping challenges spanning from debt incurred in the past decade. It can be argued that a significant challenge is having Eskom as the only energy entity for the whole country and an economy that is rapidly embracing digitalisation. This coupled with mismanagement of the entity, corruption, and a brain drain within the entity attributed to through racial engineering and non-payment of electricity by manyhouseholds.
In surveying these challenges faced by the entity, we can establish the negative relationship between demand, supply, and payment for the service, where there is high demand, low generation capacity, unstable supply, and limited payment of electricity by clients.
Taking into consideration the socio-economic situation of South Africa with significant differences in economic and financial classes, even in spatiality, this does explain why some areas may not fully pay for electricity while some do. Considering that services are efficient and reliable when everyone pays for them, a feasible solution for the payment of electricity used is crucial in improving the payment of electricity in the country.
Therefore, discarding the notion of paying for electricity according to one’s ability and willingness is essential,and having a system that can have everyone pay for electricity. However, another problem may stem from Eskom’s payment and tariff system that has reflected some price gouging characterized by unfair price hikes and unregulated added tariffs. This shows a culture of burdening those who pay for electricity by always hiking the prices to compensate for the pay gap among thosewho use the electricity yet not paying.
The relationship between low-income areas such as Soweto, where most households are not paying for electricity, and Eskom’s faulty and gouging payment system. It can be established that the problem is not the willingness to pay for electricity but the ability to do so.
Eskom applies a blanket approach in its payment structure, which disregards the different income thresholds of different areas, leading to some areas not being able to pay for electricity because they cannot afford to.
We recognise the strides taken by the entity to propose a flat rate payment structure which is a feasible solution. However, the entity would be well-served by consideringthe different income thresholds of different areas. Therefore, the income assessment of areas should be a priority in establishing the area’s affordability in paying for electricity.
For instance, for low-income areas such as townships, plagued by high unemployment, most living below the poverty line, and high reliance on social and old age pensions, there should be an affordable tariff that can have every household pay for the energy service.
The primary attraction of this affordable flat rate would be in eradicating the culture of non-payment, introducing a fair payment system, and having everyone pay for electricity in accordance with the area’s income threshold.
The idea is not to finance the debt incurred in the last decade through rapid high price hikes and tariffs but to have an inclusive payment structure that embraces consistency and guarantees a new form of revenue for the entity.
This will further generate an income for the maintenance of electricity infrastructure, which Eskom had stopped maintaining and replacing in areas where there is a non-payment of electricity.
Undoubtedly, this needs rigorous and excellent administration with much competence to ensure that all necessary demographic information is captured along with a diversified payment system that is user-friendly. This is coupled with pay-points for the elderly. The success of this project can also be guaranteed by transparency from all stakeholders, no corruption, accountability and cohesion
The views expressed here are not those of Central News.
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