On November 26, 2011, I wrote: “After a recent tour, Public Enterprises Minister Malusi Gigaba has said the December 2013 deadline for the Medupi power station, in Lephalale, Limpopo, to start delivering power still stands. ‘I have no intention of allowing any delays to the target of December 2013,’ Gigaba told reporters during a site visit. ‘I will tolerate no delays – that is why we have brought all the stakeholders on site.’”
Thus spake the Oracle in 2013: “I was outside the front door of the Medupi power station last week and I can tell you there is no way that Medupi will generate any power in December. It is not going to happen. March 2014. If they’re lucky.”
As we all know, Unit Number 1 of the Medupi power station was only synchronised in March 2015, a casual one-and-a-half years after Gigaba had issued his ultimatum. As we all know, the Minister has now moved on to higher things, leaving behind an Eskom that is rapidly resembling the gift that keeps on giving, where millions have been diverted to all sorts of dubious places for dubious reasons and where, it seems, not one of the management can keep their fingers out of the cookie jar.
In August last year, Eskom executive Matshela Koko gave a coal supply contract to a firm without using the tender process. The National Treasury warned that the contract may be irregular. Further contracts were pushed forward and the National Treasury rejected two of them. Eskom signed the contracts anyway – and Eskom reports to the Minister of Public Enterprises, who, at the time of the dodgy contracts, was the ultimatum-giving Gigaba. But now, guess what? Gigaba is Finance Minister, to whom the National Treasury reports. No more of those naughty rejections and objections by the National Treasury, we think. The wool must firmly cover the eyes.
All this reminds me of nothing so much as the cartels who run the cocaine trade in South America and Mexico. When you loot enough cash and spread it around, there is no amount of objection or legal process that will stop the corruption thus created. If anybody takes any of these national enterprises to court, I am quite sure, often enough, they will find that palms have been greased in every direction to keep the hearings going forever.
So what? The problem is that, despite what anybody may think, Eskom does not have an infinity of revenue available. It is a bit like income tax: you can put tax levels up to acertain point, beyond which no more revenue increase would occur – people will just become more adept at avoiding tax.
Similarly, Eskom can put up its energy supply rates to recover the money that has been pushed into dubious contracts but, at a certain point, people will stop using electricity for certain functions. Geysers are cheaper than heat pumps but, if electricity costs a lot, then people will buy heat pumps and never go back to geysers. People will use gas instead of electricity to cook. Induction-cooking-based appliances and microwave appliances will be used instead of ovens. Conventional streetlighting will be replaced with low-energy-consumption streetlighting. Private gas wells and generation will undercut Eskom supplies. All this will lead to less revenue for Eskom. Ultimately, any industry that is reliant on electricity will shut down and go somewhere else if it becomes too expensive.
About ten years ago, I wrote a column in which I said that, unless Eskom built a new power station, it was going to run out of power. I and many of my colleagues were astonished when Eskom just did not bother to do this because government would not allow the utility to do it. We could not conceive of a government that stupid. But now it seems Eskom is going to do it again on a grander scale; it is going to run out of power and money at the same time. What a time to live in!