Mhambi has been redeployed.

Thursday, January 31, 2008

Where's the power to the people?

Mhambi has just returned from an exhilarating 2 month visit to South Africa. Friends of Mhambi might smirk at that. Exhilarating perhaps if your a student of social trends they might say. Scary or downright depressing if you happen to live in South Africa.

Derelict cooling towers
Originally uploaded by Leorex.

And it has to be said, very few of the whities - including old lefties - I met were not envious of me living overseas. And a few of the black South Africans and other blacks I met expressed similar concerns. The only optimistic whitey I heard of was my one nephew. He's a successful businessman.

At a dinner party with committed and very informed lefties I was left in no doubt. It was good that I left when I did they said. There was the Zuma, Mbeki battle, the Selebi shenanigans. But the power black outs were the straw that broke the brave optimistic camel's back, they said.

"It's symptomatic of the retreat of the state." The once mighty South African state is in free fall. South Africa now has more than 3 times the number of private security officers than police. The state gave up any pretense of ensuring its citizens physical safety. And now its the power. "Now people will start to supply their own power". Their is no confidence in public policy and the state. "It's every one for themselves".

This is the type of world where the rich will flourish and the poor will suffer. Not a comfortable world for those of us with a social conscience.

It should not be lost on anybody that it was first recommended to this government that it needs to invest in power generation circa 1998. That is a few months before the government embarked on a multi-million Rand arms deal, that turned out to be highly corrupt.

Even if not corrupt the wisdom of this deal was questionable in some respects. South Africa faces little by way of a conventional military threat. But the corruption involved catapulted the costs while introducing more hardware of dubious use to the Republic. What is clear now is that energy generation was not on the agenda.

Compounding the depression has been the response of the government AND the opposition. Government has claimed that we are suffering because of a growing economy and greater demand and that other countries, the US, Canada and Brazil has suffered similar issues. Meanwhile the opposition, besides rightly labeling the government as inept, pinned for privatisation.

Government claims to have planned and directed this kind of economic growth so surely this can not be an excuse? Besides, a 1998 white paper acknowledged the need. And as the Mail and Guardian pointed out, current power usage is actually below peaks of a year before, but none of the existing power stations are running at full capacity anyhow, probably because of a lack of staff shortages.

As for the US, Canada and Brazil argument. Yes, they have had black outs. Mhambi has little knowledge about what transpired in the Brazilian case, but in the others I do.

In the US and Canada the problem was caused in 2003 by a lack of spare capacity on a particularly hot day, coinciding with an accident. The power was restored everywhere within two days. This can not be compared to a decade of neglect in South Africa.

California however did have a more protracted crisis. It coincided with being the first energy market in the world to be deregulated. According to Wikipedia:

State lawmakers expected the price of electricity to decrease due to the resulting competition from deregulation; hence they capped the price of electricity at the pre-deregulation level. Since they also saw it as imperative that the supply of electricity remain uninterrupted, utility companies were required by law to buy electricity from spot markets at uncapped prices when faced with imminent power shortages.

When the electricity demand in California rose, utilities had no financial incentive to expand production, as long term price were capped. Instead, wholesalers such as Enron manipulated the market to force utility companies into daily spot markets for short term gain. For example, in a market technique known as megawatt laundering, wholesalers bought up electricity in California at below cap price to sell out of state, creating shortages. In some instances, wholesalers scheduled power transmission to create congestion and drive up prices.

The energy crisis was characterized by a combination of extremely high prices and Rolling blackouts that lasted for 12 months from 2000 to 2001.

Here, it is predicted that our problems will last for at least 8 years. Privatisation will not necessarily solve South Africa's problems as should be clear from the above example. It will most certainly lead to more expensive energy. It will be bad news for the poor.

People seem to forget that the Nationalists' nationalised Eskom provided South Africa with the cheapest energy in the world. They forget that a nationalised Telkom provided us with cheap phone calls, and that the privatised version is the most expensive internet service provider in the world.

As with the police, you can expect the ANC not to object to the creeping privatisation of power. As was pointed out in fascinating book The criminilisation of the state in Africa, privatisation in Africa often leads to more opportunities for corruption.

No wonder my friends are so depressed. Round here you are on your own and only the very rich and ruthless are still smiling.

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everfresh said...

Personally I see opportunity amongst all this doom and gloom. Getting people into a culture of electricity saving will have its clear benefits.

Furthermore renewable sources of electricity needs to be explored. A pity then that SA new energy policy: “National response to South Africa’s electricity shortage', gave very little attention to this. Eskom is steadfast in its position to maintain a monopoly on energy provision including that of renewable sources.

As mentioned in a M&G article ( "... the energy plan calls for just 500MW in co-generation by the end of next year -- while proposals from interested parties have already topped 5 000MW.

Wessel said...

That's not the point. The government did not plan full stop. Be it nationalised power or provision by others. Privatizing power generation has many pitfalls.

You might argue that private companies would have made sure that the shortfall is supplied. Perhaps, but then you need a raft of complicated *and* well policed regulations to govern the price of transport and delivery across the government network, the provision of power to outlying and poor areas etc.

As Telkom has shown us, to have private telecoms provision you not only need more regulation you also need them stringently policed, because of the nature of natural monopolies.

I agree though that it provides South Africa with the opportunity to become a leader in other forms of power provision.