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Thursday, October 11, 2007

Press Release: Eskom’s Load Shedding and Industrial Power Usage

Press Release: Eskom’s Load Shedding and Industrial Power Usage
Earthlife Africa Jhb
11th of October 2007

Over the past few days, Eskom has been engaged in load shedding and encouraging domestic users to conserve electricity. In the process, a few key facts have been conveniently omitted.

The greatest users of electricity are not domestic users, who account for only 17% of electricity users. The greatest users of electricity are industrial factories; 29 companies consume 40% of all electricity. Furthermore, the demands on electricity supply up to 2050, according to the Department of Minerals and Energy figure, are primarily due to industrial demand.

Despite being the most-intensive users of electricity, industry pays half the tariff that domestic users do (an average of 29c per kwh compared to an average of 17c per kwh). This has an obvious effect on Eskom’s ability to generate, transmit and distribute electricity.

Furthermore, Eskom and the Government have committed themselves to large-scale supply of electricity to individual and foreign companies at reduced tariffs; this at a time when Eskom struggles to supply citizens with electricity. Thirty percent of all South Africans are still not connected to the electricity grid.

An example of how Eskom and the Government are favouring foreign companies over the interests of South African households is the electricity supply deal to the Canadian aluminium-smelting firm Alcan.

For the past two years, Earthlife Africa Jhb has consistently called upon the Department of Trade and Industry (DTI), the Department of Public Enterprises, Eskom and Alcan to disclose the details of electricity sales to Alcan for its proposed smelter. Both the South African Government and Alcan have hidden behind a profoundly anti-democratic clause in the Developmental Electricity Pricing Programme (DEPP). Alcan is the first foreign company to benefit from the DEPP, and has signed a 25-year deal for 1350MW supply of electricity. This represents about 4% of the entire country’s usage.

What is the DEPP? Essentially, the DEPP provides for uniquely discounted electricity tariffs for foreign industries that are heavy consumers of electricity (over 50MW) in South Africa. In return for investment in South Africa, the DEPP will ensure that electricity tariffs are internationally competitive (our nearest competitor is Australia, which sells electricity at US$0.053 per kwh and is 30% more expensive) and that the industry in question can achieve an profitable internal rate of return; i.e. if electricity is a major overhead (such as in aluminum smelting), it the tariff will be low enough to ensure profit.

This is a significant incentive for heavy industry to invest in South Africa and is supposed to provide significant jobs. However, what it really does is commit Eskom to tariffs for heavy industry at a rate lower (or, at most, on par with the next cheapest supplier of electricity) than anywhere else. It is, in effective, a subsidy for foreign industries, similar to a tax break or import duty waiver.

The most worrying factor about the DEPP is the “built-in” secrecy clause. Eskom is a public enterprise, ultimately owned by the citizenry at large. However, the DEPP guidelines ensure that any contracts signed under the DEPP are to remain secret. This is profoundly anti-democratic. The DEPP states (clause 12.1):

All officials, employees or members of the Department, the adjudication committee, NERSA, Eskom and non Eskom distributors shall regard as confidential all technical information, records, particularly any strategic commercial information and all knowledge that pertains to any project that applied for benefits in terms of DEPP, whether such information is recorded on paper or in an electronic manner.

The very next clause (12.2) in the guidelines bounds individuals with knowledge about the contracts to silence for the rest of their lives.

If the DEPP is a method for promoting growth and development in South Africa, why then the secrecy? Why shouldn’t this be in the public domain? This clause gives foreign corporations like Alcan the right to build electricity-intensive industrial plant in South Africa, get electricity on favourable terms in relation to their expected rate of return, and not to have to tell the country at large what rate they purchased electricity from the South African state. Further, this clause seems at odds with the spirit of the Promotion of Access to Information Act, through a pre-emptive strike against the releasing of information.

The DEPP deal with Alcan means that the citizens of this country won’t know the answers to the following questions:

* What is the price of electricity agreed upon by Alcan and Eskom?
* What are the conditions of supply of electricity?
* Will the price paid to Eskom cover the indirect costs of smelter? For example, the environmental group TWIG has calculated that the indirect costs of harm to the environment based on Eskom CO2 emissions to supply the smelter with electricity would be R6.4 billion.

The question that should be asked when Eskom turns off the lights is; why, if Eskom can’t supply electricity to the citizens of this country, is it offering foreign companies large amounts of power at reduced tariffs? Must individuals and small businesses suffer so that large industries can be assured profit?



  • The executive management of Eskom performed to such an extent over the past three years that long term performance bonuses of R10,3 million will be paid to them on 31 March 2008. The question is; how is it possible that South Africa is sitting without electricity while the government owned company that is responsible for power generation will pay out “performance” bonuses. The answer lies in the nature and the performance measurement criteria of these bonuses.

    To read more visit under heading ESKOM MANAGEMENT TO RECEIVE “PERFORMANCE”

    It is now time to stop payout of the bonuses. Voice your concern. Visit

    Newsletter with recognition of a partner of Powergroup. Contact us if you want to partner with Powergroup.

    Riaan Oosthuysen

    By Anonymous Anonymous, At 12:12 pm  

  • Power Shedding

    Power Shedding is back, at least in Gauteng. I’m not sure what is happening in the rest of the country but I presume it happening everywhere. I’ve listened to the traffic reports this morning, spoke to some people and received a lot of report of inconvenience and disruptions.

    We called the Powergroup into life during January this year in the mist of Load Shedding. Shortly thereafter Load Shedding stopped and everybody was happy again. This weeks Load Shedding according to Eskom is due to ‘n sudden demand of Electricity due to the cold weather. This of course is just ‘n forerunner in the small for the winter on hands. What’s happening now will just repeat on a much bigger scale in the winter to come. In the mean time at least 4 of Eskom generators are out of commission. This just reflects back to the reports brought out by which indicated a lack of planning and maintenance on the whole Electricity grit.

    In the mean time Eskom shifts the blame to the consumer. They show their teeth and indicate if we do not use less power we will feel their grunt. I agree, we must use less electricity to get through this crisis, but we must also demand heads to roll of people who are the authors of this crisis and replace them with competent people who does not only do the talk, but also do the walk. If one’s look at Eskom’s financial statements it is clear on their own account that they are the only authors of the electricity crisis.

    Million of people had billions of damages due to mismanagement of Eskom and it is time to claim back that was taken away en pressurize Eskom and Government to implement a plan of action and not just talk about it.

    I spoke to a lot op people who indicated that what will it help to take on a giant like Eskom. There is a duty on everyone of us to act now. If we do not act we will give Eskom and the Government the green light to proceed with mismanagement. Just look at our roads, look at our municipalities, look at the state of our rivers, and look at the state of service in government organizations. Government organizations are kept alive by business that is forced to do the work of Government officials if business wants to keep the economy alive. I see at the Masters Office, Magistrate Courts, and Municipality Offices. How long will we tolerate this?

    I’ve been criticized that I am using emotions and religion to make profit out of an unfortunate crisis in the country. I’ve been criticized that I am busy with touting. I believe that God uses people to bring change about. This means that God will use people to turn our country back to the country it is supposed to be. I am willing to stand up and make a difference. Are you?

    If everyone runs away from the problems in our beautiful South Africa with all of its opportunities, I will stil be here because I believe in this country. I know what God has in store for this Country and I know that I’ve got a purpose in this country, do you?

    I the mean time Eskom bosses cant wait for the 31 of March 2008 due in 13 days when they will receive an huge bonus of more than R10 Million for allowing this Electricity crises and all we can do is complain, criticize en point fingers but doing nothing, I repeat nothing at all. When will we wake up? When will we put our money where our mouth is?

    Powergroup is waiting in anticipation for South Africans and anybody who wants to make a difference in this beautiful country. Powergroup with their experts are already in the position to prove in court that Eskom was negligent in managing electricity in South Africa. According to their own financial statements there is more than enough money available to build more power stations and to pay out damages to people who have been hit hard by this crisis. This has been so for the last 10 years. If we do not act, where will we be in 10 years?

    If we unite and stand together we will be the Giant who can force Eskom and Government to act now and we can be through this crisis before we know it. Thereafter we as citizens wil be able to force municipalities and governmental institutions to perform the duties and restore our country to the state it is supposed to be.

    Riaan Oosthuysen

    By Anonymous Anonymous, At 11:00 am  

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