Lights Out in South Africa as Power Utility Struggles to Survive

JOHANNESBURG Businessman Collen Rameetsi wasn't concerned about his welfare when South Africa's power utility, Eskom, began implementing four-hour blackouts, known as load-shedding, last week to try to inch its way out of a debt and management crisis.

He was worried, specifically, about the eight bodies in his industrial refrigeration unit.

Rameetsi runs a small funeral home in Johannesburg's population-dense Soweto township. While his refrigeration facilities have backup generators that turn on when the power dies, he worries about the rising cost of fuel to operate them.

Yoh! he said. Load-shedding is affecting us a lot. Most especially, we undertakers, because you know what, we've got some corpses in our fridges, he said. Luckily enough, we've got some backups. But you know what, we don't have enough money for the generators, whatever, to start the generator, because we are always depending on Eskom.

Cash infusion

This week, Finance Minister Tito Mboweni attempted to resuscitate Eskom with a three-year cash infusion worth about $4.6 billion, far short of the utility's request for about $7 billion.

The government previously bailed out the utility in 2008 to the tune of 83 billion rand, at the time, worth close to $10 billion.

Earlier this month, President Cyril Ramaphosa announced he would split the utility into three units to restructure it.

Mboweni warned this week that the government's help comes with conditions. The main one, he said, is that the utility must install a new executive to oversee the restructuring.

Mboweni and other top officials have criticized areas like Soweto, which owe the utility billions of dollars, for not paying their electricity bills.

But that, says analyst Chris Yelland, is a drop in the deep pond of problems for the national utility, which in previous years invested in two new coal-fired plants that blew past deadlines and budgets.

He has estimated that the power cuts cost the economy about 2 billion rand, or about $143 million, in lost revenue every day.

They are an old electricity utility facing the classic problems of old electricity utilities in adapting to a new world of an energy which is rapidly changing, he told VOA. And they are facing problems with financial, operational and environmental sustainability. ... And the solutions, of course, are complex, going to take a lot of money, and there are short-term problems and issues, medium-term issues and long-term issues that need to be dealt with.

Yelland says Eskom has considered one remedy, but it is extremely unpopular.

You can put your prices up, and that will generate more revenue, he said. But of course Eskom is not a free hand, it cannot just put the prices up, because it is a monopoly, it is regulated, and the regulator controls by how much it can put its price up, and it has to consider the impact on customers and the economy.

Unemployed or cash-strapped

But that is a hard pill to swallow for cash-strapped Sowetans. Mmapule Noko, 24, says her bills are already too high. She estimates she pays about 1,000 rand, or just more than $70 a month during the winter, and understands why her neighbors don't pay.

They are unemployed, she said. I don't blame them, I don't judge them, but I know. I'm from Soweto � I know; they are not working. So they have to come up with a plan: create jobs, maybe the electricity will be paid for. Or something, I don't know.

Rameetsi was equally at a loss for a solution for the suffering utility. But, he says, that's not his main concern these days. He just wants to make sure the people in his care rest in peace, even when the lights go out.

Source: Voice of America