Wednesday, June 25, 2008

Axis of Evil pans Eskom tariff hike plan

Who runs government?

Elected officials or punks in an alliance of convenience?

Cosatu laments job losses and threatens protests over lack of jobs but has no qualms about closing down a multi-billion rand smelter which will cause said loss of jobs.

If Eskom executives have indeed promised Alcan a sweet deal on electricity at half the cost regular consumers pay then this is where the government should step in and undo the deal. It is clearly bogus.

Also, if the Eskom execs have been
withholding spending in order to leave excess profits to split among themselves as bonuses then again, heads should roll.

But, what am I saying, this is the ANC and common sense is not its strong point.

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The ANC-led alliance dropped a massive bolt into Eskom’s revenue-generation plans yesterday with unanimous rejection of the corporation’s bid to more than double the cost of electricity over the next two years. It threatened also to pull the plug on Rio Tinto-Alcan’s 3.25-billion aluminium smelter planned for Coega, near Port Elizabeth.

The ANC and its partners do not have any formal authority over Eskom, but will be influential in the final decision.

The National Energy Regulator, Nersa, is due to decide early next month whether to grant Eskom’s request to add more than half to the electricity price now and again in a year.

“The summit was unanimous in rejecting Eskom’s demand for a 53% tariff increase,” the ANC, Cosatu and the South African Communist Party said in a joint statement after a three-day meeting.

Economists warn that though Eskom is selling power at below cost, the proposed hike would feed through into retail prices and, in combination with rising petrol prices, smother economic growth.

The alliance said the emergency energy summit starting in Johannesburg on Friday should address all matters of energy policy and not just Eskom’s revenue plans. The price increases demanded by Eskom are to meet the cost of fuel — mainly coal — and will not contribute to the corporation’s R345-billion short-term building programme to relieve the country’s power crisis.

Eskom is scheduled to spend about R1.3-trillion on new nuclear and conventional power stations by 2025, but none will come on stream before 2012 at the earliest.

The alliance supported renewable energy projects and co-generation, in which private companies generate their own power and sell excess into the national grid. Leaders of the three parties put the Alcan deal in doubt, saying: “Energy-intensive projects such as aluminium smelters should be reviewed in line with the country’s strategic needs.

The alliance will take part in the study to determine the costs and benefits to the country and at provincial level of these decisions,” the parties said.

Alcan agreed in 2006 to build a smelter after Eskom guaranteed a 1300-megawatt power supply at an undisclosed bulk price believed to be less than half the rate paid by domestic consumers. The smelter, intended to anchor the costly Coega harbour project and industrial development zone, would suck in more than two-thirds of the Koeberg nuclear power station’s output, but without directly creating many jobs.

The Alcan smelter was planned for Coega only because South Africa offered the world’s lowest industrial electricity price.

The alliance decision followed news of an internal ANC probe into the power crisis following claims by Eskom whistle-blowers of serious mismanagement.

Outside legal advisers urged the ANC in a secret report to push for a presidential commission of inquiry into the power blackouts and Eskom’s investment strategy.

The informants charged that Eskom management had cut corners on maintenance and invested the savings to boost the corporation’s financial results and earn up to R10-million in bonuses this year.

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