Eskom’s BEE requirements render SA powerless – IRR

Sometimes the child-like, often irritatingly repeated question of why to every answer one gives is exactly the kind of interrogation the government needs to understand what is required. That is, if Eskom is to have any hope of ever returning power to the people. The answer to most of Eskom’s travails is BEE, which has helped bring what was, until recently, recognised as one of the world’s most efficient power-generating state entities (and our country) to its knees. A 2020 IRR poll showed that 80% of black respondents thought we’d do better with a meritocratic, decentralised procurement system in healthcare, housing and education rather than more BEE. That “flexibility” of mind that already pervades South Africa’s base level has yet to percolate to the top. As the IRR says, “Skin (no matter what colour), is not thick enough to stop the cold; what actually matters lies within.” – Chris Bateman

Cut the reddest tape at Eskom – IRR

Minister of Public Enterprises Pravin Gordhan has boldly called for the scrapping of all “the damn red tape” inhibiting power production and prolonging South Africa’s struggle under Stage 6 load-shedding. It’s time for action to match the words.

Minister Gordhan promised to “discuss” moving away from the ANC’s long-failing Integrated Resource Plan (IRP). In addition, Gordhan’s admission that the government “cannot be pedantic” anymore and “must respond with urgency and flexibility” to Eskom’s current crisis opens the gate for public pressure to replace more talk with real action that puts power in plug points 24/7.

Many civil bodies have recently lobbied for important replacements of IRP policies with those resembling the IRR’s longstanding recommendations to expand private power generation at the cheapest price.

However, not enough has been said about cutting ‘the reddest tape’ of all – namely, race law – at Eskom. Unfortunately, some analysts still believe most poor people are too dazzled by BEE’s future promises to be able to seriously consider public criticism of that policy when crises arise. This view profoundly misunderstands that when a person struggles in a shack without power, work or a decent way to find either, this is not symbolic. This is a daily set of practical crises.

A 2020 independent survey commissioned by the IRR showed that 80% of black respondents thought they would do better by a meritocratic, decentralised procurement system in healthcare, housing and education rather than more BEE. The ‘flexibility’ of mind that already pervades South Africa’s base level has simply failed to percolate to the top.

As for power production specifically, Gwen Ngwenya, currently the DA head of policy, observed in a 2019 piece titled Eskom and BEE: A Total Eclipse of the Brain that a series of questions about load-shedding led to a common-sense conclusion that is ignorable only by people who can afford generators.

“Why is Eskom in trouble? Because it has high operating costs and it cannot meet its debt obligations. Why? Its ambitious programme to build two big power stations has incurred substantial cost overruns and technical faults. Why? In part it was flawed from the beginning with a small bidding pool, meaning it was likely not cost competitive from the start. Why? There was political meddling. Why? Chancellor House [the ANC investment arm]. Why? Contractors needed to have a black partner in order to secure contracts. Why? BEE.”

Ngwenya observed further that among some analysts it “is difficult to convince people to travel down this line of questioning” because “the closer one gets to the subject of BEE, the more it resembles going down an abandoned mine shaft”.

However, if Minister Gordhan is serious about thinking flexibly and urgently about basic problems, he must ask whether it makes sense to continue “interposing non-value-adding intermediaries”, as Eskom CEO Andre de Ruyter phrased matters, which “inflates costs, introduces additional risk in terms of corrupt practices, and slows down our supply chains” even while load-shedding is at Stage 6.

Some in positions of high power would say yes to BEE no matter what because the temptations to forsake the common interest are so great. Anthony Butler, in his book Paying for Politics, observed that “BEE offers a simple and coherent ideological message with which the liberation movement’s left wing has not even begun to compete: ‘It’s our turn’.”

But this is no answer whatsoever to the 11 million South Africans who are not only left in the dark for at least six hours a day, but who also have been unemployed for at least a year under business conditions that are garrotted by red tape constantly. To most of the unemployed ‘our turn’ for honest work has never come and under current policies, never will.

Cutting the reddest tape is doable. In February, the IRR made the call that Finance Minister Enoch Godongwana is empowered “to exempt any organ of state from any or all the provisions” of the framing Act’s racial preferencing if “it is in the public interest”. The national interest lies in penny-pinching procurement rather than trumping race law, according to the State Capture Report.

The power to cut the reddest tape of all was briefly exercised by Minister Godongwana shortly after the IRR’s call, and should be exercised again now, permanently. It is in the public interest to save every possible penny at Eskom to keep the lights on as a matter of ‘urgency and flexibility’.

Said IRR Head of Campaigns Gabriel Crouse: “South Africa has already had too much ‘white power’ and ‘black power’. What we need is electrical power to drive factories and heat shelters. We need something more helpful than skin, Mr Gordhan. Skin is not thick enough to stop the cold. What matters lies within.”

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