Your editorial opinion refers (“Nersa’s credibility crisis now threatens the electricity system itself”, February 12).
The arithmetic errors are indefensible, but are they the root of the problem? Raising prices is a solution to Eskom requiring bailouts, if it can sell whatever it can generate and is allowed to stick to its demonstrably uneconomic operational models, which include providing power to nonpaying municipal customers and trucking coal next to railway lines. Improving its operational model is an alternative.
An analysis of input cost inflation as a driver of price rises over the past 30 years would be illuminating:
- The World Bank has quantified the impact of rightsizing Eskom’s headcount/wage bill to be in line with international norms.
- The first-order impact of overhauling its supplier agreements to remove middle men and inefficiencies could be easily quantified, even if eradicating them may prove to be harder.
- The impact of deregulating the energy market is harder to quantify accurately, but many markets where this transition has happened show the direction is clear.
This would go a long way to improving the economics of Eskom, one where the solution to the hole in the income statement is not a price rise, whatever the National Energy Regulator of South Africa calculates that to be.
Greg Becker
Via Business Day online
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