Time To End the Energy Supply Monopoly by Eskom

By: Prince Neo Mokwena

Caption: Broken Bulb /Image Source: Business Tech

Will there ever be a solution to loadshedding in South Africa? According to Alex Forbes chief economist Isaah Mhlanga, South Africa loses over R4 billion from its GDP due to the continuous stage 6 rolling blackouts, for each day they happen.

Escom (Electricity Supply Commission), today referred to as Eskom, is the current and main electricity supplier for South Africa. It was developed in 1922 under the Electricity Act (No. 42 of 1922). The Electricity Control Board (ECB) was also developed under the Electricity Act (No. 42 of 1922), and its purpose was to control and license the electricity supply and set tariffs. It also had the authority to control anything electrical in South Africa. Its main goal was to produce cheap and reliable electricity for South Africans especially the mining industry.

Now, through its regulatory power, Eskom fully attained the energy supply monopoly in South Africa in 1948, when the national party nationalized the entire South African electricity supply industry. It achieved its monopoly by using its Electricity act of 1922 to ban independent power producers and Eskom itself from making any profit from supplying electricity. This new legislation forced independent power producers to leave the energy supply market, because they were not benefiting from it. This left Eskom to take full control of the energy supply sector in South Africa.

Eskom being the only one producing ‘cheap’ electricity for South Africans without gaining any profit, sounds like a brilliant idea, right? Well, unfortunately not, Eskom being the sole monopoly for energy supply means that it has no competition to compete against, to learn from, or to even motivate it to do a better job. This is because it`s pointless to work hard if you are still going to get paid, irrespective of whether you do your job correctly or not. This, however, has opened doors for corruption, coal tender frauds, collapsing infrastructure and ultimately leading to load shedding.

Loadshedding is the ultimate price that South Africans have to pay for Eskom`s failing energy supply monopoly.

Caption: Eskom Power Plant /Image Source: TechCentral

“I don`t think I`ll ever forgive #Eskom for the trauma it`s caused me in life. The constant rolling blackouts. Driving in the dark, sitting in the dark. Small business unable to keep it moving. It`s just too much now. And sadly, I don`t think government understands the urgency here.” Says Heidi Giokos on twitter.

Something definitely needs to be done about this situation, and the only thing that can be done is getting rid of the energy supply monopoly by Eskom. By doing so, this will relief Eskom from some of its overburdening duties which means less pressure on the grid. This might mean there will be little to no loadshedding at all.

To those who are saying that removing Eskom from its monopoly status is a bad move and South Africans will suffer the consequences of high electricity costs because of that. Firstly, keep in mind that Eskom is currently is going through financial crises and because of this, there is constant loadshedding, which attacks South Africa`s economy and shrinking its GDP day by day. Therefor a shrinking GDP means bad news for employees and businesses.

So, at the end of the day South Africans are still going to suffer, they have no choice but to choose their method of suffering. Will it be keeping the Eskom monopoly with cheap electricity and loadshedding that affects the economy? Or allowing private power producers to step in and assist Eskom to supply South Africa with electricity, at a higher electricity bill cost?

Well, based on these circumstances, removing Eskom from its monopoly position and allowing independent energy suppliers to supply South Africans with energy will be the best solution. Because, South Africa will now have stable electricity supply which is good for the economy, and South Africans will benefit from this long-term wise.