SCARE STORIES AND POWER PRICES (27.03.2008)

Public enterprises minister Alex Erwin jumped the gun with his “scare stories” of electricity price increases. And, in the process, he has lost whatever residual confidence the trade unions had in him.

Not that there was much left. “Ever since he cried sabotage to justify the power outages in 2006, instead of the negligence and slack maintenance that were shown to be the cause, we have had problems with minister Erwin,” says Federation of Unions (Fedusa) general secretary, Dennis George.

Trade unionists who are aware of the agenda at the tripartite advisory forum, the National Economic Development and Labour Council (Nedlac).are particularly incensed. They are aware that Nedlac is in the process of discussing a pricing structure for power utility Eskom.

Among these discussions has been the “far less than transparent” pricing structure now in operation. Under this, for example, generally hard-pressed farmers pay more for electricity than do the often immensely lucrative mining companies.

Ignoring this negotiating process, Erwin announced in parliament that hefty electricity tariff increases were necessary now in order to avoid a 100 per cent increase later. Cosatu spokesperson Patrick Craven promptly denounced this as “an attempt to frighten the public into accepting price rises”.

So far as Cosatu is concerned, says Craven, “The whole story is one of mismanagement and bad planning.”

From Cosatu’s viewpoint, this is largely a result of the government’s abortive privatisation strategy.

Says Craven: “The government didn’t want to invest, because that would have meant Eskom carrying loan debt and they thought that would put off potential buyers.”

However, the lack of investment was not because of any shortage of capital. The unions have pointed out that the government could find as much as R14 billion to “gamble on the unproven technology” of the pebble bed modular reactor while failing to invest in increased generating capacity or to upgrade transmission lines.

As a result, Eskom, which has profitably produced low-cost electricity now requires rapid and quite massive investment for which it demands the public must pay. One of the arguments advanced is that countries such as Canada charge much more for electricity than does South Africa.

As Craven points out, this is an import parity argument which has absolutely no bearing on locally generated and consumed power. “This is extremely concerning, because it will mean that the poor will again suffer disproportionately,” he says.

Says George: “The time has come to focus on what is best for South Africa as a whole and for all South Africans. Erwin’s proposals mean the poorest of the poor will suffer most.”

The labour movement as a whole is aware that the hefty electricity tariffs proposed will have an inflationary effect across the board at a time when even the official cost of living index (CPIX) is creeping toward 10 per cent. This, in turn, will lead to higher wage demands as union members fight against cuts in their living standards.

But this reaction to inflation will almost certainly again be portrayed by business and government as being responsible for fuelling inflation. Yet, as Labour Research Services researcher Saliem Patel points out, the only group in society that has consistently kept “very well ahead of inflation” in their earnings are company directors, both executive and non executive.

This seems worth bearing in mind in the face of anti union propaganda because of formal notice having been given by Cosatu and Fedusa of possible strike action to defend the living standards of many millions of South Africans.

Says National Council of Trade Unions general secretary Manene Samela: “The government has destroyed all the necessary instruments for negotiation. We will join Cosatu and Fedusa in any action.”