By Douglas Gibson
Can you imagine the scene? Andre de Ruyter saying “Don’t make me smile; my lips are cracked”. This was when he heard that Mayor Geoff Makhubo insisted that Johannesburg must take over electricity distribution in Soweto from Eskom, thus relieving Eskom of an impossible burden.
Johannesburg’s City Power is responsible for electricity distribution in most areas in Joburg, while Eskom distributes in Soweto and some southern areas, as well as Bryanston and some areas north. The problem is that many in Soweto, Orange Farm and Ivory Park do not pay Eskom for their electricity, either because they cannot or because they do not wish to.
The result is a burgeoning debt running into the billions. City Power suffers the same problem from the areas it supplies, particularly the informal settlements, now numbering 186 at last count.
In addition, there are what is known as non-technical losses; through illegal connections millions of rand of electricity is stolen, more particularly in the informal settlements where thousands of people enjoy services that they do not pay for.
In the case of Eskom, the last figure of outstandings was in the region of R14 billion and the mayor wants to take this over.
Mayor Makhubo is on record as having marched a year or so ago in support of a flat rate of R150 a month, irrespective of usage. He is a very wealthy populist, according to evidence led at the Zondo Commission. Two months after becoming mayor he led a march of Soweto’s residents to Eskom’s Diepkloof offices.
Unlike the mayor, I know a little about City Power, having served as a non-executive director for three years and as chairperson of the Audit and Risk Committee. Makhubo waited until the first AGM after he took over as mayor and then retired the whole board, barring one EFF person, clearly the result of a deal. This means that all the institutional knowledge was lost and new people will still be getting to grips with the realities of City Power.
How can a company make a profit when the technical losses and outright theft mean that several hundred thousand consumers receive free electricity, irrespective of whether they can pay or not?
If this zany plan goes ahead, City Power will double or triple its problems and be effectively insolvent. What Makhubo and others must do is to obtain a social welfare grant of tens of millions of rand, either from the government, or out of council funds. That should be paid to City Power and it could go on to make some money for a change.
DA Johannesburg caucus leader Leah Knott made an excellent response to Makhubo. She said: “Making a statement such as this without having conducted a proper feasibility study and discussing the terms with Eskom is not only premature but exceptionally naïve. Such an endeavour could essentially bankrupt the City within a matter of months.
“How will the city increase collection from Eskom supplied areas which currently sit at 25%?”
Makhubo has many questions to answer about dodgy dealings in the past but what is worrying is that he seems to have no clear direction or plan. He seems to shoot from the hip and hope that “things will be alright on the night”. This is really not good enough. South Africa’s hub deserves better than this.
*Douglas Gibson is a former opposition chief whip and former ambassador to Thailand.
** The views expressed here are not necessarily those of The Star or IOL.