South African electricity prices are extremely low by international standards.  In this month’s Fast Facts we show that South African electricity prices are less than half of those in the United States and the United Kingdom and about a third of those in Germany and Spain and a fifth of those in Denmark.

Eskom’s past capital investments, made under the National Party government and paid off in previous decades, ensured that the new leadership of Eskom could charge low enough prices to ensure an effective monopoly in the electricity field. Ironically this is one of the chief reasons that a price increase is warranted to ensure that other competitors can enter the electricity market in South Africa. It is partly due to the very low prices that new electricity contractors stayed out of the South African market.  A second reason for an increase is to ensure that Eskom can make the necessary capital investments to ensure future supply.

That a sound economic case can be made for the increase is not to exonerate public officials and Eskom management for the catastrophe they have inflicted on the economy. It is no use therefore for the government to pretend as it did in cabinet statements this week that it will shield the poor from the higher tariffs. While government may implement the higher tariffs so that poor communities are exempted from the direct costs they will still carry the indirect costs.

Chiefly these will be the trilogy of slower economic growth and resultant slower job creation in an environment of rising inflation. Together these three factors will undermine efforts to combat poverty and inequality in South Africa. This will probably increase the already heavy dependency of the poor on the country’s burgeoning welfare system.

So there must be no doubt that South Africa’s poor communities will directly carry some of the harshest costs of government policy bungling. Government’s efforts to pretend otherwise are naïve at best and callous at worst. That also goes for COSATU threats to proceed with strike action against the increased prices when the union was an alliance partner of the ruling party for all the years it neglected to properly manage electricity infrastructure.

- Frans Cronje

Forthcoming events

There are a number of forthcoming events hosted by the Institute.

On Monday and Thursday next week John Kane-Berman will present his annual Mirror Briefings in Cape Town and Johannesburg. These will present a political and economic scenario for a future South Africa. There are still seats available for the Cape Town briefing but the Johannesburg event is now fully booked. Visit the briefings section of this website for more detail.

On the 9 April the Institute will host the South African Students’ Congress at our Johannesburg offices to speak on the challenges faced by tertiary students at universities. The Institute’s bursary programme funded 500 students to pursue tertiary studies in 2008 so we are well aware of the need to draw attention to the funding and other challenges faced by poor students. Details will appear on the briefings section of this website from next week.  

In May we host a panel of top economists to discuss their growth analyses for the South African economy. This briefing will take place over breakfast at the Johannesburg Country Club. Details and a booking form will be posted on the briefings section of this website from next week.

Also in May we will host SA: The Good News to speak on the state of South Africa. That will also take place in Johannesburg and details will follow.

New website

The Institute has listened to its subscribers and is pleased to introduce its new website. All our data and opinion is now available online. Corporate and Business subscribers get direct access to protected data on this site which includes all the statistics from our acclaimed South Africa Survey in both PDF and Excel. Our other users and members get access to a range of opinion and information that was not previously available. For information on subscription send an email to our marketing head Anelda Schreuder at Anelda@sairr.org.za or visit the subscriptions section of this site.

We would also like to thank all those subscribers who helped us through the design phase of this site to deliver a product that better meets their data and information requirements. Such input and criticism is essential to ensure that we are able to respond to a changing research and policy environment and maintain our position as South Africa’s leading research and policy organization. We welcome such input at any time.

Frans Cronje
Deputy CEO