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South Africa: A Sensible Summit
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Business Day (Johannesburg)
EDITORIAL
15 May 2008
Posted to the web 15 May 2008
Johannesburg
SA's power crisis hasn't gone away, whatever the lull in load-shedding might suggest. And it is a good idea for key stakeholders to get together to try to make sense of the crisis and map the way forward. But if tomorrow's energy summit turns out to be just another talk shop, it might be worse than useless: it might even do harm, if it ends up delaying decisions that must be taken or action plans that must be implemented.
There are at least three areas in which policy decisions are needed that all the parties to the summit buy in to. The first is pricing. Whatever the National Energy Regulator (Nersa) decides about this year's tariff increase, the real issue is what the price path is going to be over the next few years.
And the macroeconomic trade-offs involved in determining what that should be go beyond the regulator's remit. Tariffs need to increase dramatically to make SA use electricity more efficiently and to ensure that not only Eskom but also, crucially, private sector players have the incentive to invest in supplying the power SA needs. But that process needs to be predictable; it needs to have political support from all sides; and it needs to make economic sense. The summit must weigh up those factors and come up with a plan.
That touches, second, on how Eskom's build programme is to be funded and how the costs should be divided between consumers and taxpayers. That's a political decision the summit must work on. But it shouldn't be separated from the issue of what Eskom's mandate should be and what we should expect it to deliver.
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The third set of issues the summit must consider precisely concerns load-shedding. If SA does need to conserve power to prevent blackouts, how should the burden be distributed? If workers have to choose between jobs and electricity, they surely would choose jobs. But at the moment, industry, especially big industry, is doing almost all the saving. In the end that could cost investment and jobs. It doesn't make sense economically. But it's the politicians who need to find alternatives.
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