AfriBusiness condemns Eskom as state monopoly capital

The problem with Eskom isn’t simply its one-sided tariff hikes, its mismanagement or its sordid debt situation. The real problem with Eskom is that it is state monopoly capital.

This is the position of AfriBusiness amid ongoing Nersa hearings on Eskom’s proposed tariff hike.

“We reject the idea that the state should have a monopoly on electricity provision. And we refuse to pretend that it is supposedly fair, efficient or reasonable to allow one state institution, Nersa, to determine prices for electricity provided by another arm of the state, Eskom,” says Piet le Roux, CEO of AfriBusiness.

Le Roux continues: “AfriBusiness condemns the existence of state monopoly capital. State monopoly capital is, in fact, the only real monopoly capital there is. It is one of the main problems in South Africa, today and historically. In a free market, everyone’s capital is subject to the ongoing preferences of consumers. Clearly, not so with state monopoly capital, to which consumers are forced to turn because alternatives have been banned.”

AfriBusiness notes the recent limited relaxation of regulation preventing private producers to generate electricity. Schedule 2 of the Electricity Regulation Act, 2006 (Act no. 4 of 2006) now no longer prohibits the generation of electricity under one megawatt without prior licensing and state approval, though producers are still required to register themselves.

“We hope this limited opening of the door to compete with the state in electricity provision is seized upon by private producers and that they are wildly more successful at Eskom-proofing the economy than regulators anticipated,” le Roux concludes.