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Shopsteward Volume 27: Special Bulletin

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Labour input to the electricity crises stakeholder summit, by Zwelinzima Vavi

16 May 2008

Minister of Labour, Membathisi Mdladlana
Secretary General of the ANC, Gwede Mantashe
NEDLAC Executive Director, Herbert Mkhize
Comrades and Friends

Labour expresses appreciation for the convening of this summit under the auspice of NEDLAC. We thank the ANC, in particular its Secretary General, for having taken the initiative.

The summit has come at an important juncture. South Africa is respected everywhere in the world for its ability to confront its challenges and resolve problems through open and frank discussions amongst key role players. We need to ensure that the electricity crisis is dealt with in a more open and collective fashion in order to minimise the economic impact, particularly for the poor and working people.

The emergence of the electricity crisis at the beginning of this year plunged mining and other industries into near paralysis. The subsequent regime of rolling black-outs, imposed without any consultation, led to a rising threat of job losses, the disruption of working time and deepening distrust. While we appreciate the ending of the black outs, we have to make sure that this type of unilateral action, at the cost of our economy and our people, is never imposed again.

We need to remember, always, the social context of this economic crisis. South Africa remains one of the most unequal countries in the world, with extraordinarily high levels of poverty and unemployment. Any solution to the electricity crisis must take these realities into account. We cannot afford to give up our ideal of shared growth. We cannot afford to add to the burdens already facing poor households, whether through ludicrous increases in the price of electricity or through higher joblessness as a result of poorly designed rationing.

It is now a known fact that the crisis is primarily a result of poor planning. In 1998 the White Paper on Energy acknowledged that government had to invest in electricity infrastructure or face a shortage by 2007. But the neo-liberal agenda adopted under GEAR led to inaction when bold steps were demanded. Eskom itself aimed more to increase its returns than to ensure a secure electricity supply. Now we are told that we require an investment in electricity infrastructure in excess of R340 billion to meet existing and future demand.

In short, we now face a dual challenge: managing the low level of electricity reserves in ways that minimise economic and social costs, and paying for the new investments required to get us out of the crisis in the long run. We have joined the process here to seek a collective response to this crisis. Still, we have made it clear that whilst we are willing to play a role to solve the problem we cannot ask workers and the poor to bear the brunt of the cost. That would only aggravate our social and economic problems in the future.

We welcome the progress we have made thus far in terms of developing a policy framework that would help us address the crises. However it is clear that the summit has come a little too soon. We are still being asked to approve price hikes that will hit ordinary South Africans hard. We need to understand the full range of options in order to ensure both that the costs are minimised and that they are not pushed onto the poor.

We have agreed in principle that some increase in tariffs may be unavoidable, but we cannot simply write a blank cheque for Eskom because they tell us their costs have risen. We need a better understanding of the possibilities for direct state investment as well as managing tariffs to ensure the burden does not fall on poor households.

Yes, we do accept that we are facing a difficulty that can't be resolved without some level of pain. Our starting point however is that it is not a sin to have cheap electricity in South Africa. The question we have to deal with is how to manage the electricity shortfall without further damaging the economy. We cannot accept further imposition of rationing on the economy, with the attendant job losses. But a huge price shock, even if spread over five years, may have almost as bad an effect.

We will have to be creative in this process, without falling back on neo-liberal remedies that assume Eskom must turn a profit. We are a developing country that requires an active and developmental state. We need to reflect more carefully about the comparative impact of increasing tariffs compared to other forms of financing for Eskom's production costs. This has not yet been done.

Accordingly we propose that a smaller high level leadership committee of between 5 to 10 people comprising of the ANC leadership and NEDLAC parties be convened to attempt to resolve this in the next few days. We realise that we don't have a lot of time, but we need to take the time to find the best possible solutions. We cannot afford the kind of rash action that led to rolling black outs at great cost to working people.

We are committed to the energy efficient measures, including saving measures that would reduce overall usage. We will urge and campaign amongst our members and the broader public to support a range of savings initiatives. These include

Switching off geysers during the day,
Changing to compact fluorescent lamps, and
Using electric heaters only as a last resort

While we promote these savings initiatives, we must continue to see similar interventions from both government and business. In particular, we know that there is scope for both commerce and government to reduce the use of electricity and temperature controls in buildings. We need to see a concerted plan to reduce electricity use in these key sectors, where cuts will have the least harm for working people and the economy.

We have to avoid at all costs any more enforced load shedding or rationing. Those are the most expensive options for our people.

The recent announcement in the mining sector of imminent retrenchments due to the ongoing rationalisation by Eskom to reduce electricity supply to major mining companies will not be accepted.

Hear us today: We will not allow workers to pay for the mistakes of others. We will oppose any job losses that may directly or indirectly result from this crisis.

Again we thank all those behind this initiative. Quite clearly we need more innovative thinking to solve all the outstanding issues.

Thanks you for listening.

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