Union Claims Eskom Green is Just Another Form of Privatisation

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JEREMY MAGGS: Eskom has announced the creation of a new company called Eskom Green, designed to secure funding for renewable energy initiatives. This move has sparked renewed debate about the future of South Africa’s power utility.

The government asserts that this initiative will boost investment and facilitate the nation’s transition to sustainable energy. However, the General Industries Workers Union of South Africa (Giwusa) contends that this is merely another step towards Eskom’s privatisation.

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The President of Giwusa, Mametlwe Sebei, has joined me in this discussion. Welcome, Mametlwe. Are you suggesting that Eskom Green is really about privatisation rather than a commitment to renewable energy?

MAMETLWE SEBEI: Thank you, Jeremy. Indeed, yes. The initiative has little to do with green energy or resolving Eskom’s issues.

There are two critical points: they intend to incorporate not just renewable energy sources but also what they term ‘clean coal’, which we know is more of a marketing gimmick. While it reduces sulfur emissions, this so-called clean coal still emits carbon dioxide at rates twice that of natural gas.

Moreover, we see that this has a detrimental effect on Eskom. As noted with the Renewable Energy Independent Power Producer Procurement Programme (Reipppp), it has only contributed about 8% to capacity while increasing costs by 30%.

This is not solely a South African experience; it’s a global trend, seen in places like Kenya and Texas where energy has been privatised.

Private energy producers contribute more to the public budget than state-owned enterprises, worsening the issue of energy poverty in our country.

JEREMY MAGGS: If that’s your perspective, what specific evidence leads you to believe this is the start of privatisation rather than a new funding method?

MAMETLWE SEBEI: The government has been quite transparent about its intentions. They are in the process of dismantling Eskom by separating its functions: generation, transmission, and distribution. These are long-standing initiatives.

They are advocating for public-private partnerships, including within Eskom Green, which would allow private firms to participate.

This is why they speak about fundraising efforts.

Whenever private stakeholders are involved, regardless of the percentage, it alters the entity’s fundamental nature. No one invests significantly unless there’s profit to be gained.

Read: Is Eskom betting on Ramaphosa’s departure?

This transformation shifts Eskom from a developmental, state-run organization providing affordable power to a profit-driven operation focused on shareholder returns. This presents significant challenges.

JEREMY MAGGS: However, the government claims Eskom lacks the financial capacity to fund this transition independently. If private capital isn’t an option, where will the funds come from?

MAMETLWE SEBEI: The question is whether privatisation will truly free us from needing public funding.

Consider Sasol, the largest former state-owned enterprise in this sector, which was funded by taxpayer money and continues to receive government support through mechanisms like import parity pricing. This allows Sasol to profit about R30 billion more from oil pricing derived from public resources.

In the automotive industry, the government has invested hundreds of billions in subsidies to support local manufacturing, in addition to special tariffs on electricity and water.

Thus, we find corporations in critical economic sectors being subsidized by the state, where socialized costs contrast with privatized profits.

We believe this trend will persist.

JEREMY MAGGS: Given the severe pressure on the public purse, why should taxpayers bear the entire cost instead of sharing it with investors?

MAMETLWE SEBEI: I would agree that taxpayers should not bear the whole burden. Much of Eskom’s debt is indeed questionable. Many companies involved in projects like Medupi, which have crippled Eskom, have faced corruption charges in US courts and paid fines.

So, why hasn’t the South African government pursued similar actions based on this evidence? Why should companies guilty of corruption against our nation pay the US and avoid accountability here?

A significant portion of that debt is indeed questionable. Municipal bodies hold it, yet it remains unresolved because the ANC benefited from these corrupt dealings.

JEREMY MAGGS: Let’s return to Eskom Green. If it’s designed to expedite renewable projects, what alternatives does your union propose to achieve the necessary pace of renewable generation to meet climate commitments?

MAMETLWE SEBEI: Renewable energy should be decreasing costs, primarily because of lower capital requirements.

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In essence, renewables can be created simply by placing solar panels on various properties. This could be expanded nationwide to convert every house, school, and hospital into a power-generating entity by equipping roofs with solar panels.

As I speak, I see homes that have already adopted this approach.

JEREMY MAGGS: And where does the funding for that come from?

MAMETLWE SEBEI: The state would need to invest, just as it continues to support many private investors.

Consider the procurement agreements; the state ensures profits for electricity, even if not utilized. This is an imbalanced deal.

Currently, for electricity generation costs of R3 billion, Eskom pays R15 billion to independent producers—a disparity that is well-documented by research from the Alternative Information and Development Centre (AIDC).

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These independent producers cost Eskom five times the expense of producing electricity internally, and this pricing model appears to be set for the long term.

Renewables, whether solar or wind, require minimal maintenance after installation.

This should be making electricity more affordable.

In contrast, with energy generation being privatised, we’ve experienced soaring costs that leave many ordinary South Africans and industries grappling with energy poverty.

JEREMY MAGGS: I’m eager to hear Eskom’s response to these points. Thank you, Mametlwe Sebei, President of the General Industries Workers Union of South Africa, for your contributions.