ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Eskom: Coal Shortages and Municipal Debts

Updated on June 26, 2020
Melusi Jeisal Ngwenya profile image

Melusi Jeisal Ngwenya has a Bachelor's Degree in Social Psychology and has been a fan of battle rap for years.

Eskom

Source

The electricity industry throughout the world is changing because electricity utilities are being pressured due to globalised markets and governments opening their countries to foreign investors to help fund power sector expansion and development. South Africa is not exempted from these changes and will therefore have to align itself with these international developments. Government’s electricity pricing policy is to achieve a balance between equity, economic growth, and environmental goals. A balance has to be established between affordable electricity prices for households, low-cost electricity for industrial consumers, prices that provide efficient market signals by accurately reflecting the cost of supply and a general price level that ensures the financial sustainability of electricity utilities

Eskom Market Structure

Eskom operate as a monopoly since it is the sole supplier of electricity to residential, mining, and industrial premises in South Africa. A monopoly market structure is a market where there is only one supplier who controls significant resources limiting the chances for the entry of new firms. Furthermore, a monopolistic firm is the price-maker indicating the lack of price competition, therefore increasing the chances for the firm to make supernormal profit. The main characteristics of a monopoly are that there is only one manufacturer or seller of a product, there are no close substitutes for the product, and there are obstacles that impede other participants’ entry to the market. Thus, consumers cannot buy the product from anyone but the monopolist

Government Intervention

Eskom needs money in large part because municipal debt to Eskom is very high. At present government bails out Eskom and it bails out failing municipalities. There is not enough money so instead of government giving bail out loans to both Eskom and to municipalities, government should give bail out loans to the municipalities, but earmarked and secured for payment direct to Eskom. Eskom will have a better balance sheet because the money will be coming in as a payment for electricity delivered, not as a loan. Municipalities get the bulk of their money from government. So, before distributing the monies to municipalities, the government can deduct what that municipality owe Eskom and pay it over on behalf of that municipality. That will force municipalities to cut expenditure on all the useless items mainly salaries and wages on, firstly overpaid municipal managers and secondly on their bloated staff compliment.

Stratergic Debt Collection

Municipalities with low cost housing developments often experience high levels of non-payment amongst beneficiaries of these housing developments. Recipients are often not able to pay for such services. A culture of non-payment linked to the belief that there will be no follow-up procedures. ESKOM and the Municipality should introduce prepaid meters that will make it possible for them to deduct a certain percentage of the debt on every electricity token purchased by the debtor. In Zimbabwe the system was introduced and its proving to be a success because Zimbabwe Electricity Supply Authority (ZESA) is collecting $4 million from debtors every month through the prepaid meter systems. The prepaid meter platform is aimed at collecting 50 percent of what you purchase, which goes to clear the debt. Media cited parent firm, Zesa Holding’s generation unit, stating that the prepaid system has allowed it to collect not just what was due from current sales, but also outstanding amounts from the electricity consumed during the post-paid period. ZETDC said it has collected $123 million from its customers’ longstanding debts while an amount of $247 million was still outstanding, but is being amortized through a fixed 50% deduction on all new sales.

“If we do not conduct the audits, we run the risk of continued failures without dealing with the root cause. In some areas, Eskom technicians have not been allowed to conduct these audits which result in repeated failures of equipment.”

Stop Externalising Electricity

With the threat of rolling blackouts ever present, Eskom should first meet its obligations here at home before it can ever think of overextending itself through power supplies to other countries. It is inconceivable that Eskom is willing to hold South Africans to ransom with the burden of rolling blackouts while it is supplying electricity to foreign governments who were not even paying for it.

Get read of illegal connections

Illegal connections are any connection made to the Eskom network without Eskom’s permission. This includes tampering with a meter or connecting to a mini-substation or overhead pole. Illegal connections overload the system and can cause a disruption in power services. In addition, it can also cause fires and lead to loss of life. If they do not conduct the audits, they run the risk of continued failures without dealing with the root cause. In some areas, Eskom technicians have not been allowed to conduct these audits which result in repeated failures of equipment.

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://corp.maven.io/privacy-policy

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)