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Eskom downgrading – DA calls for government action

14 August 2008

Statement by Manie van Dyk MP, DA Spokesperson on Public Enterprises.

In light of the downgrading of Eskom by Moody’s Rating Agency, and pending ratings by Standard & Poor’s and Fitch rating agencies, the Democratic Alliance (DA) calls on the government to provide a clear plan on how it is going to help Eskom raise the R343 billion for its capital expansion programme without resorting to tariff increases.

Government is the only shareholder in Eskom and should thus adopt actions that will bolster the utility’s plummeting credit rating, and ensure that the South African public is receiving the service from Eskom it deserves.

It is a matter of concern that the downgrading comes at a time when the business community and South Africans are reeling from soaring food and fuel prices – any further tariff hikes by Eskom will negatively affect our growth prospects.

Eskom is furthermore in the midst of a major capital expansion programme. One of the prerequisites for economic growth in any industrialized economy is the presence of predictable and sustainable electricity supply.  In the long run, not being able to ensure a steady supply of electricity will pose a threat to South Africa’s growth prospects.  Besides this, power outages cause congestion, disrupt business activities and inconvenience millions of South Africans.  The Government must therefore take immediate action to ensure that Eskom’s capital expenditure programme is not compromised by the credit or investment downgrading.

There is no doubt that the power outages that South Africa witnessed at the end of last year are the outcome of government’s neglect of our electricity generation infrastructure over the past decade, which has resulted in a situation whereby we have insufficient reserve margins to cope with routine failures.  The DA therefore calls for the government to abandon its usual laissez-faire attitude and immediately release the first tranche of the R60 billion it committed to Eskom – and allay fears over insecure funding for the power utility.

The DA is strongly opposed to any unjustifiable tariff hikes as these are likely to have a substantial effect on inflation and hence monetary policy – with vulnerable members of society taking the brunt of such increases, even as they are already suffering due to the escalating prices of food and fuel.

The Government must urgently explain how it will assist the energy utility as certainty on government plans will bring confidence in the utility’s funding situation and save it from further downgrading from pending ratings.

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2 comments

  1. Force Jacob Moroga and the rest of his team to pay back the bonuses they received for the poor job they did and use the money to sponsor private citizens to be able to install solar-geyzers ext.


  2. I propose government promote Hammer OS installations as the solution to all of these electricity supply ills.



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