One of the primary factors contributing to the strained electricity infrastructure is the economic underperformance, which has led to widespread unemployment.
“Collectively, municipalities are owing Eskom R78bn and… a lot of this is irrecoverable,” said the minister.
“There’s no possibility under the sun that we are going to collect that and it’s important that we resolve this picture."
Ramokgopa bemoaned the pricing structure and how increased tariffs is contributing to the high cost of living and unemployment.
He made the analogy that as people lose jobs, they struggle to pay for their rates and taxes, leading to a significant decline in the revenue base of municipalities.
This decline has hindered the ability of municipalities to reinvest in and maintain their electricity distribution infrastructure.
The eroded revenue base, coupled with a lack of comprehensive revenue systems, has resulted in municipalities being unable to bill and collect payments effectively.
The issue is further exacerbated by illegal connections, which many municipalities have turned a blind eye to.
These illegal connections have now overwhelmed the system, contributing to infrastructure failures.
“Eskom needs this money for it to be able to reinvest back into its own infrastructure,” Ramokgopa continued.
“To give you the magnitude of the problem, if we don’t resolve this problem, our projection is that at the current rate, by 2050, Eskom will be owed R3.1 trillion. Eskom will collapse. Generation capacity is going to be compromised. So, it’s important that we resolve this question.”
If we don’t resolve this problem, our projection is that at the current rate, by 2050, Eskom will be owed R3.1trn
Additionally, Ramokgopa drew attention to another growing crisis where municipalities have not adequately modelled population and household growth rates, leading to insufficient planning for the increased demand on distribution infrastructure.
This lack of foresight and capacity expansion has caused the infrastructure to buckle under pressure, resulting in frequent power outages and load reduction measures.
The rising electricity tariffs, driven by Eskom's tariff increases, have further strained the system.
Municipalities add surcharges to these tariffs, escalating the cost of doing business and living.
This situation has led to inflationary pressures, making it difficult for the lower middle class and public servants to afford electricity.
“In the solution, we must protect the interests of Eskom as a going concern, ensure that municipalities are able to collect but also protect the interests of the user,” he said.
“Because when that distribution infrastructure fails that is providing electricity to 50 houses, there’ll be 10 to 20 houses that have been paying diligently but they are collateral damage.”
The biggest victims of all of that is the end consumer and, by definition, is the South African economy
As affordability becomes a critical issue, the risk of widespread energy poverty looms large.
This not only affects household quality of life but also impedes the ability of small businesses to operate efficiently, thereby impacting economic growth and job creation.
The minister spent most of his address focused on the effects of this debt, coupled with the municipalities' practice of not ring-fencing electricity revenues.
This, he says, has led to insufficient investment in infrastructure maintenance and modernisation.
The resulting neglect has left the distribution infrastructure outdated and unable to meet current demands, further compounding the issue of power outages.
“Distribution is our albatross. it’s on a mode of self-destruction and the casualties are the poor. They are the ones that are subjected to conditions of load reduction in the main and even those who are diligent payers are subjected to load reduction.”
“This can’t continue any further,” exclaimed Ramokgopa. “It’s important that we arrest it so that we are able to ensure that the country is able to achieve its developmental objectives.”
To address these challenges, Ramokgopa said it is crucial to bring local government to the table and introduce innovations aimed at lowering the cost of electricity supply.
This includes adopting technologies that provide cleaner and cheaper energy, modernising the distribution grid, and ensuring universal access to electricity.
Such measures will not only stabilise the electricity supply but also support economic activities in townships and contribute to overall economic growth.
The minister was clear in his assessment that South Africa's electricity infrastructure crisis is a complex issue rooted in economic challenges, poor planning, and insufficient investment and vowed to address these issues through his newly formed department.
