Let Eskom take over, fed-up Nelson Mandela Bay chamber asks Nersa

The power supply provided by the Nelson Mandela Bay metro is so poor that the local business chamber has asked energy regulator Nersa to intervene and have Eskom appointed to take over local electricity distribution.

This comes as Nelson Mandela Bay, home to one of the most important automotive hubs in the country, is moving closer to day zero when the water supply will dry up, after levels in the Impofu Dam, near Humansdorp in the Eastern Cape, dropped too low to allow for water extraction.

Denise van Huyssteen, CEO of the Nelson Mandela Bay Business Chamber, says businesses suffer due to the inefficiency of the municipality. A full 29% of the water supply is being lost through leaks and a further 11% is unaccounted for due to, among other things, theft.

Read: SA targets cable thieves holding economy to ransom

Van Huyssteen says cable theft is a huge contributing factor to the electricity problem. In one incident it left a manufacturing plant in the Struandale industrial area in Gqeberha, that exports its products, without electricity for 12 days last year.

Security

The chamber has signed a memorandum of understanding with the metro council to extend its security to substations in order to safeguard the infrastructure.

Furthermore the electricity tariffs the metro imposes on business and industry are excessive and it is only due to its own inefficiency that the metro is unable to make a substantial profit from electricity distribution, she says.

In a letter to Nersa requesting intervention the chamber, representing about 700 businesses consuming about 70% of electricity supply in Nelson Mandela Bay, says uncontrolled electricity faults unrelated to load shedding have reached alarming proportions in many areas in the metro.

The chamber says electricity losses are well above 20% and up to 40% of the electricity meters are being tampered with. This threatens the financial sustainability of the municipality itself.

“The presence of visible illegal connections and abuse of substations serves as depressing evidence of a collapsed electricity distribution function,” it says.

The chamber tells Nersa that following recent interactions with the metro it “does not believe the required leadership or political will is present to resolve this situation in the short- or medium term”.

“There appears to be no credible strategy or plans dealing with the ever-escalating decline. The chamber equally [does] not see structures in place to enable an effective turnaround of the current municipal service delivery failures.”

Risk that businesses will ‘gradually disappear’

The chamber says its own efforts to protect infrastructure will only yield sustainable results if there is a stable and reliable municipal organisational structure, which the metro has been unable to provide for many years.

The gradual decline of the quality of electricity supply is an unacceptable strain on industry and business within the metro and there is a real risk that business will “gradually disappear from Nelson Mandela Bay”.

“Attracting investment in such an environment is an impossible task,” says the chamber.

The metro should be an enabler for the local economy to prosper. Instead, it “has become a substantial threat to the viability of business” in Nelson Mandela Bay.

Read: Ford SA injects R600m into its Gqeberha engine plant

The request

The organisation asks Nersa to exercise its statutory and constitutional duty as a regulator, to investigate whether Nelson Mandela Bay’s electricity distribution licence should be amended to include a condition for it to appoint Eskom as its service delivery agent and service provider – performing all its functions under the licence and acting as its collecting agent for electricity revenue.

This revenue must be paid into a separate, ring-fenced account opened in the name of Eskom to be accounted to and remitted to the metro.

This, according to the chamber, could be for a limited period until the metro is able to satisfy Nersa that it has developed sufficient administrative, financial and technical skill and capacity to discharge its obligations accurately and sustainably.

Read: Total municipal charges compared across major metros

‘Shocking’

Dr Lumkile Monde, lecturer at the Wits School of Economics and Finance, says it is shocking that the metro cannot look after its key customers.

He says Volkswagen of South Africa for example has chosen to locate its manufacturing plant in Gqeberha in the metro and there is a whole ecosystem of related businesses around it. It is important for Nelson Mandela Bay to retain these businesses that contribute to the metro’s revenue to the benefit of all residents.

Read: VW to take its [Kariega] plant off the grid

He says the quality of individuals serving in the utility services of Nelson Mandela Bay and municipalities in general has deteriorated over many years under the ANC and it is understandable that the business community is now trying to reach out to Eskom, an institution that understands the impact of service delivery failure on business and individuals.

Read: Nelson Mandela Bay water crisis can be averted

Although the DA and ANC both got 48 seats in the metro council in the municipal election last year, the ANC is leading it with the support of several smaller parties.

An upcoming by-election in Ward 43 on 4 July may upset this balance.

‘Malicious’, says MMC

Luxolo Namette, member of the municipal council for electricity and energy in Nelson Mandela Bay, has accused the business chamber of making a “malicious political statement”.

He says the metro’s electricity supply is within the industry standards “although we have a challenge of vandalism”.

He adds: “The local business chamber is exempted from load shedding which is caused by Eskom, yet the business chamber wants Eskom to take over. Nersa is the only regulator when our electricity supply is below minimum standards. Only the regulator can make that determination based on stats and figures, not on emotions.

“It is not a coincidence that the timing of this request is just when Eskom is being unbundled.”

Read: Nelson Mandela Bay water crisis can be averted