Municipal electricity supply licences and towns’ economic progress on the line


AfriForum warns Eskom and the government that the repercussions of the North Gauteng High Court’s ruling that certain municipalities’ electricity supply may be cut, will impoverish the unstable economy of these rural towns.

The civil rights organisation will also apply to the National Energy Regulator of South Africa (NERSA) in order to revoke the electricity supply licences of the involved municipalities that do not comply with licence requirements.

According to Stefan Pieterse, spokesperson for AfriBusiness, the court ruling is bad news for small towns’ economies because the selling of electricity is one of the main resources of municipal income. Electricity is by nature also necessary for towns’ production sectors.

“Municipalities will generate less income because businesses will privatise their power supply or move to metropolises. At the end of the day the man on the street, not the businesses, are thrown to the wolves,” says Pieterse.

Dawie Roodt, chief economist of the Efficient Group, is of the opinion that most of the bigger companies already receive their electricity directly from Eskom. These companies will not be as disadvantaged. Roodt says that smaller businesses will in future have to depend on alternative methods of energy generation (such as generators) if Eskom cuts the power supply.

According to Marcus Pawson, Head of Local Government and Environmental Affairs at AfriForum, each municipality must have a complete integrated development plan (IDP). This includes among others a financial and economic development plan. These documents, if implemented correctly, can play a cardinal role to strategically prevent the cutting off of electricity to thereby avoid the economic impact of such a situation.

Pawson further states that smaller municipalities do not necessarily have experts at their disposal who can compile a decent IDP. Without this economic and financial development planning, or where obsolete IDPs are being implemented, municipalities in arrears will not be capable to pay Eskom. Power interruptions will undermine the viability of small- and medium-sized businesses and will hinder economic growth. This has the potential to economically destroy South Africa’s rural towns and eliminate the prosperity of people in these areas.

“AfriForum has seen the poor and ill-considered IDPs of many municipalities and we can rightly be concerned about the repercussions of Eskom’s electricity cuts on businesses, medical services and other important sectors,” says Pawson.

“Eskom can in no way boast about the court order that was ruled in its favour. South Africa is in an economic stranglehold where the only solution now lies in the hands of politicians regarding many communities’ culture of non-payment, the poor administration of municipalities, corruption levels within every government sphere and the debt levels of state entities,” Pawson says.

AfriForum will prepare projects for intensive participation in municipal planning and the fighting of corruption in every government sphere.

To join and give your support to AfriForum, SMS the word “HOOP” to 45344 (R1).

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