Eskom Service Delivery Framework: briefing

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Public Enterprises

21 May 2003
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PUBLIC ENTERPRISES PORTFOLIO COMMITTEE

PUBLIC ENTERPRISES PORTFOLIO COMMITTEE
21 May 2003
ESKOM SERVICE DELIVERY FRAMEWORK: BRIEFING

Chairperson: Mr B Martins (ANC)

Documents handed out:
Eskom: Service Delivery Framework

SUMMARY
Discussion focused on Eskom's decision to write off bulk debt incurred by the central region, including Soweto, prior to 31 September 2001. The Democratic Alliance (DA) expressed concern that the rationale underpinning this decision could be perceived as discriminatory. The Inkatha Freedom Party (IFP) observed that a precedent might have been created in respect of other areas with similar histories, billing irregularities and faulty infrastructure. Regarding free basic electricity, the programme had been successfully piloted and a phased roll-out would begin on 1 July 2003.


MINUTES
Mr L Montana, Department of Public Enterprises (DPE), advised members that the briefing had been arranged in response to complaints from certain communities about poor service delivery in respect of electricity and electrification.

Eskom: Briefing
Mr Jacob Moroga (Distribution Manager, Eskom) appraised members of the background to the problem of bulk debt, which had developed largely as a result of take-overs from former black local authorities and homelands and the intensification of the electrification programme. Small power users (SPUs) in the central region, South Africa's industrial heartland, constituted the biggest proportion of the debt.


Decreasing payment levels in Soweto since 1997 had highlighted several complex social issues related to non-payment. These, together with billing inaccuracies and faulty meters, had been largely responsible for the deteriorating relationship between Eskom and some communities. With burgeoning numbers of illegal reconnections, public safety had also become a concern.

The Service Delivery Framework (SDF) had emerged in response to this situation. It focused on normalising the situation, managing credit and addressing illegal practices in the central region and Soweto in particular. Lessons learned from the central region would then be applied to other areas of bulk service debt nationally. However, the large-scale conversion of domestic meters to the prepaid system, allowing consumers to monitor and manage their electricity consumption, had already significantly curtailed debt in many residential areas with similar cultures of non-payment.

On 30 April 2003, in the context of the SDF, Eskom had announced the cancellation of approximately R1,4 billion in bulk debt incurred by the central region before 31 September 2001. In arriving at this decision, Eskom had taken into account the high levels of disputes in large areas of the central region regarding the accuracy of metering and billing, as well as the complex history underpinning the take-over of debt incurred by the former black local government authorities (BLAs).

Mr Montana emphasised that the SDF was, however, not a framework for writing off debt.

Mr Moroga concluded by advising members that free basic electricity (FBE) had been successfully piloted in thirteen areas and that a phased roll-out would begin on 1 July 2003.

Discussion
Mr J Louw (ANC) thanked Mr Moroga for providing insight into the issue of bulk debt and the rational underpinning the decision to write off debt incurred by the central region prior to 31 September 2001. He asked whether there were grounds for questioning the legality of the decision, as had been suggested by some political parties.

Mr Montana advised members that the process of arriving at the decision concerned had been transparent and carefully consulted with all affected parties. Since the legality of writing off the debt had not been raised earlier in the process, it was unlikely that attempts to question the legality of the decision at this late stage could be substantiated.

The Chair commented that, in running its course in the central region, the SDF process would identify potentially contentious issues that would inform how best to apply the framework to other regions.

Mr R Heine (DA) advised members that his party had not, in fact, been briefed before the decision had been taken. This had implications for the Committee's oversight role, particularly since the decision appeared to discriminate between levels of poverty in respect of the ability to pay. He asked for detail on the signatories to the decision.

Mr Moroga reiterated that the process of arriving at a solution to the bulk debt problem in the central region had been as inclusive as possible.

Mr Heine responded that, while the DA was not one of the parties questioning the legality of the decision, he nevertheless felt obliged to alert members to some of the potential pitfalls of the SDF process. He suggested that Eskom should provide the Committee with more detail on the process leading to the decision concerned.

Mr S Sibiya (IFP) endorsed Mr Heine's perspectives and concerns, asking how Eskom intended addressing bulk debt in areas where issues similar to those raised in respect of Soweto would also apply. Was bulk debt likely to be written off in all these areas?

Mr Moroga advised that where billing irregularities occurred regularly and faulty infrastructure was a widespread problem, the possibility of debt write-off would nee to be explored. He conceded that it would have been helpful for the Committee to have been kept informed of the SDF process in the central region noting, nevertheless, that Eskom had consulted the DPE before finalising the decision concerned.

The Chair asked Eskom to provide the Committee with a detailed account of the entire SDF process since its inception. This would help members to understand how the decision in respect of bulk debt in the central region had been arrived at and justified.

Ms D Ngcengwana (ANC) praised Eskom for its work in the rural areas between the former Transkei and Durban. She requested a brief progress report on the use of solar power in the national electrification programme.

Mr Moroga advised members that the electrification programme in rural areas was making good progress. However, there tended to be some resistance to the introduction of solar and other renewable energy sources among communities in the deep rural areas. Since these areas were usually far from the national grid, and noting the high cost of extending that grid, this issue needed to be addressed.

The meeting was adjourned.




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