Multinational Monitor

JAN/FEB 2002
VOL 23 No. 1


Derailed: The UK’s Disastrous Experience with Railway Privatization
by Brendan Martin

Business Goes to School: The For-Profit Corporate Drive to Run Public Schools
by Barbara Miner

Off the Grid: Mexico’s Free Market Extremism and Labor’s Challenge to Privatization
by David Bacon

Power to the People In South Africa: Operation Khanyisa! and the Fight Against Electricity Privatization
by Patrick Bond

System Failure: Deregulation, Political Corruption, Corporate Fraud and the Enron Debacle
by Andrew Wheat


Theft of the Century: Privatization and the Looting of Russia
an interview with
Paul Klebnikov

Undermining Security: A Warning Against Social Security Privatization
an interview with
Dean Baker

Accounting for Bad Accounting
an interview with
John Coffee



Behind the Lines

Preparing for the Next Enron

The Front
The Big Ugly at Ok Tedi - The Boeing Boondoggle

The Lawrence Summers Memorial Award

Names In the News


Power to the People in South Africa: Operation Khanyisa! and the Fight Against Electricity Privatization

by Patrick Bond

Johannesburg — “It’s a criminal gang,” announced Jeff Radebe, the African National Congress (ANC) Minister of Public Enterprises, at a December news conference.

He was blasting activists of the Soweto Electricity Crisis Committee (SECC) for their Operation Khanyisa! — Reconnect the Power! — campaign. Over six months, more than 3,000 families had their electricity supplies illegally switched back on, after being left in darkness when they could not afford to pay their enormous monthly bills. SECC volunteers risk electrocution to do the work, and charge their neighbors nothing for the service.

Radebe, ironically, is a leading member of the South African Communist Party. In May 1999, when Thabo Mbeki was elected president, Radebe was mandated to privatize and commercialize Pretoria’s largest government-owned enterprises.

The Soweto confrontation was not his first brush with activists who brand him a sellout. In August, he used similar language to scorn the two million member Congress of South African Trade Unions (COSATU), which embarked on a two-day national strike against the planned privatization of electricity, telecommunications and transport. Mbeki and Radebe were furious because the strike distracted attention from the UN World Conference Against Racism, which opened in the South African city of Durban the next day.

The Electricity Supply Commission, still known by its Afrikaans acronym, Eskom, is the most important South African government-owned enterprise, and the fourth largest non-petroleum power company in the world. It proudly claims to be one of the New South Africa’s success stories, having provided electricity to more than 300,000 new households each year. Yet many tens of thousands cannot afford the full-cost-recovery policy (meaning that each consumer must pay the full cost of the electricity they use, without subsidies from industrial and other large users to small consumers) that Pretoria’s minerals and energy ministry adopted in 1998.

Charges Against ESKOM

The policy of cutting off those who cannot afford their bills has generated sparks for an enterprise that has long been a lightning rod for controversy. Virtually all black South Africans were denied Eskom’s services until the early 1980s, due to apartheid racism. Even $100 million worth of World Bank loans to Pretoria for expanding Eskom’s grid between 1951 and 1966 explicitly left out all black neighborhoods, and is one reason that local activists are demanding reparations from the Bank. As a result of the Eskom blackout, the black South African townships were perpetually filthy due to soot from coal and wood burning.

In spite of its limited success in connecting new households to the electricity grid, Eskom has become an even bigger target of dissent. Having fired more than 40,000 of its 85,000 workers during the early 1990s, thanks to mechanization and overcapacity, the utility tried to outsource and corporatize several key operations in recent years, drawing the ire of workers.

The government has told the metalworkers and mineworkers unions that while it is privatizing electricity generation rights, Eskom’s transmission and distribution operations will remain state-owned. The South African cabinet is expected to approve the restructuring program in February. But unions remain worried that further commercialization will cost still more jobs in an economy that has lost more than a million formal sector jobs since the early 1990s.

Moreover, Eskom gets sustained heat from environmentalists who complain that its massive coal-burning plants still do not have enough sulfur-scrubbing equipment. Eskom’s investments in alternative renewable energy have been negligible, notwithstanding the country’s abundant solar and wind power. Instead, Eskom is spending tens of millions of dollars to develop a prototype pebble-bed nuclear reactor, alongside a British partner which has teetered on the edge of bankruptcy [See “Too Cheap to Deter,” Multinational Monitor, November 2001].

The South African utility has been enmeshed in further controversy in Mozambique. Eskom relies upon hydropower from Mozambique’s huge Cahorra Bassa Dam, whose Portuguese operators claimed in early January that the $0.003 per kilowatt/hour that Eskom was paying represented price extortion (Sowetans pay nearly 10 times that amount for each retail kilowatt hour). Because the transmission lines from the dam go through South Africa’s eastern province before returning to the Mozambican capital of Maputo, the huge hydroelectricity consumption of that city’s Mozal aluminum furnace comes from Eskom.

Mozambique must buy the processed electricity back from South Africa in U.S. dollars, having sold it to South Africa in the South African currency, rands. The price is far in excess of what it would pay if it received electricity direct from Cahorra Bassa and did not have to rely on an arrangement established during the early 1970s colonial period, when Portugal and Pretoria collaborated to keep blacks out of power. Because of the pricing problem, Mozambique is considering adding two more dams below Cahorra Bassa on the Zambezi River. But these proposals have faced protests from environmentalists.

Zapping Privatization

The most prominent critic of Eskom’s operations is Trevor Ngwane, formerly an ANC councilor for Soweto, until the ruling party expelled him in 1999 for opposing Johannesburg’s privatization strategy. Says Ngwane, “We believe that the drive to privatize — by milking more from the poor — seemed to instill in Eskom the most anti-social, anti-environmental strategies. We also believe that the tide has turned, internationally, against privatization. ‘Renationalization’ is now a popular sentiment.”

Ngwane has been central not only to the SECC’s success, but to a provincial and national Anti-Privatization Forum that will serve as the main activist host for protesters at the upcoming Johannesburg World Summit on Sustainable Development. Known as “Rio+10,” the August 26-September 4 conference will be the world’s largest-ever conference, with 193 heads of state and 63,000 delegates expected.

In an attempt to defuse the growing SECC-led protests against Eskom, in December, Radebe and an allied community network, the South African National Civic Organization, ventured to the historic Orlando Hall in Soweto. They urged residents to put their Eskom payment boycott behind them, and repay half their arrears plus make regular payments.

Radebe and Eskom officials complain about a “culture of nonpayment” among Soweto residents, including residents they say have the means to pay.

“Nonsense,” retorts Ngwane, “The people who can’t pay the high costs of electricity genuinely can’t afford to, and Eskom’s billing is so erratic that no one really trusts the company to tell them what is owed.” He ridicules the ANC for having promised a lifeline amount of free electricity — a guaranteed minimum supply to meet families’ basic needs — in the 2000 municipal elections, in which Ngwane failed to win a council seat running as an independent. The government has not delivered on the ANC promise.

Ngwane says that Operation Khanyisa! has worked. Last October, Eskom announced it would no longer disconnect those who could not pay their electricity bill. “People’s Power was responsible for Eskom’s U-turn,” says Ngwane. “We mobilized tens of thousands of Sowetans in active protests over the past year. We established professional and intellectual credibility for our critique of Eskom, even collaborating on a major Wits University study. We demonstrated at the houses of the mayor, Amos Masondo and local councilors, and, in the spirit of nonviolent civil disobedience, we went so far as to disconnect the electricity supplies of the mayor and councilors to give them a taste of their own medicine.”

Ngwane and the SECC promise to keep up the pressure on Eskom. The SECC is pressing forward with a “decommodification” strategy for basic needs. The SECC is calling on Eskom to:

  • commit to halting and reversing privatization and commercialization, and to scrap arrears;
  • implement the free electricity program promised in the 2000 municipal elections;
  • end the skewed rates that do not sufficiently subsidize low-income black people;
  • add special provisions for vulnerable groups — disabled people, pensioners, people who are HIV-positive; and
  • expand electrification to all, especially impoverished people in urban slums and rural villages, the vast majority of whom do not have power.

“We are lucky, as South Africa’s social movements, to have Rio+10 here in August this year,” Ngwane says, promising that a similar humiliation to the Durban anti-racism conference awaits the government, if it continues privatizing and cutting services.

But Pretoria watches warily. According to a report in Business Day newspaper last August just prior to the World Conference Against Racism, “Part of the [ANC] strategy — championed by Trade and Industry Minister Alec Erwin, Transport Minister Dullah Omar and Public Enterprises Minister Jeff Radebe — was to seek to caution COSATU members against possible hijacking of their strike by outside elements such as those protesting at World Bank and International Monetary Fund meetings.”

That seems a particular reference to Ngwane, who was featured in a film popular among critics of corporate globalization, “Two Trevors go to Washington.” The film, which aired on South African network television, showed Ngwane in street protests during April 2000 meetings of the IMF and World Bank in Washington, D.C. Those meetings were chaired by the conservative South African Finance Minister Trevor Manuel.

The dreadlocked Soweto activist smiles at mention of government tactics to marginalize the protests against privatization. “Radebe’s threats are an attempt at divide-and-rule. He is trying to isolate our organization and to neutralize COSATU so as to break the unity of the community and unions. But the boycott of Eskom will continue.”

Patrick Bond is a political economist at the University of the Witwatersrand and a Multinational Monitor contributing writer. His recent books on South Africa include Unsustainable South Africa (forthcoming, 2002), Against Global Apartheid (2001), Elite Transition (2000) and Cities of Gold, Townships of Coal (2000).


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