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EEC AN AGENT OF POVERTY?

13/01/2020 07:46:00 Vusi Sibisi

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At the end of what has become a routine consultative process hosted in all the nerve centres of the kingdom, the Eswatini Regulatory Authority (ESERA) will come out with a decision on the percentage increase of electricity tariffs the Eswatini Electricity Company (EEC) will implement this year.

The question is, will this percentage increase be necessarily informed by inputs from the EEC constituents? Just how subjective this matter of electricity tariffs increase is perhaps underpinned by the approach to the issue apropos the certainty that, come hell or high water, an increase will happen as opposed to the objective proposition of if and whether there will be a tariff increase at all. Consequently, it is a foregone conclusion that, whatever the inputs from the diverse consumers, in the end there will be an increase of the tariffs, the percentage of which is secondary. Inevitably this scenario is replicated in almost all areas and services where prices are purportedly regulated and controlled – the consumer simply has no say as purported by the so-called consultative processes.

As I see it, for the process to be objective it has to begin from ground zero, which essentially is asking the question of the necessity to increase tariffs before anything else. This does not preclude the fact that the party applying for tariff increases, in this case the EEC, can and may propose a percentage of the increase it envisages to ESERA but this should not confine the consultative process from factoring ground zero, in this instance zero increase, if and when this is desirous and feasible. Otherwise the current approach is akin to merely going through the motions under the guise that consumers were consulted even when in the end ESERA will give EEC what it wants perhaps with marginal and insignificant adjustments merely to placate its various publics.

Compromised

Also germane to the subject matter is the compromised – again within the context of objectivity and subjectivity - position of ESERA, which, in the absence of diverse operators and a broader pool of resources, is umbilically attached to the fortunes of EEC. To ensure its own healthy subsistence ESERA is, first and foremost, duty bound to ensure a healthy balance sheet for EEC. While emaSwati are already overburdened by high electricity tariffs – perhaps the highest per capita in the region and beyond – what is glaring in these consultations is the appreciation that EEC was created by emaSwati to be - along with a number of other public entities – a catalyst to the national development imperatives of the kingdom. Put differently, EEC and the other public entities were and are agents of development and this should underpin their functions and operations. Yet today it is the bottom line that matters, which has transformed EEC into a latter day Frankenstein that is a burden to and detrimental to the development of the country.

Not long ago the same EEC declared a half billion Emalangeni profitability, a feat that raised a lot of eyebrows from discerning emaSwati. Here is a company that does not even produce a third of the electricity needs of the nation whose function, in real terms, is that of a middleman purchasing electricity power from third parties and reselling it to emaSwati. To realise that kind of profit would mean a massive mark-up on the reselling price. In real terms this places EEC in the same league of suppliers and service providers, the infamous tenderpreneurs, which are scamming government hundreds of millions of Emalangeni through over-charging and over-pricing way above market-related rates. This is not fair to consumers for any reason even if EEC’s mandate had been changed from that of a national developmental agency to a purely profit-driven enterprise. In turn this has made EEC, like government, complicit to if not an agent of impoverishing emaSwati.

As I see it, with such massive profits considering that EEC is not a core producer of electricity but rather just a vendor and distributor, it can and should cushion consumers in these tough economic times by refinancing its budget from these profits without requiring a tariff increase annually. And the Trade Union Congress of Swaziland (TUCOSWA) has also voiced its objection to the proposed tariff increase and called on EEC to use its profits to finance its budget and cushion consumers. The labour movement has warned that it intended to include in its list of grievances the proposed electricity tariff hike and mobilize consumers to strike in protest against this proposal.

A question ought to be asked at this juncture about the final destination of EEC profits. Of course the answer to this question is that it is government, as the sole owner of the entity, which is the beneficiary. And we all know that government has lost the trust of the people when it comes to prudent management of the fiscus, with a good and unsurpassed record of reckless spending of public funds on useless hedonistic projects of no economic viability and a First World lifestyle for the privileged minority. Consequently the profits would be better employed cushioning emaSwati from EEC’s periodic tariff increases than to be transmitted to and wasted by a government whose primary focus is not the nation but the ruling elite.

Ultimately it is time that serious consideration was given to unbundling EEC to bring to an end its monopoly, a move that will bring competition which would be beneficial to emaSwati downstream in respect to competitive pricing of electricity. Just why this small country with sufficient resources at its disposal remains dependent on external suppliers on a commodity that is central to economic development after half a century of independence speaks volumes about the dysfunctionality of the obtaining political system and its leadership.