‘Electricity is a public good,’ says Minister Gordhan, defending state ownership of Eskom

Public Enterprises Minister Pravin Gordhan was asked at the Financial Times Africa Summit on Tuesday why South Africa needed Eskom at all. A member of the audience put it to him that South Africa had been ahead of the curve in 1993 and 1994 in licensing mobile telephone companies and that had changed the country’s telecoms landscape.

“Given that history of trailblazing, why do you need Eskom?” was the question for Gordhan, who was participating in the London summit remotely.

“We consider electricity to be a public good,” he said. “And I think there is a reason for the state to be involved in the provision of public goods — although there are many different kinds of innovations and mechanisms which would allow for partnerships with the private sector.”

Gordhan suggested that placing the provision of electricity into private hands in other parts of the world had not worked out well, including because it had increased prices. One of those places was Britain, he said, noting that by 31 October Britons would hear whether they would be receiving some sort of assistance towards paying their energy bills. 

“There are other examples in the United States where some of the issues have relevance as well,” Gordhan added. 

He said there was a need for public goods and for the public sector to play an important part in the provision of those goods, but not necessarily the only part. He noted that the private sector in South Africa was spending “huge amounts of money” to provide electricity for public use through Eskom’s transmission network, but also for its own use in mining and other sectors. 

But, Gordhan asked, when the private sector came in to finance the provision of energy, “what will be the terms on which they will come in?” And could the private sector hold a country and its population hostage if it has an unregulated environment in which to operate? 

He said the multilateral financial institutions had to play an important part in financing African energy provision. Partnerships between the public and private sectors were also needed. 

“But in a way in which what is happening in some countries in the north doesn’t happen here eventually on the African continent as well; which is that renewable energy which came in fairly cheap — and that was its selling point — now the prices are being increased to match market prices for other forms of energy.  

“And that’s a risk the world needs to look at, let alone ourselves. The last point is that Africa and many other developing countries across the world have had this dubious honour of having promises made but promises not delivered upon. In many ways, I would refer to this as the Covid-19 vaccine phenomenon — ‘We look after our own first and the rest of you can wait until we’re finished.’”

Gordhan was asked whether he believed that South Africa’s international partners who have pledged $8.5-billion to help finance its Just Energy Transition Partnership (JETP) — the European Union, US, UK, France and Germany — would not deliver what they had promised.