Yesterday the South African government accepted a loan from the World Bank. During the Mbeki era South Africa was cautious not to take on any loans from the World Bank and in so doing avoided the crippling conditionalities that are enforced by the World Bank when caught in the debt trap. With the changing of the guard in the South African government, so too have we seen a change in attitude towards the World Bank and its conditionalities.
World Bank loans are renowned for their clandestine conditionalities that tie governments to programmes of privatization and liberalization – effectively undermining the ability of sovereign states to develop policies that respond to the needs of the electorate. Rather than developing the economic capacity to meet the needs of the poor, World Bank conditionalities oblige governments to reduce their spending on social services, lower tax on the wealthy, privatize state industries and reduce tariff barriers, opening the country’s economy to multinational corporations.
We will never know the specific conditions attached to the Eskom loan because of the un-transparent and undemocratic workings of the World Bank.
The $3, 75 billion World Bank loan is intended to help Eskom fund their R385 billion expansion programme. Based on the World Bank’s track record, the Zuma government way well have already committed to the further commodification of energy in South Africa. In his State of the Nation Address Jacob Zuma hinted that private electricity producers will be licenses to sell electricity onto the national grid. Private capital will require a higher rate of return on their investments than Eskom’s current pricing model can deliver. This will see South Africans paying even higher prices for energy in the future.
Eskom has already been granted an electricity tariff increase of 25% each year for next three years by the National Energy Regulator (NERSA) which will result in the more than doubling of household electricity bills. It is estimated that household electricity bills will jump from R350 for a typical township household to R720 by 2012.
As if providing insult to injury, local media has reported on several not-so-clandestine deals between government and industry where heavy industrial polluters will be paying less rates than average households. These Special Pricing Agreements with big corporate giants such as BHP Billiton are remnants from the apartheid era. It is estimated that while consumers pay between 35c and 40c per kilowatt-hour, some industries are paying as little as 5c to 11c per kilo watt hour.
South Africa has already achieved the status of having the most unequal society in the world and the dysfunctional energy system is adding petrol to the fire. With high unemployment rates South Africa will experience a further decay in living standards.
The new coal power station will also require that 40 new coal mines are established, new coal mines requiring new deals. It is alleged that all the usual suspects – Eyesizwe, Mvelapanda, African Rainbow minerals and even Chancellor House (the ANC’s investment arm) - might have a stake in the opening of these new coal mines.
The worst outcome of the World Bank loan will undoubtedly be the increased carbon emissions that will contribute to climate change and the new mines which will continue to pollute, especially drinking water, in provinces like Mpumalanga.
South Africa is currently the world’s 12th biggest emitter of greenhouse gas emissions, and the establishment of new coal-fired power stations will push SA up the ranks. It will increase the amount of damage caused to the planet which also be as a result of the burning of more fossil fuels - making South Africa a major catalyst in the ecological destruction of the planet.
At this stage the government can ill afford to enter into a loan with the World Bank that imposes more conditionalities on the economy and increases privatisation. Let us not forget that the dysfunctionality of the energy system is rooted in the partial privatisation of Eskom, removing access to electricity as a basic condition for a dignified standard of living, and forcing the poor to pay for infrastructure that was denied to certain racial groups during the apartheid era.
Currently, media reports and government will have us believe that coal-fired power is the only solution to address the electricity crisis which resulted in ongoing nationwide blackouts. However, many renewable alternatives at cheaper costs are available such as batch heaters at R400 per unit and solar water heaters at R4000 per unit installed. A green solution will also result in the creation of more than 1 million jobs.
A list of these alternatives can go on and on and on. But what of the democratic space to engage in this debate? The government, in signing the World Bank loan agreement, may well have offered our democratic right to determine our energy policy up as collateral.