When the ANC came into power in 1994 it sought to mirror the Afrikaner nationalist strategy — create a space for capitalism, but in turn keep space for the government to intervene in the economy in a broad-ranging way.
This debate, of how much socialism versus capitalism there must be in our economy, is playing itself out again over the Independent Power Producer furore and the Eskom unbundling. This is, however, a debate that is distracting us from the real issues and the things that work and do not work in our mixed economy.
With regulated airport taxes on the decline, ACSA had to diversify its revenue base in other areas of asset acquisition and services. Despite a dip in profits, ACSA has not run to the government for guarantees and is using its own balance sheet to finance future growth. The IPP debate is a useful distraction from the fact that Eskom is already a convenient milking cow for debt providers, coal miners, coal transporters and other suppliers. If most of Eskom’s profits go into paying the cost of finance, then most of Eskom’s balance sheet is already privatised by dint of the debt burden.
The one-sided debate about IPPs is full of contradictions. While their assets may be privately owned, the market for power is a highly regulated one where government-procured renewables during a buyers’ market in a structured competitive process try to ensure that market offers the best price with the most optimal socio-economic benefits.
Given that so much of the coal supply chain is privatised, while its social, environmental and health costs are extensively socialised, it is ironic that there are few attacks of the privatised coal industry with similar vigour to that applied to the IPPs.
Source: Financial Digest (financialdigest.net)
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