February 15, 2008


Utility Futility: South Africa is in the grips of an energy crisis. The solution lies in privatization and free-market reforms (Richard Tren, February 14, 2008, The American)

The minister of public enterprises, Alec Irwin, proposes rationing and price hikes to deal with the problem and has threatened to outlaw the export of high grade coal so that the government can direct the fuel to power stations. South Africa has had a particularly wet summer, and Irwin has claimed that the wet coal is, in part, a cause of the power outages. (Irwin is the same man who, several years ago, blamed a power outage at South Africa’s only nuclear power plant on saboteurs, when in fact it was caused by poor maintenance.)

Meanwhile, at a special sitting of parliament, the minister of energy and minerals, Buyelwa Sonjica, made the laughable suggestion that South Africans should “go to sleep early so that you can grow and be cleverer; boil less water; use the microwave rather than stove; take a shower rather than a shallow bath.” [...]

In all likelihood, it was the ANC’s obsession with changing the racial makeup of companies, both state-owned and private, that led to the current problems. In practice, this meant firing white workers and hiring black ones. Transforming Eskom so that it better reflects the country’s demography is one thing, but doing so in a way that alienates the current employees and robs the organization of years of expertise was shortsighted. As we now see, it has been enormously costly to all South Africans, regardless of their skin color.

President Thabo Mbeki’s government is constantly accused by the hard-left trade unions and the South African Communist Party of being too pro-market and economically liberal. If only these charges were true. In fact, Mbeki has prevented the privatization of state-owned enterprises for far too long. If he had privatized electricity production and opened up the market so that any producer could supply power, South Africa probably would not be in its current predicament.

The energy crisis can be overcome if South Africa embraces such free-market reforms. Meantime, Mbeki should fire his incompetent ministers and sack the inept Eskom officials. But given the ANC’s track record, this may be too much to hope for.

...that it does about Iraq?

Posted by Orrin Judd at February 15, 2008 12:00 AM
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