Piet le Roux, CEO of business interest organisation Sakeliga, says that for at least five years businesses in towns across SA have had their power deliberately cut off by Eskom through no fault of their own.
Now, three years after Sakeliga joined a court action to stop this, the Supreme Court of Appeal has ruled that Eskom may not cut electricity to paying customers in defaulting municipalities in an effort to recover debt.
Le Roux, whose organisation represents more than 12,000 businesses, says the consequences have been devastating.
"Once Eskom cuts power to a town there's no practical way for businesses to make alternative plans, so the engine that needs to be there for local recovery is ripped out."
For many businesses, power cuts have been a daily occurrence, he says.
"Production lines come to a halt, cold storage lines, smelters, anything that requires continuous energy gets interrupted. And it's not like you can flip the switch back on. Cutting power for just a few hours a day brings the whole town to a halt."
This has created a big disincentive for businesses to set up operations outside metropolitan areas.
"So you've got industry pulling out of local economies, which is absolutely devastating to them and has all sorts of social consequences."
The cuts have been happening in more than 40 municipalities across the country, "and hospitals, schools, everything a town needs to prosper, has been going to the dogs".
The scope for private electricity generation is "exceedingly small". Businesses that are able to generate power for themselves are not allowed to sell it or even donate it - not even to hospitals.
40+
The number of municipalities cut off by Eskom because of outstanding debt
In spite of noises by mineral resources & energy minister Gwede Mantashe, legislation does now allow meaningful private alternatives to Eskom.
"There's been some movement but definitely not at a pace which a social and economic emergency like this requires," says Le Roux.
Sakeliga is looking at ways businesses can pay Eskom directly for electricity rather than municipalities, but the aim is to cut their dependence on Eskom completely.
"My understanding is that it is still not possible generally to purchase power from independent power producers.
"If this situation is allowed to continue we'll see an even faster implosion of towns and municipalities across the country.
"I don't think the severity of the situation is generally understood by government."
It's not only about policy but capacity, he says. "The interplay of these two is causing an implosion at local level."
Sakeliga and other business organisations have been trying to help with capacity building.
"But increasingly we think recovery will depend on whether local chambers of commerce and business groups are able to set up their own institutional capabilities to replace what we have traditionally thought of as government provision of services.
"It doesn't help us just to say government should do better. We have to find ways for local chambers among others to take over some municipal service provision in the interests of the local community."
Sakeliga is launching a case in the North West in a month or so that it hopes will pave the way legally for local business to take greater control over finances in municipalities that aren't providing services, and provide them themselves.
First prize would be to partner with municipalities to capacitate them, but they're not willing to accept such assistance, says Le Roux.
In Koster in the North West, significant service delivery including the provision of sewerage and water works is being undertaken by local businesses after a recent judgment. Obtaining legal sanction to take over municipal functions was their last resort after trying for years to help and work with the municipality.
Le Roux says municipalities are not interested in working with businesses that demand transparency because they're afraid it will expose their incompetence and reduce opportunities for corruption.
"They're also afraid it will interfere with political appointments and cadre deployment, which have hollowed out capacity over the last 20 years."
The municipal manager in Koster locked the gates of the waterworks and businesses had to get the sheriff and police to enforce the court order.
Increasingly …
businesses don’t ask
for permission to
replace a street light
or repair a cable or
install a water pump
Businesses in other towns have been getting similar court orders. Or they've just gone ahead and started filling potholes and replacing water pumps without a court order, at their own expense, he says.
"There's a de jure and, increasingly, a de facto situation in SA where businesses don't ask for permission to replace a street light or repair an electricity cable or install a water pump in the sewage works."
In more and more towns across the country businesses are operating in this de facto world.
"They recognise that the quickest way to deal with the problem may not be technically legal but they're going to do it anyway because it's an emergency situation."
He says the practice of businesses and communities working together to fix badly needed infrastructure without municipal approval or co-operation is "certainly picking up steam".
In some cases, this has brought businesses and communities that benefit from their interventions closer together, he says.
"Nothing brings one together like a common problem you successfully solve. It forges new networks of trust."
In most cases, business chambers regard the capital spent on these emergency projects as just another necessary second tax and don't try to recoup it through rates and taxes trust funds.
But Sakeliga is developing legal strategies to address this, says Le Roux, who has an honours degree in economics from Stellenbosch University and a master's in economics from Unisa.
"If municipalities come under financial pressure because of their mismanagement, it is very important that we find legal ways of preventing them from using local rates and taxes.
"We're going to use every legal opportunity to prevent money reaching delinquent and spendthrift municipalities.
"There's a short cut, of course. Government could intervene, change a lot of policy and replace municipal office bearers with better ones. But it doesn't look like that short cut is being taken."
