Page 30 - Energize May 2021

VIEWS AND OPINION

Robbing hoods that take from the poor to

pay the rich…

The state of free basic electricity in South Africa

by Chris Yelland, EE Business Intelligence

A new research report published by the Public Affairs Research
Institute (PARI) reveals that in the 2019/20 financial year
alone, some R9-billion budgeted and disbursed by South

Africa’s National Treasury to local government for the
provision of free basic electricity (FBE) to the poorest-of-the-
poor has been misappropriated by municipalities.

he report, titled “Broken Promises: Electricity access for low- basic services in the 2020/21 financial year, as shown in Table 1.
income households - good policy intentions, bad trade-offs However, the research report indicates that currently less than
Tand unintended consequences”, by Dr Tracy Ledger, further 30% of the 10,1-million indigent households that qualify for free basic
shows that in the six financial years from 2014/15 to 2019/20, some services, for which municipalities received the budgeted allocation of
R38,3-billion disbursed by National Treasury for FBE to indigent R54,1-billion in the 2020/21 financial year, actually received any free
households failed to reach the intended recipients, and was instead basic services.
used by municipalities for other unauthorised purposes. Furthermore, in the case of free basic electricity, only some 21% of
This situation continues unabated and is in fact worsening. the 10,1-million qualifying indigent households actually received FBE in
“The number of households receiving the FBE benefit has generally the 2019/20 financial year and only 21% of the R11,4-billion disbursed
declined over the past five years, while the number that is funded in by National Treasury to municipalities for FBE was actually used by
the national budget has increased”, says Dr Ledger in the report. municipalities for the intended purpose, as shown in Table 2.
The 1998 Government White Paper on Energy Policy clearly This has occurred in the face of rapidly rising electricity prices from
documents government’s policy of universal access to electricity, and Eskom and much higher prices of electricity supplied by municipal
the provision of FBE to indigent households in South Africa, alongside electricity distributors; and serves to significantly increase levels of
other free basic services such as water, sanitation and refuse removal. poverty in South Africa.
The research report by Dr Ledger, shows that a sum of R435.04 In terms of government’s FBE policy, qualifying indigent households
per indigent household per month and totalling about R54,1-bllion may receive 50 kWh of electricity free-of-charge per month. Most indigent
for about 10,1-million indigent households, was calculated, budgeted households are situated in Eskom areas of electricity supply, while the
and disbursed by National Treasury to municipalities to fund free remainder are in areas supplied by municipal electricity distributors.

Table 1: Amounts per basic service allocated through the Local Government Equitable Share, 2020/21

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