Tax warning over stopping load-shedding at hospitals, schools, and police stations

3 years ago 1

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If the government had to provide generators to protect state hospitals, clinics, schools, and police stations from load-shedding, it would come at a massive cost to South African taxpayers.

That is according to Organisation Undoing Tax Abuse (Outa) CEO Wayne Duvenage, in his response to this past week’s court ruling that such facilities be spared from load-shedding.

The North Gauteng High Court ruled after hearing a case brought by opposition political parties, labour unions, and civil action groups against Eskom, who had argued that load-shedding was unconstitutional.

A full bench of the High Court ruled that the government had failed in its constitutional and statutory duties to ensure citizens’ rights to healthcare, security, and education.

It ordered that public enterprise minister Pravin Gordhan “take all reasonable steps within 60 days” to prevent the interruption of electricity supply due to load-shedding.

In instances where buildings or sites could not be isolated from the grid to allow for exempting them from load-shedding, Gordhan must ensure the provision of backup power equipment like generators.

In a responding affidavit, former Eskom CEO André de Ruyter warned that such exemptions would pose a serious and unacceptable risk of a national blackout.

Eskom explained that isolating and excluding particular customers from load-shedding was technically impossible as they were embedded in the utility’s distribution network.

Therefore, exempting the essential facilities would result in unessential entities — such as nearby homes and businesses — also having reduced or no load-shedding, meaning there would be very little load left to shed to reduce demand.

Eskom would also have to stop critical planned maintenance on power station units to try and ensure sufficient supply.

Even so, electricity demand could eventually exceed availability, causing the grid to become unstable and power stations to start tripping, resulting in a blackout.

Generator costs would run into the millions

The court’s alternative to load-shedding exemptions — providing generators to essential government facilities — seems to be Gordhan’s only option.

However, former Eskom general manager Alwie Lester told The Sunday Times although he understood the rationale of the judgment, it was an impractical proposal.

“There are several thousand schools, hospitals and police stations around the country,” Lester stated.

“There would be the capital costs and the running costs of generators which, in my view, would run into the millions, nationally. Not sure who pays for this.”

According to Duvenage, it would likely be taxpayers who have to foot the bill.

“It’s going to cost the taxpayer a lot because the hospitals and police stations are funded by general taxes,” Duvenage said. “It’s not just the generators; it’s the diesel.”

Duvenage also pointed out that most state hospitals already had generators.

Presidency spokesperson Vincent Magwenya told The Sunday Times that government was “very likely” to appeal the judgment.

“We have significant concerns about the judgment and its impact on the stability of the grid and the negative effect on the fiscus,” Magwenya said.

As of Saturday, 6 May 2023, Eskom’s legal team was still studying the ruling.