The High Court’s decision that all public hospitals, clinics, schools and police stations in South Africa must be relieved of load shedding within the next two months is the “wrong decision”, economist Dawie Roodt said in response to the ruling on Monday.
Die pronunciation applies to one part of an application submitted by 19 political parties, organizations and trade unions in the hope that the court can put an end to load shedding.
“I differ from the court. I think he made the wrong decision,” says Roodt.
“First of all, we must understand that the best solution in an economy is always to sell a thing to the guy who wants to pay the most for it. So the correct approach – in theory – is that those who want electricity should bid for it and the guy who can pay the most is the one who gets it. The others live without it. That’s the way it’s supposed to be.”
Roodt says that from a moral point of view it is not wrong that the court agrees that institutions such as schools must have electricity, but that it is not in the best interest of the economy and must be approached differently.
Among other things, he cannot understand why institutions such as schools should be exempted from load shedding, while companies have to do without power. According to Roodt, this is unfair and he says that the economy would also suffer extremely if the income it receives from company tax were to drop.
“We have to understand that there is a cost involved for the economy. Those companies that are not going to get power now because it is channeled to schools and the like are the companies whose tax money is being used to build those very schools anyway [wat nou van beurtkrag vrygestel word].
“The entire production base of the economy is being undermined.”
Roodt says, however, that it is not clear what the cost of the exemption will be for the economy because it is not indicated anywhere on a budget. He believes that if the tax payer is expected to pay for electricity to, among other things, schools, it should appear on the finance minister’s budget.
“There must be a line that clearly indicates what the electricity subsidy to schools is.
“You can’t manage anything, not a country or a company, if you don’t have the right information.”
Roodt says there are more than 700 companies that pay two-thirds of all company tax.
“The third most important source of income for the finance minister is company tax. There are a total of 770 companies, less than a thousand, which pay two-thirds of this company tax.
“Without those companies’ tax revenue, we are [Suid-Afrika] very deep in trouble.”
He says that if there is a political, social or social reason why certain areas or institutions should have electricity even if they cannot afford it, it should be subsidized.
The Minister of Public Enterprises, Pravin Gordhan, announced on Monday that the department will submit an urgent appeal application to have the judgment set aside.
Gordhan says the department is very concerned about its consequences on efforts to stabilize the national network and free the country from the grip of load shedding.
“The department has studied the ruling and decided through a legal opinion that the appropriate step is to file an application to set aside the ruling and allow existing load-shedding efforts to end – without causing unnecessary danger to the nationwide network to cause – can continue.”
Gordhan says the department respects the independence of the courts, but believes the ruling will have “unintended consequences” and undermine efforts to end load shedding.
When asked, Eskom said that its legal team was still studying the verdict and that it could therefore not comment yet.
The power supplier’s former head, André de Ruyter, warned in February this year in answering court documents in the case that the waiver of load shedding could lead to a complete and nationwide network collapse that the country cannot afford.
He said in an affidavit at the time that most of the places that the applicants are asking to be exempted from load shedding are in the middle of the power grid and that as a result there will be little power left to reduce (load shedding) to put pressure on the network down.
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