Private Utilities 5th Newsletter

 Private Utilities. Eskom, the South African utility, led by our esteemed government ministers, has cost the South African economy R40 trillion and that's assuming only 50% of new build would have been delivered since 2006

https://www.linkedin.com/pulse/your-power-station-utility-david-lipschitz/

Eskom Baseline vs Actuals, by David Lipschitz

The underlying values

#economy #utilities #government #strategy #grandstrategy #analysis #projection #history #baseline #actual

Play the cards right - David Lipschitz's Letter in the Cape Times on 1st December 2017

Much is being written about Eskom's failure and the reasons for it.

It is sobering to think that when Medupi coal power station was originally budgeted, it was forecasted to be complete by November 2015, and Kusile by April 2017. If this 9.6 GW was already on the grid, the fiscus would be earning R286 billion more per annum and another two million people would be employed. Instead of being "R50 billion under budget", as Minister Malusi Gigaba recently said, we would be R300 bn over-budget.

It is time for people to realise that you can tax the input side of the economy as much as you like, but it is the output side of the economy that will make you orders of magnitude more money in income, and also in savings due to not having to pay out so much unemployment benefit.

SA Growth Concerns : Letter in the Cape Times on 1st November 2017

Here is the letter as it was in the Cape Times.

Suppose your income in 2016 was R1 144 billion and your forecast was a 1.7% increase in growth, one would suggest a new budget of R1 163 bn.

At the moment, income for 2017 is projected at R1 214 bn, which is 6.1% higher than last year's income and with a revised forecast of 0.7% growth, the 6.1% divided by 0.7% gives me an 871% improvement in my projection.

We should be celebrating our success in squeezing more money out of an already distressed taxpayer.

This enabling government's National Development Plan calls for active citizens to contribute to the economy. Well, this active citizen has volunteered to supply this government with electricity at night and at peak times, at no capital cost to the economy. But this citizen is being ignored. Why is the government ignoring the NDP?

A modern economy needs electricity and water in plentiful amounts and cheaply and available when it is needed. But we as a nation are massively short of electricity and water. In the early 2020s Eskom will switch off old power stations, which means that even if the nuclear was running in five years it wouldn't strengthen our grid. There are alternatives. Why isn't government considering them?

If South Africa grew as a fast as our neighbors, tax revenues would automatically increase. Why is government continuing with old programs which aren't working instead of adopting new processes as Minister (Malusi) Gigaba says we should be doing?

And here is the full detail of what I wrote:

Question 1:

Suppose your income in 2016 was R1144 billion and your forecast was for a 1.7% increase in growth, one would suggest a new budget of R1163 billion. At the moment income for 2017 is projected at R1214 billion which is 6.1% higher than last year's income and with a revised forecast of 0.7% growth, the 6.1% divided by 0.7% gives me an 871% improvement in my projection.

We should be celebrating our success in squeezing more money out of an already distressed taxpayer, but instead we are saying we are R50 billion short. What am I missing?

Question 2:

This enabling government's National Development Plan calls for active citizens to contribute to the economy. Well, this active citizen has volunteered to supply this government with electricity at night and at peak times, at no capital cost to the economy. But this citizen is being ignored whilst government plans to spend R1400 billion on nuclear power thus increasing my tax burden by R6000 per month without actually getting any more electricity. Why is the government ignoring the NDP?

Question 3:

A modern economy needs electricity and water in plentiful amounts and cheaply and available when it is needed. But we as a nation are massively short of electricity and water. We need this electricity and water now, not in 10 years time. Even if we start building 9.6 GW of new nuclear at Koeberg tomorrow, we won't have this electricity for 10 years. And in the early 2020's Eskom will switch off old power stations which means that even if the nuclear was running in five years it wouldn't strengthen our grid. There are alternatives. Why isn't government considering them?

Question 4:

Why does government still continue to see how much they can get out of the spending side of the economy rather than how much they can get out of the income side of the economy? As stated in the Mid-Term Budget speech, the rest of Africa and the world are growing far faster than South Africa. If South Africa grew as a fast as our neighbors, tax revenues would automatically increase because of our growth. Adding to the tax burden with 20% or more electricity, water, fuel, food, etc, tax increases is slowing down our growth. Why is government continuing with old programs which aren't working instead of adopting new processes as Minister Gigaba says we should be doing?

I look forward to being enlightened with the answers that are suggested.