The Editor mentioned to me the other day that she should issue a health warning with some of my leader articles because they often create an acute case of depression. This will in future be issued with the articles as it is becoming increasingly difficult to construct positive and encouraging articles about the state of the nation and the environment in which engineering has to play its role.

Last month we took a look at the status of the mining industry and one could not do much more than be pretty negative about the trend it has taken over recent years. From being top spot so to speak for decades, we have slumped to a mediocre level that replicates a number of other circumstances in our country. And the bell tolled loud and clear this week when 4 major employers in the EPCM industry advised that they were about to institute section 189 retrenchment programmes. They inevitably become the victims of the lack of new mining spend which in turn does not happen because the investors in such business have made it clear that other countries are able to offer a less risky investment climate. Most of the analyst commentary on the issue has confirmed this view. It is just appalling and almost treasonable that those in government allowed the talk about nationalization to go so far without taking a firm hand, ably assisted by incoherent mining policy.

It only goes to show that in such matters of global economics and investor confidence that they do not know. And worse is that they do not know that they do not know. It had little to do with the Euro crisis which gets blamed for everything including lack of local service delivery. Don’t mention the State of the Nation address because I will then need the advice of the intended health warning.

On the matter of power, we note with some relief that NERSA saw fit to refute giving Eskom the 16% escalation over the next five years, which on top of the increases over the last three would have been catastrophic for industry, business and the average citizen. Even the 8% is severe enough which means a doubling of the price of electricity in less than 9 years, and it does not include the mark-up that most municipalities will add on before charging the consumer.

It causes one to reflect on what has happened to Eskom, and whilst it gets the blame for such drastic price increases, it is really government policy that caused the whole crisis. To have left the power capitalization industry to virtually collapse from 1994 to 2007 was the collective decision of policy makers who again demonstrated that they did not know that they did not know. In that period Eskom became a cash-cow for government. It also became a show piece of transformation where most of the established intellectual capital and memory was methodically removed to satisfy a political whim. It became evident that political identity was more important than experienced engineering and project management skills that had been built up over decades of designing and building the best six pack stations in the world.

The effective owner’s team had been removed and replaced with the outsourcing to foreign based project houses. Costs escalated and are exhibited in the horrific escalation on the price of Medupi for example. Where was the sinking fund to finance the new station build? It became necessary to charge the current consumers to fund the capital expansion. Therein lies your 16% requirement. Whatever Eskom may say to the contrary, it is borne out by the current nightmare that personifies our electrical energy generation and distribution structures. Absolute power has certainly disrupted the economy and will do so for the foreseeable future. How do we reverse the slide to uncompetitive input costs?