OPINION: Good Business Basics: Lack of key services will see consumers seek other sources of supply
Consumers are forced to pay ‘basic’ charges for most utilities, outside of actual consumption anyway, so combining this with the rapid increases in state provided water and electricity rates, makes the private sector a more pressing and realistic option.
Reports this week that Discovery Insure, had launched a private firefighting unit got me thinking: is this the beginning of the end for provision of services by the State?
Granted that Discovery has a large measure of self interest in the move, namely the protection of insured assets from fire loss or damage, by being able to respond much more swiftly than municipal fire services, it is undoubted that in the months to come, they will be able to monetise the service to the public at large who will be willing to pay for the service.
It has become the norm in the past few months in large parts of the country, including us held hostage by the Ugu District Municipality’s chronic inability to supply water, to pay for water delivery from private service providers to replenish our storage tanks. It is surely only a matter of time, before some enterprising people find ways to provide ‘private sector electricity’ to homeowners, either during our frequent outages (planned or unplanned).
The spiral of inefficiency and non-delivery of key services, particularly water and electricity, is going to accelerate, as more and more consumers seek or create alternative sources of supply, such as their own boreholes (as some communities are banding together to install), or the likes of solar power, and the ‘annuity revenue’ of monthly payments by consumers rapidly dries up.
There is an argument that the profit motive being attached to basic utilities and services places citizens at risk of predatory or anti-competitive behaviour, but at the moment, what realistic options are there? Consumers are forced to pay ‘basic’ charges for most utilities, outside of actual consumption anyway, so combining this with the rapid increases in state provided water and electricity rates, makes the private sector a more pressing and realistic option.
This trend should be setting off warning bells with the government to no end-with revenue shrinking rapidly from consumers, either through protest non-payment, or lack of delivery, who is going to fill the gaps to sustain the bloated salary bills that most of these utilities carry? Most of us are asking exactly that question of Ugu as revenue from water sales has all but disappeared.
Vijay Naidoo is the CEO of the Port Shepstone Business Forum. He writes in his personal capacity. The views expressed are the author’s own and do not necessarily reflect those of this publication.
