FBE

New research shows how municipalities divert funding intended for free basic electricity


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New research shows how municipalities are depriving poor households of access to free basic electricity.

The 1998 White Paper on Energy prioritised affordable access to clean and safe energy for all low-income households, small business and small farmers. It recognised the strong linkages between such access and socioeconomic transformation: affordable electricity facilitates improved standards of living and generates livelihood opportunities.

But in the intervening 20-plus years, very little has been done to realise this goal. If anything, affordable access has declined, in the face of substantial real increases in the electricity price. The Free Basic Electricity (FBE) policy – along with other free basic services – was intended to be a partial remedy to this situation. Currently, more than 10 million households are subsidised in the national budget for FBE: this covers only 50kWh per month, far too little for average household needs, but nonetheless it is an important support for poor households.

However, our research indicates that at present only 2 million households actually receive the benefit. Even if we make allowance for some 2.5 million households that are nor connected to the grid, this still means that more than 5 million households that are funded for FBE in the annual budget are not receiving that benefit from their municipality. (Municipalities are responsible for implementing all the free basic services, and have the sole decision-making authority on whether or not to register a household for these benefits).

The amount of money that the poorest households are effectively losing (since they have to purchase electricity or candles or paraffin to compensate for not getting the FBE) was just over R6 billion in the last year. Money allocated for free basic services in the national budget that does not go to that purpose can be diverted to other municipal expenditure. It appears that this is exactly what is happening, and as a result millions of households are being deprived of their free basic electricity (and other services).

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