Home PodcastJulie Alli Unmasking exploitation: The crisis of prepaid electricity charges and unchecked capitalism

Unmasking exploitation: The crisis of prepaid electricity charges and unchecked capitalism

by Luqmaan Rawat
The exploitation of those who use prepaid electricity meters must come to an end Photo Biz News

South Africa – In the midst of the hustle for extra profits engulfing various business sectors, the controversy surrounding prepaid electricity charges has taken centre stage. Consumers are up in arms due to the additional charges imposed on top of already high electricity tariffs. These extra charges have burdened consumers, especially those in the lower echelons of society. The complexity of this situation and its far-reaching implications need careful consideration and analysis.

This crisis has historical roots, particularly impacting the poorer and working-class segments of society. Since the apartheid era, marginalised areas such as townships, rural regions, and villages have struggled to gain access to safe and reliable electricity. The transition to democracy in 1994 held the promise of addressing these energy challenges, yet the reality has proven to be otherwise.  

Prepaid electricity meters, often touted as a cost-effective solution, have emerged as one way authorities have attempted to address the energy crisis. Originally perceived as a means to alleviate the burden on the economically disadvantaged, these meters have expanded their reach to encompass all strata of society. Load shedding and escalating energy costs have made everyone aware of the energy crisis, leading to a renewed focus on prepaid meters, explained Trevor Ngwane, Director at UJ Centre for sociological research and practice.

“The energy crisis has now reached all parts of society with loadshedding, with high energy increases. Everyone is paying attention. Everyone is affected. It is in this context that now we hear this talk of prepaid meters. It’s an ongoing struggle but it’s taking a new character because it’s affecting everyone during a time of economic constraint and economic crisis.”


The exploitation of prepaid meter users

The prepaid electricity discourse sheds light on a multifaceted problem encompassing unregulated charges and the intricate dynamics between vendors and consumers. While municipal tariffs are set by the authorities, vendors can levy additional service or vendor fees, often charging 15% of the purchased electricity. This unregulated fee is a glaring loophole, exploited to maximise profits at the expense of the unsuspecting consumers. The National Energy Regulator of South Africa (NERSA) approves rather than regulates these fees, resulting in unchecked exploitation.

“There is no regulation of the retail price of electricity to consumers. It depends on who your vendor is, where you live, how much electricity you use and often you end up paying more because everyone is hustling trying to make a quick buck. That way of thinking and of doing things is moving away from what we call a developmental agenda. Where we are striving to provide a better life for all. Where we are trying to make sure that every child born today, yesterday, tomorrow will have enough energy, food shelter, healthcare.  We are moving away from that.”

The absence of stringent regulations governing prepaid electricity charges has created a breeding ground for exploitation. With no cap on the retained price of electricity, vendors are given carte blanche to manipulate charges and extract exorbitant fees. The market-driven mindset, fueled by unchecked capitalism, exacerbates this issue, prioritising profit over equitable service provision. The consequence? Ordinary consumers bear the brunt of escalating fees and hidden costs.

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Neoliberal capitalism’s impact

Ngwane believes South Africa operates on what is called neoliberal capitalism which emphasises deregulation, labour flexibility, and profit-driven motives. The underpinning neoliberal capitalist system influences the unchecked exploitative practices observed in the prepaid electricity market. As a result, essential services such as electricity provision become commercial commodities rather than societal necessities. This shift disregards collective welfare and instils a culture of individualism and self-interest, driving the cycle of exploitation.

“In the old days, the state made sure that everyone had food. They even controlled the price of bread. Now we have deregulation. Profit must take over. We’ve got labour flexibility. Workers must be paid any amount of money depending on the employer.”


Banks involvement in prepaid electricity

Banks play a crucial role in the prepaid electricity ecosystem, serving as intermediaries for transactions. However, the lack of transparency in detailing transaction costs has led to consumer confusion and frustration. Purchasing electricity through banking channels yields minimal information, often only an SMS confirming the transaction. The absence of a detailed breakdown conceals the various hidden costs associated with the purchased token, leaving consumers unaware of the true value of their purchase. Committees must be created to hold banks and other retailers accountable for hidden charges and exorbitant extra fees.

“We as communities need to set up price control, price monitoring committees so that we can chase and see all these additional and hidden calls on the one hand. On the other hand, when we get that information, we have to put pressure on the government, on NERSA to actually stop these practices. These practices are just nefarious methods to make money at the expense of the consumer, of ordinary people. It’s important that ordinary people stand up, communities stand up and they monitor what they pay for and what they are charged for.” 

For Ngwane, it should start at the very bottom. Communities must hold the local shops accountable first and rally to buy electricity from those shops who do not exploit the consumers. People must also be open with each other on how much they pay for basic services. In this way, it will be easier for people to see if and how they are being exploited.

The uproar surrounding prepaid electricity charges reveals the underbelly of unchecked capitalism, where profit often takes precedence over the well-being of citizens. The unregulated vendor fees underscore the urgent need for regulatory intervention and community mobilisation. By fostering transparency, demanding accountability, and shifting the focus back to collective well-being, we can challenge the exploitation ingrained in our systems. It is only through collaborative efforts, regulatory reforms, and a reimagining of capitalism’s role that we can pave the way for an equitable energy landscape.


Trevor Ngwane also discussed with Julie Alli the privatisation of Eskom and how these ideas has led to the situation we are currently in. Listen to that discussion here:

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