Assessment of free basic electricity and use of pre-paid meters in South Africa

Abstract

In 2000, the African National Congress (ANC) through its election manifesto, made promises to provide free basic services to all poor South Africans. This was later quantified as 6 000 litres of water and 50 kWh of free basic electricity (FBE) monthly per household. Regarding the issuance of FBE, qualifying residents were registered and had to agree to a pre-paid meter being installed. It is argued that the quantity of free basic electricity provided to poor households is inadequate to meet basic needs and improvement of the quality of life. Conversely, there has been resistance to installation and use of pre-paid electricity meters, especially in townships around Johannesburg. Although prepayment systems have been proposed as innovative solutions to the problem of non-payment and affordability in utility services, the use of such mechanisms is still controversial. This paper reviews and assesses free basic electricity and the use of pre-paid electricity meters in South Africa. It also contributes to the on-going debate on FBE and prepayment systems. Recommendations are given on creating viable and stable institutions to curb uncertainties in the provision of electricity services, and methods for identifying changes in aggregate welfare resulting in the adoption of pre-paid electricity meters. Information from this article can be useful for policy-making purposes in other developing countries facing resistance in marketing, dissemination and installation of pre-paid meters