Abstract
This paper discusses the user pays's principle (UPP) within the South African developmental state concept. The essence of the paper is to ascertain whether UPP can be implemented in the electricity sector without necessarily harming the developmental state agenda taking into account the challenges of inequality, unemployment and poverty in South Africa. In this paper, we present the arguments in support of the UPP in the electricity supply industry (ESI) and its building blocks. The paper analyses the role of regulatory authority in the implementation and adoption of the UPP. Finally, the paper analyses the role of UPP in the developmental state concept and the challenges of implementing it. The analysis shows that adoption of inclining block tariff (IBTs) was based on the individual's perceived ability to pay and not on UPP while the free basic electricity (FBE) policy is a government-funded initiative meant to provide electricity to poor households. The paper also found that the ESI currently has high levels of inefficiencies in production and use, procurement and operation of utilities, cross-subsidisation, infrastructure and maintenance backlogs which may hinder the full implementation of UPP. Lastly, although the full implementation of UPP could incentivise efficient operation of the ESI and attract the much-needed investment in the sector, the UPP system will pose serious challenges considering the country’s three main problems: inequality, unemployment and poverty.
Highlights
There is a global movement towards the implementation of the ‘user pays’ principle (UPP) in infrastructure projects around the world
We review international best practices on the ‘user pays’ pricing approach (UPP) and map out possible approaches for its successful implementation and propose reasons why the UPP is necessary for South Africa
The objective was to ascertain whether UPP can be implemented in the electricity sector without necessarily harming the developmental state agenda, taking into account the challenges of inequality, unemployment and poverty in South Africa
Summary
There is a global movement towards the implementation of the ‘user pays’ principle (UPP) in infrastructure projects around the world. The main point of discussion over the past three decades in most developing countries has been the costs and benefit of implementing the UPP. In South Africa, Government’s National Development Plan (NDP) of 2012 envisaged a developmental state economy that is capable of transforming the country through the rollout of bulk infrastructure in electricity, water and sanitation, housing, telecommunications, etc. To increase in short to medium term in order to finance capital and operational expenditure requirements and remain sustainable This is based on the fact that some of the existing electricity tariffs are below cost, with most based on the individual’s ability to pay (perceived affordability) rather than on the ‘user pays’ principle.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
