South Africa: Survivor – Eskom Edition, in Two Easy Episodes

analysis

Our Minister of Public Enterprises, Lynne Brown, says privatisation has been rejected and Eskom’s chairman, Zola Tsotsi, also says privatisation of the utility will not happen. We should probably wait for Finance Minister Nhlanhla Nene to present his medium-term budget policy statement next week, which will have to include how he plans to plug the gaping holes in Eskom’s balance sheet. But if decisions are really about choosing from a range of available options, then we should know that these have now become severely constrained as a direct consequence of previous decisions.

It is possible to look back and analyse why the choices for Eskom have narrowed down to this point. They are a function of other decisions when more options were available. Some of these decisions were good ones; others much less so.

From previous government policy, the decision in the 1990s to give Eskom an unfunded mandate to rapidly expand electrification to South Africans was one decision; the decision to postpone any new builds was another; and so was the decision to allow South Africa the extended period of some of the lowest priced electricity anywhere in the world, while Eskom’s capital base eroded…

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