South Africa: Fixing Eskom - Home Truths and Unavoidable Actions


Acknowledging that the core problems in Eskom spring from broken generation and that the solution is to lose the unproductive and attract the skills, investment and expertise to sort out the existing fleet, is crucial to turning Eskom around.

It is late in the day, but there is, at last, an energetic focus from government and other players on finding a solution to Eskom's problems. There is finally a general consensus that the power utility -- once regarded as the country's greatest state asset -- will drag the economy down with it should it continue its epic slide to bankruptcy.

These solutions inevitably hinge around taking on more debt -- via the $11-billion UN renewable energy fund for example, or more scary, from the R1.8-trillion state pension scheme -- to get Eskom out of its current dire situation, with (South African) promises to change its future energy mix in exchange.

The trouble is that solutions focused on restructuring debt or finding new money don't deal with the problem: Eskom's expensive electricity generation inefficiencies, which are the cause of the growing debt.

Can the government finally fix the Eskom problem? To make this judgment, it is necessary to appreciate five home...

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