South Africa: The Problem With Privatising Eskom - Profit Does Not Equate to National Good

analysis

Privatising Eskom will not resolve South Africa's energy crisis. In fact, going down this road might have adverse long-term consequences. This policy discussion is too important to be dominated by vested interests and a singular narrative of privatisation. Other regions have walked down this path, with mixed results.

Some time in the late 1990s and early 2000s, there was a seismic shift in Europe's approach to its future energy policy direction. It was against this backdrop that the bloc crafted an energy policy framework for the deregulation of its power sector.

Europe had to factor in member states' national sensibilities and idiosyncrasies and balance these against the imperative to introduce more competition in its energy market. The thinking at the time was that most regional economic powerhouses in the European Union (EU) were fiscally constrained by state-owned power utilities.

Outright privatisation was the natural outcome of liberalisation and deregulation in some member states, while others adopted mixed models. There were, of course, outlier member states which opted out of the entire thing and stuck with the course of state-owned power monopolies, with the backing of powerful lobbying muscle from unions.

The power reform initiative was driven by the European Commission,...

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