The Lights Keep Going off in South Africa
In recent weeks and months many South Africans have faced prolonged periods of power blackouts due to preventative measures taken by energy giant Eksom. Homes, business and industrial sites have faced hours a day without power as Eksom manages the power the country has to avoid a total mass blackout and system overload. The ongoing crisis which it has become is leading to economic consequences and affecting the political scene with President Cyril Ramaphosa who has an upcoming election in May. Added to this is the fact that Eksom is in huge debt and has mismanaged its finances and operations leaving the new build power plants beset with delays and not providing the much needed additional power to meet the ever higher demand across South Africa.
The roots of this crisis have been in effect for quite a considerable time with Eksom and South Africa’s power. Following apartheid being ended in South Africa, more power was needed to be distributed to the growing townships across the country. These townships needed power to grow as economic centres and allow for the standard of living for those living there to rise. The BBC writes that “the current crisis is the result of a perfect storm in which rising costs, falling revenues, crumbling infrastructure, and decades of corruption and mismanagement each play a part.”
The lack of new power plants being successfully opened and completed allowing them to bring additional capacity to the system has harmed South Africa greatly in the past decade or so with examples of plants in Kusile and Medupi. These two plants where meant to be fully operational and working by 2015, but their opening has been delayed by rising constriction costs, delays and scandals involving corruption. With more and more power problems this has led to customers and consumers falling behind on payments and leading more to Eksom’s rising debt and deficit. More wealthier customers are moving towards renewable and more reliable forms of power but this cannot be the case for all especially those in rural communities and townships.
Things may be on the upturn for South Africa and its energy giant in Eksom. The South African government has outlined a long term 3 year plan which commits billions of rand to the utility company. Finance Minister Tito Mboweni has said “Pouring money directly into Eskom in its current form is like pouring water into a sieve,” Mboweni said. “We are setting aside 23 billion rand a year to financially support Eskom during its reconfiguration.’’ With Eksom having debts in the hundreds of billions of rand, this plan will provide a stable basis for them to move forward but even more long term the South African government may be forced to inject even more money for it.
The crisis shows us that having good regulation and management is key for essential public services even if these companies are privatised. The effects of years of management and corruption have left a heavy price on Eksom but also on South Africans who will have to deal with these problems long into the future.