Some Reflections on the Eskom Power Cuts

Driving across Sandton this morning, with hardly a traffic light working, there was plenty of time for reflection on Eskom’s announcement today of an emergency and the resumption of power cuts for the first time since 2007/08.  Here are a few thoughts:

  • Eskom’s current management team has done an excellent job to date in keeping the lights on.  They inherited a utility in which there had been underinvestment by previous governments, and previous managements had failed to get the message through to the stakeholder (government)
  • Not so good has been the programme to bring in new generating capacity.  The new coal power stations are behind schedule, and government dithering over fresh commissioning – particularly of nuclear – is a disgrace. 
  • It rains a lot in South Africa.  The excuse for the current crisis – that the coal is too damp – seems, frankly, a bit wet.
  • Industrial and mining customers have absorbed many shocks in recent years, and many people do not understand the full scale of this.  The economy would be growing faster if there were more capacity.  A point with which Finance Minister Pravin Gordhan agreed both on Budget Day and on Monday this week, when he attended a discussion at Alexander Forbes.
  • The state’s dominance of Eskom is daft, and there should be a far greater role for the private sector in bringing in future generation, as argued this week by the Free Market Foundation, which seems to be prepared to take the issue before the courts.
  • The current crisis may pass, but the background constraints remain.  And Eskom has shed too many senior people recently. 
  • As winter arrives, we should all be stocking up on candles, torches, gas heaters, generators.  And prayer books.

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