The world’s influential business players and investors with the power to move funds around the globe are watching how the ruling ANC handles the problems at Eskom. This is evident, as the London-based Financial Times picks up on President Cyril Ramaphosa’s pledge to reduce the country’s reliance on the state-owned utility as the provider of electricity. Blackouts are annoying for South Africans because they interrupt business activity and interfere with daily life. For investors, power cuts are a reminder that assets are being grossly mismanaged. – Jackie Cameron
By Thulasizwe Sithole
President Cyril Ramaphosa has vowed to break the hold of Eskom on South Africa’s power supply. He delivered this powerful message during his State of the Nation Address 2020 and it resonated with international investors.
The influential Financial Times picked up on the details, telling its readers that Ramaphosa has “pledged to free more of the power supply of Africa’s most industrialised nation from the grip of Eskom, the failing state-owned electricity monopoly, as its intense rolling blackouts plague the economy”.
Towns and cities, says the FT, will be permitted to buy independent power and investors will be invited to bid for renewables projects under “measures that will fundamentally change the trajectory of energy generation”.
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“Our economy has not grown at any meaningful rate for a decade” and its recovery has stalled “as persistent energy shortages have disrupted businesses and people’s lives,” he is reported as saying.
The FT underscores that Eskom “controls nearly all of South Africa’s power supply but heavy debts and looting of contracts under Jacob Zuma, the former president, left it without enough funds to repair ageing, coal-based power plants”.
“Resulting breakdowns at the plants led to the country’s most intense blackouts in recent weeks, throttling activity at factories and mines,” says the FT, of why power cuts have been worse than usual.
According to the FT, mining companies in particular have been pushing Ramaphosa to “cut red tape that blocked projects to reduce their dependence on Eskom by adding independent power production to their mines”.
The pink paper reminds its readers of the obstacles that have got in the way of reducing the cost of electricity in South Africa and, ultimately, held back economic growth. ANC allies come in for scathing criticism.Â
“Little progress has been made on more thorough reforms to Eskom’s parlous finances, including a plan to split it into three more manageable businesses and proposals to relieve its $30bn debts.
“Because of repeated bailouts the utility’s debt pile is threatening to overwhelm public finances which were weakened by the sluggish economy. Trade union allies of the ruling African National Congress have vociferously opposed a greater role for independent power production against Eskom.”
Ramaphosa also had to brace South Africans for further “debilitating” rolling blackouts, known as “loadshedding“, it notes.Â
