Eskom needs to tackle things differently

Giving Eskom more money won't solve the energy crisis, says Dr Roy Havemann, a research associate at Stellenbosch University, but splitting it into separate units definitely has the potential to do so.

- Dr Roy Havemann

The announcement by Finance Minister Enoch Godongwana of debt relief for the country’s troubled power utility, Eskom, is a step forward. It will fix one problem: Eskom has too much debt. But the plan won’t end power cuts, which have worsened in recent years.

The international experience is that one way to end electricity shortages is to allow competitively priced, privately funded generation at scale. This requires a reorganisation of South Africa’s electricity market along the lines announced by the Department of Public Enterprises nearly four years ago. The crux of the plan was to split Eskom into three separate units: generation, transmission and distribution, with transmission remaining state-owned.

With the announced conditions, which include the requirement that Eskom prioritise capital expenditure in transmission and distribution during the debt-relief period, the finance minister has missed an opportunity to finally achieve this.

WHAT WE CAN LEARN FROM OTHER COUNTRIES

Other countries that have had power cuts offer South Africa lessons. China, for example, faced rolling blackouts between 2003 and 2006 because of an unexpected growth spurt. In 2015, Greece was in the middle of a financial crisis and its people could not afford the electricity supply, some of which came through a complex deal with Russia. And in Colombia, a drought in 1992 caused the main source of electricity supply, from a hydroelectric plant, to literally dry up.

All these countries experienced power cuts. But South Africa is the only country to have had power shortages for 15 years. This is because the others moved quickly to rejig their electricity supply systems.