Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      Solly Malatsi seeks out-of-court deal in TV migration fight

      15 July 2025

      South Africa’s telcos battle to monetise 5G as 4G suffices for most

      15 July 2025

      Major new electric car brand launching in South Africa

      15 July 2025

      MTN empowerment investors see ‘modest’ return as Zakhele Futhi winds up

      15 July 2025

      Eskom wants your solar system registered – but what does that actually mean?

      15 July 2025
    • World

      Grok 4 arrives with bold claims and fresh controversy

      10 July 2025

      Samsung’s bet on folding phones faces major test

      10 July 2025

      Bitcoin pushes higher into record territory

      10 July 2025

      OpenAI to launch web browser in direct challenge to Google Chrome

      10 July 2025

      Cupertino vs Brussels: Apple challenges Big Tech crackdown

      7 July 2025
    • In-depth

      The 1940s visionary who imagined the Information Age

      14 July 2025

      MultiChoice is working on a wholesale overhaul of DStv

      10 July 2025

      Siemens is battling Big Tech for AI supremacy in factories

      24 June 2025

      The algorithm will sing now: why musicians should be worried about AI

      20 June 2025

      Meta bets $72-billion on AI – and investors love it

      17 June 2025
    • TCS

      TCS+ | MVNX on the opportunities in South Africa’s booming MVNO market

      11 July 2025

      TCS | Connecting Saffas – Renier Lombard on The Lekker Network

      7 July 2025

      TechCentral Nexus S0E4: Takealot’s big Post Office jobs plan

      4 July 2025

      TCS | Tech, townships and tenacity: Spar’s plan to win with Spar2U

      3 July 2025

      TCS+ | First Distribution on the latest and greatest cloud technologies

      27 June 2025
    • Opinion

      A smarter approach to digital transformation in ICT distribution

      15 July 2025

      In defence of equity alternatives for BEE

      30 June 2025

      E-commerce in ICT distribution: enabler or disruptor?

      30 June 2025

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CambriLearn
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » In-depth » Eskom’s troubles show everything that’s wrong with SA

    Eskom’s troubles show everything that’s wrong with SA

    By Agency Staff20 February 2019
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    The sorry state of South Africa’s state power utility starkly illustrates just how far the country slipped during former President Jacob Zuma’s scandal-marred rule and the enormity of the task of rebuilding the nation’s stricken finances.

    From the heady days of the 2000s, when growth topped 5%/year, the economy has struggled through two recessions, and debt ratios have tripled. There have been almost daily revelations of state corruption, the nation’s final investment-grade rating is hanging by a thread and budget surpluses have turned to ever-widening shortfalls.

    And then there’s Eskom, which supplies 95% of the nation’s power. Driven to the brink of collapse, it secured a record R69-billion bailout in the national budget on Wednesday — an allocation that will force the government to break its expenditure ceiling. Company chairman Jabu Mabuza said even that might not be enough. The utility had wanted R100-billion to help service its mountain of debt, pay its bloated workforce and maintain an ageing fleet of power plants that intermittently trip and cause rolling blackouts.

    We are paying for the past, the nine years of waste. South Africans are going to pay for that for generations to come

    “We are paying for the past, the nine years of waste,” said Colin Coleman, CEO of sub-Saharan Africa at Goldman Sachs Group. “South Africans are going to pay for that for generations to come.”

    Founded in 1923, the utility built dozens of mainly coal-fired plants over six decades to become the world’s fourth-largest power company. When white minority rule ended in 1994, its spare generating capacity during peak demand times was more than double the international norm of 15%. Seven years later, it was named power company of the year at the Financial Times Global Energy Awards in New York, with all of its 78 production units considered to be in good working condition.

    Real rot

    But by 2005, South Africa was running short of power, after the government underestimated the scale of demand and delayed investments in new generating capacity. The real rot at Eskom set in following Zuma’s election to head the ANC in late 2007. He became president in May 2009. By last year, after Zuma had been booted from office, a series of inquiries placed the utility at the epicentre of a looting spree of billions of rand in taxpayer funds by allies of the then-president, with his tacit consent. Zuma denies any wrongdoing.

    Meanwhile, the utility’s staff soared by a third, to 48 628, between 2007 and last year, while its generating capacity rose just 7% and power sales volumes less than 3%. Electricity prices surged almost five times over the period and Eskom’s debt ballooned almost 10-fold.

    “Eskom is a symbol of where South Africa finds itself today, a combination of having a lot of potential and messing up on that due to wrong decisions, wrong management actions,” said Roland Henwood, a political science lecturer at the University of Pretoria. “The government has been forced into making concessions to Eskom, but there’s no other option.”

    Jacob Zuma

    The national treasury now considers Eskom the biggest threat to the nation’s finances. But the decay that occurred during Zuma’s rule wasn’t just at the utility. Other state entities, including South African Airways, the national carrier; armaments company Denel and the public broadcaster also fell victim to graft and bad management decisions and appointments. They, too, are in dire financial straits and in need of bailouts.

    The nation’s finances slid as well. Public debt and the state wage bill soared, while the country experienced several ratings downgrades before eventually being relegated to junk by S&P Global Ratings and Fitch Ratings.

    Nedbank, South Africa’s fourth-largest bank, estimates that corruption, maladministration and bad policies shaved R470-billion off the nation’s GDP between the start of Zuma’s second term in May 2014 and February last year, when the ANC forced him to step down to stem a loss of support.

    This change isn’t a one-year project, it’s more like a second transformation. I’m not sure the political environment can take this

    The task of picking up the pieces has been left to Zuma’s successor and new party leader Cyril Ramaphosa. He has replaced the boards and management of Eskom and other state companies, embarked on a drive to lure US$100-billion in new investment and clamped down on graft. But rebuilding the economy will likely take years — the treasury sees growth averaging just 1.8% over the next three years and sees the budget deficit swelling to a decade high.

    State institutions have been so badly damaged and graft has become so embedded that a turnaround could prove elusive, according to Andre Duvenhage, a political science professor at North-West University in Potchefstroom, west of Johannesburg. While Ramaphosa may have the necessary qualities required to pull it off, he’ll be hamstrung by his unsteady grip over the ruling party and his opponents within it, he said.

    “This change isn’t a one-year project, it’s more like a second transformation,” Duvenhage said. “I’m not sure the political environment can take this.”  — Reported by Michael Cohen and Gordon Bell, (c) 2019 Bloomberg LP



    Cyril Ramaphosa Eskom Jabu Mabuza Jacob Zuma Tito Mboweni top Wayne Duvenage
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleGarmin shares soar on strong demand for sports watches
    Next Article Apple is said to be working to combine iPhone, iPad, Mac apps

    Related Posts

    Eskom wants your solar system registered – but what does that actually mean?

    15 July 2025

    Trump tariffs could wreck South Africa’s vehicle manufacturing industry

    14 July 2025

    Still in play: Ramaphosa banks on talks to ease US tariff blow

    8 July 2025
    Company News

    Mental wellness at scale: how Mac fuels October Health’s mission

    15 July 2025

    Banking on LEO: Q-KON transforms financial services connectivity

    14 July 2025

    The future of business calling: Voys brings your landline to the cloud

    14 July 2025
    Opinion

    A smarter approach to digital transformation in ICT distribution

    15 July 2025

    In defence of equity alternatives for BEE

    30 June 2025

    E-commerce in ICT distribution: enabler or disruptor?

    30 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.