The South African Institute of Race Relations (IRR) has released a new report, titled: “The rise and fall of Eskom – and how to fix it now”.
The report highlights the challenges faced by Eskom, why the company is facing these challenges, and what should be done to resolve them.
According to the IRR, it is necessary to look at Eskom’s history to understand the mess it is now and the possible remedies.
It should be noted that this article contains mainly extracts from the report, and should therefore be seen as a summary of the IRR report and not the opinions of MyBroadband.
Eskom from 1923 to 1994
From 1923 to 1994 Eskom was free from political interference. Its brief was simple: to make sure that South Africa had enough electricity.
Eskom was an autonomous organisation run by technocrats. Engineers were in charge and were appointed entirely on merit.
During this period Eskom was entirely self-financing. There were no state subsidies for electricity.
Strong economic growth in the sixties meant that electricity demand was set to outstrip supply, and there was quick action.
To solve this problem, Eskom started to build huge coal stations of standardised design. The stations were built on time and on budget.
The power stations were funded via cheap debt, which was timeously repaid. The taxpayer didn’t have to pay a cent.
After this programme Eskom had plentiful and reliable electricity at probably the lowest prices in the world.
1994 – after the ANC took power
In 1994, when the ANC took power, there were changes at Eskom. This included race-based affirmative action, political interference, and political appointments.
Highly skilled and experienced white engineers, managers, and technicians were given generous ‘packages’ to get out and make way for persons of the correct skin colour and political affiliation.
While the ANC was regarded as Marxist which favoured state-run institutions, there were talks about Eskom being ‘unbundled’ or privatised.
The State also seemed intent on taking away Eskom’s obligation to supply electricity. In 1998 it forbade Eskom from building new power stations.
Eskom fell into a void. It no longer knew what it was meant to be doing, or even what its key function was. Meanwhile, South Africa was running out of electricity.
South Africa running out of electricity
In its election campaign in 1994, the ANC promised an annual economic growth rate of 6%, which South Africa could easily have attained.
If we had increased growth to 6% a year, we would have run out of electricity in 2001. But because South Africa seldom had growth much above 3% a year, we only ran out in about 2007.
One of the greatest lies of this era, often repeated by many ANC politicians, was that we ran out of electricity because we were ‘victims of our own success’ (unexpectedly high growth).
The truth is that the country’s economic growth was unexpectedly low, but despite this we still ran out of electricity.
The fundamental problem that is crippling us now is that Eskom didn’t build power stations when it was glaringly obvious that it had to.