- Aug 2, 2008
RE - It was cheap because they ran the company properly.So here is a bit of irony for you.
Electricity was so cheap back then, that if the Eskom from 1994 was magically transported to today and allowed to charge modern prices, it would be able to provide free electricity to the whole of Soweto while still making money.
It was cheap because they ran the company properly. Hence, if the company was run properly, the fact that Soweto does not pay would not be an issue.
So cheap that the average selling price in 1995 was 11.15 cents per kWh while the production cost was 9.40 cents.
In about 1969, after South Africa’s economic growth rate had topped 6% in various years in the 1960s, electricity demand threatened to outstrip supply. ….. Then Eskom made its best ever strategic decision: it decided to embark on a concerted programme of building huge coal stations of standardised design, each one having six identical units. The result was that vendors and contractors from all over the world tripped over themselves to give Eskom the best prices and conditions. The stations were built on time and on budget. They were funded via cheap debt and all the debt was timeously repaid. The taxpayer didn’t have to pay a cent. By the end of the programme, Eskom had plentiful and very reliable electricity at probably the lowest prices in the world – lower than that from private utilities in other countries. (IRR report 18 March 2015)
In 1998, the white paper on electricity supply recommended that Government look at building new power supply infrastructure to be ready to replace ageing plants that would reach the end of their designed life. The recommendation was ignored in favour of the arms deal which was designed purely to enrich certain comrades by purchasing useless (to SA) equipment at vastly inflated prices. Much of that hardware is in mothballs or has been scrapped.
That decision led, as early as 2002, to supply problems but these were hidden from the public by Eskom selling cheaper power to industry on condition that their power would be cut first first in the event of high demand on the grid. Over the following years, problems increased to the point where they could no longer be hidden – with results that we all know; company closures, countless thousands of job losses, deaths in medical facilities.
In contrast to the 1969 power stations, the Medupi and Kusile projects are years behind target and over budget by several hundred percent.
Nuclear power offered Zuma and his cronies a huge nest egg but, fortunately, it is not a priority at the moment. The interesting thing about nuclear is that, among all the critics, only the EFF kept quiet and one has to wonder if any incentive was offered to them in return for not rocking the boat.