For nearly a century, Eskom was a world-class power producer. The power utility was so successful that by the end of 1990 it was supplying more than half the electricity in Africa.
It was also highly efficient. In 1994, Eskom promoted the fact that it was the world’s lowest-cost producer of electricity.
This well-run company did not need any financial support from the government from 1923 when it was started to 2008.
Things started to change in 2007/2008, which coincided with the introduction of load-shedding because of chronic power shortages.
Corruption, incompetence, and political meddling started to crush this once-proud institution and brought it to the brink of collapse.
Professor Anton Eberhard, an energy policy and investment specialist from the Power Futures Lab at the University of Cape Town, highlighted how Eskom deteriorated:
- Eskom received no financial support between 1923 to 2008.
- Over the last decade, Eskom received R83 billion.
- This year, Eskom received R49 billion.
- Eskom will receive another R112 billion over the next three years.
Eberhard said the situation is completely unsustainable and expressed surprise at how quickly bailouts for companies like Eskom and the SAA have become part of the national budget.
He added that Eskom and the SAA were historically financed by capital markets with cost recovery from consumers, as with any other company.
The table below shows the Eskom bailouts and re-capitalizations since the company was formed in 1923.
|Eskom Bailouts and Re-Capitalizations|
|1923 to 2008||No bailouts|