Lloyd Albert, who owns two bakeries alongside his brother, is often forced to bake through the night in order to have products to sell during the day. He is in this position because he must plan around South Africa’s regular power outages, which exist as part of a load-shedding program. Like many other South African citizens, Albert is struggling to run his business due to a lack of consistent access to electricity. Eskom, South Africa’s state-owned energy company, has been forced to embark on load-shedding since early 2008 to avoid nationwide blackouts as South Africa’s energy production levels often fail to satisfy demand. Common blackouts have been disastrous for the South African economy, particularly small businesses, with a recent study finding that small and medium-sized businesses in the Collins Chabane Local Municipality are losing an average of 61% of their total revenue. According to the same study, 59% of surveyed companies in the Municipality reported being forced to lay off employees due to an inability to pay their wages. It is unclear if any of the proposed reforms to Eskom will lead to meaningful change for ordinary South Africans as Eskom faces deep institutional issues that hinder its ability to increase electricity production
Eskom, which supplies 95% of South Africa’s electricity, is fraught with corruption. Andre de Ruyter, Eskom’s former CEO, has claimed that the state-run corporation loses over $55 million to theft per month. The corruption within Eskom runs deep, with many officials of varying degrees of importance working alongside and maintaining ties with criminal organizations. A turbine at Camden power station, an aging plant that lies east of Johannesburg, suddenly stopped working after a subcontractor employed at the plant unscrewed a plug to leak lubrication oil. While the motives for this specific case of sabotage remain uncertain, it is by no means an isolated incident. Sabotage is both commonplace and institutional. When City Press reported that police were investigating a high-ranking official at Eskom with access to security clearances had been orchestrating sabotage at power plants, likely to profit from repairs. Eskom responded by stating that it is “committed to rooting out fraud, corruption, and sabotage within its ranks.” However, sabotage and corruption remain rampant within the company, representing a major difficulty in increasing South Africa’s electricity production.
Dr. Kgosientsho Ramokgopa, South Africa’s Electricity Minister, claimed in an interview that actors linked to the KwaZulu-Natal Mafia have been defrauding Eskom with assistance from company insiders. In another example of organized crime defrauding Eskom, South African authorities raided a coal-smuggling syndicate that has been accused of stealing high-grade coal and replacing it with lower-grade coal. The effects of this theft were severe, with $26 million in coal being stolen and many power plants receiving extensive damage due to the use of substandard coal. Despite the raids resulting in seizures, no arrests were made, meaning the perpetrators of this operation are still at large and capable of continuing to harm the country’s electricity supply. The lack of arrests highlights issues within South Africa’s criminal justice system, which has faced issues of integrity and corruption. Despite many notable anti-corruption arrests, including the arrest and ongoing trial of former Eskom boss Matshela Koko and their family members, further investigation and many more indictments will need to be had against those perpetuating corruption for the problem to subside.
The roots of corruption within Eskom extend to the wider South African government, including the ruling African National Congress (ANC), which has governed South Africa since the end of apartheid. Despite its heroic roots, the ANC has become deeply corrupt, and this corruption has penetrated into Eskom. The Zondo Commission, which was launched in 2018 to investigate state capture, corruption, and fraud in South Africa’s public sector, found that Eskom was victimized by a state capture scheme involving South Africa’s former President Zuma and many associates and appointees of his. The commission found that state capturers appointed collaborators in key positions throughout the government, which allowed them to hinder law enforcement, weaken oversight, and influence the media.
Former President Zuma and his wealthy affiliates led the state capture, and the scheme sought to access the procurement budgets of many state-owned entities and departments. Of these, Eskom was a central target. The result was endemic corruption and lack of independent oversight, as well as lenient audits, further fostering corruption within Eskom and other government-owned organizations. This state capture shows that the root of Eskom’s corruption problems is not within the organization, but rather, it is a symptom of the widespread corruption present in South Africa.
The effects of Eskom’s failures have been disastrous for South Africa’s nearly 60 million residents, who face near-daily blackouts, often for many hours at a time. With winter coming, Eskom must prepare for an anticipated uptick in energy demand combined with multiple power plants undergoing repairs. As part of this preparation, Eskom initiates load shedding throughout the country, resulting in power outages. During this time, businesses and individuals who can afford it will be forced to rely on generators to keep the lights on, while those who cannot will be left in the dark. This discrepancy in access to electricity between rich and poor South Africans highlights the rampant inequalities present in South Africa, which is the most unequal country in the world, according to the World Bank.
South Africa is attempting to transition to renewable energy, with a goal of replacing 12 gigawatts of coal plants with 18 gigawatts of wind and solar plants by 2030. However, bureaucratic issues and opposition to renewable energy have hampered this transition, resulting in new plants taking too long to come online. South Africa has struggled with transitioning to renewable energy as it relies heavily on coal power plants. Moving existing coal power plants offline is difficult for South Africa as the country already faces electricity shortages. As a result, the South African government has delayed the closure of many power plants to retain as much energy production as possible. A recently approved $1 billion loan provided by the World Bank aims to assist with South Africa’s transition away from fossil fuels. However, the South African government has claimed to need over $80 billion over the next five years to complete the transition.
The South African Central Bank estimates that Eskom’s load shedding is on track to cost the country’s economy $13 billion this year. With reforms desperately needed to allow South Africans to gain stable access to the nation’s power grid, the South African government has agreed to take on $14 billion of Eskom’s debt to stabilize the company. This agreement comes as Eskom is in an extremely precarious position, possessing nearly $30 billion in debt. Eskom’s financial troubles have led to numerous proposed reforms, including breaking Eskom into three entities and increasing privatization of energy production. However, each proposed reform has numerous issues and roadblocks to successful implementation.
To start, South Africa’s government already faces economic challenges that will hamper its ability to take over Eskom’s debt. Beyond that, a transfer of debt to the government does not fix the underlying issues that led to that debt existing in the first place. It is a short-term fix that will do nothing to help Eskom’s long-term challenges. Splitting Eskom into three separate entities faces similar problems, as separation does not change the underlying issues of corruption that led to Eskom’s current woes. President Ramaphosa floated privatization reforms in 2019, however these faced heavy opposition, particularly from trade unions and members of government who argue that privatization will favor the wealthy. In response, Ramaphosa has distanced himself from proposed privatization reforms, instead appointing Kgosientsho Ramokgopa as electricity minister and giving him significant oversight powers over Eskom. Meanwhile, battles over how to fix Eskom continue to rage in the South African government with little true reform being underway.
If major reforms are not successfully undertaken, it is unlikely that the South African government will be able to provide the electricity needed to abandon load shedding. Should no major changes occur, the result will be a widening of the gap between wealthy and poor in South Africa, businesses forced to limit hours or close due to lack of electricity, and further strain on South Africa’s already faltering economy. Meanwhile, corrupt bureaucrats and organized crime groups will continue to illicitly profit from the hardships endured by hard-working South African citizens who deserve better. Eskom’s failures are a symptom of endemic corruption within South African governmental institutions. As such, until there is widespread, successful enforcement of anti-corruption measures, Eskom is unlikely to change, with South African civilians taking the brunt of the suffering.
Feature Image Source: AP News
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