How the world sees SA: Eskom’s “slow motion car crash” gets a global spotlight

Bloomberg Opinion senior executive editor Tim O’Brien visited South Africa to see for himself what he describes as the “slow motion car crash” which we know as Eskom. The host of Bloomberg’s Crash Course podcast shared the microphone with his Cape Town-based Bloomberg colleague, energy reporter Paul Burkhardt and Olga Constantatos, head of credit at FutureGrowth Asset Management. It often requires international pressure to effect change in SA – with its attention now being focused on the electricity crisis, Pretoria is sure to be triggered into accelerated action. – Alec Hogg

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Excerpts from the podcast

(Bloomberg Crash Course Podcast)

Tim O’Brien’s deep dive into Eskom’s challenges

South Africa has been grappling with a severe electricity crisis for the past 15 years, with rolling blackouts, known as load shedding, becoming increasingly common. The international community has started paying attention to Eskom, South Africa’s power utility, and the dire energy situation. In a Bloomberg podcast published this week, Tim O’Brien, a senior executive editor of Bloomberg Opinion, together with energy reporter Paul Burckhardt and Olga Constantatos of Futuregrowth Asset Management, shed light on the issues plaguing Eskom, how the country reached this point, and the efforts being made to address the crisis.

Read more: SA in Bloomberg global newsletter’s spotlight: “Embracing Putin is a gamble”

The escalation of Eskom’s problems

Eskom, once seen as a beacon of hope for reliable energy generation in South Africa, has succumbed to mismanagement and a failure to modernize. The utility became a piggybank for influential individuals and a source of patronage, leading to a lack of progress in providing stable electricity to all South Africans. The situation was exacerbated by delays in building additional capacity, inadequate oversight, corruption, labor issues, and other factors.

Impacts of unreliable energy supply

The absence of a reliable energy source has far-reaching consequences for individuals, businesses, and the economy as a whole. Load shedding disrupts daily life, rendering essential services such as traffic lights, water supply, and sewage treatment unreliable. Extended power outages affect hospitals’ ability to provide critical care and increase the crime rate in darkened streets. Moreover, businesses, particularly those in lower-income areas, suffer from prolonged closures, layoffs, and interruptions in the supply chain, resulting in economic setbacks and social unrest.

Health issues also emerge as a direct consequence of power cuts. Spoiled food due to refrigeration failures poses risks to public health, while water contamination and outbreaks of diseases like cholera become more likely. The threat of social unrest looms large, as frustrations grow among communities deprived of essential services.

Read more: How the world sees SA – GIS on “The lost promise of South Africa”

Challenges in Eskom’s transformation

The process of transforming Eskom and modernizing the grid is impeded by corruption and resistance to change. Past CEOs have faced threats and even fled the country, hindering efforts to bring competent leadership capable of steering Eskom out of crisis. However, there is optimism that some within Eskom remain dedicated to their duty and strive to restore the utility’s integrity.

Potential solutions and the role of private sector

One positive development is the increasing acceptance of private companies in power generation. Eskom, albeit reluctantly, has begun to engage private entities to alleviate the energy shortage. However, relying solely on private power generation can exacerbate the divide between affluent residents and low-income communities who still depend on Eskom. To address this disparity, initiatives to promote renewable energy and expand power supply must be prioritized. Although implementing these measures may involve higher costs initially, the long-term consequences of blackouts far outweigh the financial burden.

Read more: Eugene Brink: New government needed to save SOEs; after de Ruyter’s Eskom nightmare

Conclusion

South Africa’s electricity crisis, epitomized by Eskom’s struggles, demands urgent attention and effective solutions. The country’s reliance on Eskom as the primary power supplier has proved inadequate, leading to widespread societal, economic, and health-related repercussions. Encouraging private sector participation in power generation, along with an inclusive approach to ensure access for all, can pave the way toward a more reliable and sustainable energy future for South Africa. By learning from this collision of challenges, South Africa has an opportunity to turn its energy crisis into a catalyst for positive change.