Eskom's Kendal power station in Kendal, near Emalahleni, on March 26, 2024. (Photo by OLYMPIA DE MAISMONT / AFP)
I think that many South Africans will agree with me when I express my profound surprise that Eskom has managed to keep the lights on for almost a month since election day.
What everyone seemed to believe was a costly election ploy — suspending of load-shedding — has seemed to last quite a bit longer than expected. But we’re not out of the woods just yet.
At the last count, by 25 April 2024, Eskom had spent over R64.78 billion on diesel in the last five years. Of this, R23.38 billion and counting was spent in 2024 alone. This has allowed Eskom to prop up its collapsing generation capacity; something which is necessary, as many power plants have outlived their sell-by-date and are in need of drastic repairs.
However, this burning of diesel is unsustainable and not as efficient as dedicated, large power plants would be.
South Africa is not a rich country, and we are already suffocating under mountains of debt. Eskom has had to be bailed out many times, with its net profit of R1.6 billion in 2023 being far from sufficient to address its past shortfall. This is besides the continued debt relief that the government keeps throwing at the irresponsible parastatal. A whopping R78 billion in debt relief for the 2024 financial year alone.
Eskom still hasn’t sorted out its cash flow problem because it is toothless when it comes to making municipalities pay their debt. Incompetent and often corrupt municipalities, which manage the distribution of electricity to their residents, have not paid what they owe to Eskom; this led to municipal debt reaching R74 billion by the end of April 2024.
Eskom is a political entity and not a private company, so it has been unable to truly hold non-paying customers accountable. The African National Congress (ANC) is fearful that if residents have to actually pay for electricity, or have their power shut off due to debt, then the party will lose support. But in the real world of economics, you can’t sustainably receive something you are not paying for.
Municipalities that don’t pay their debts to Eskom should have their power cut off. And Eskom should be clear that non-payers will not receive electricity. Non-payers will be quick to settle their debts if there are real consequences to their actions.
Additionally, we shouldn’t thank Eskom for keeping the lights on for this long. Even its irresponsible diesel burning and hasty maintenance is not the only reason that load-shedding has not returned.
Eskom itself claimed that private solar helped to stave off load-shedding. Private solar allowed Eskom to burn 50% less diesel in April than before, producing an estimated 5 440MW as of April 2024. That number is probably far less than reality, as not all solar panels are connected to the grid, or registered.
South Africans producing their own electricity, and the government allowing private sector generation, has saved the grid and allowed Eskom a lot of slack to pursue vital repairs.
But Eskom is still a parastatal that runs at the whim of potentially corrupt and ideological politicians. All it takes is one incompetent official forcing Eskom to embrace one bad procurement deal, or the legislature deciding it hates private sector generation again, for load-shedding to return in force.
To further expand generative capacity and secure the security of the grid, whatever form the new government takes it must fully and wholeheartedly embrace private sector electricity generation. If private solar panels and generators have done enough to stave off load-shedding, imagine what a private sector coal plant, wind farm, hydroelectric dam or even nuclear power plant could accomplish.
Without the chain of politics, the private sector is more dynamic and best suited to solving our electricity crisis. Let us commit to what has worked already; embrace a free market in electricity and we won’t have to worry about load-shedding ever again.
Nicholas Woode-Smith is a political analyst, economic historian and author. He is an associate of the Free Market Foundation and writes in his personal capacity.