POWER FAILURE: Eskom – the dysfunctional public utility company that’s wrecking South Africa’s economy

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(Bloomberg Markets) -- In late June, the coldest part of the southern hemisphere winter, the power went out in South Africa. For as many as eight hours a day, right into early July, traffic lights went dark, factories and offices shut down, and meals ...

These weren’t the first power outages, but they were the worst yet. Intermittent supply cuts over the past 14 years had already sapped business confidence and limited private investment in South Africa. In 2017, when he was leading Goldman Sachs’s business in sub-Saharan Africa, Colin Coleman described the struggles of state power company Eskom as the biggest threat to the South African economy.

A lack of generating capacity led to regular power supply disruptions that started in 2008. A near collapse of the national grid closed gold and platinum mines for five days in January of that year, and in July the government appointed Bobby Godsell, the former chief executive of a gold-mining company, as chairperson to help stabilise Eskom.

The projects were mired in allegations of corruption, which in some cases boosted costs. Hitachi paid $19-million to settle US Securities and Exchange Commission charges that it made “improper payments” of $6-million to Chancellor House, the investment arm of the ANC, with whom Hitachi had formed a partnership to win contracts to install boilers at the plants. In a separate agreement with South African investigative authorities, ABB Ltd agreed to return R1.

Local companies “got access, and in the process they were treated differently by Eskom under political pressure,” Mondi says. “You got the beginning of Eskom’s balance sheet being eroded.”Traffic lights during rolling blackouts in Cape Town on 19 April 2022. Ramaphosa has promised to fix Eskom in every State of the Nation Address he’s given since taking power in 2018. A number of plans have been floated, but little has happened.

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The dysfunctional company that’s wrecking South Africa’s economyIn late June, the coldest part of the Southern Hemisphere winter, the power went out in South Africa. For as many as eight hours a day, right into early July, traffic lights went dark, factories and offices shut down, and meals had to be served cold.
Fonte: BusinessTechSA - 🏆 24. / 61 Consulte Mais informação »