State, Market and Competition - Can Eskom be rescued?
Eskom is a vertically integrated monopoly, wholly owned by the state, supplying about 90 per cent of the electricity consumed in South Africa. Measured by generating capacity, it is the eleventh largest power utility in the world. It is the sixth largest company in Africa across all economic sectors. And, until recently, it was globally recognised for the quality of its management. This report: • Analyses the current Eskom business model and argues that the strategy of relying on rising tariffs to offset falling demand and rising costs is not viable. • Discusses some of the factors that have had an impact in Eskom’s operations and financial management. • Asks whether the restructuring of the electricity market is a prerequisite for ensuring the continuous supply of electricity at the most competitive prices and whether the privatisation of Eskom is necessary to achieve this.