With Stage 4 load shedding on everyone's mind as we enter the new week today, a person can't help but wonder if the black outs will make a comeback. Briefly.co.za investigates what brought Eskom to this new low.
Last week saw South Africa facing Stage 4 blackouts as Eskom scrambled to repair power stations. People are demanding to know why the once great power utility is now reduced to a husk of it's former self.
Briefly.co.za explores the factors that have led the state-owned entity to its current 'technically insolvent' situation:
Eskom is currently facing two main problems:
- Excessive costs
- Excessive debts
According to Eyewitness News, operational costs for the last financial year ( 2017/2018) stand at R132 billion alone which has resulted in raised tariffs. This in turn has resulted in unsatisfied users.
The disgruntled users respond to this, either by going completely off grid with solar panels and other options or simply not paying at all.
As a result of this sales at the power utility have been declining by 1% every year. This plunges Eskom and consumers into a vicious cycle:
Less sales mean tariff increases which in turn means less sales.
Baring this in mind, the state-owned entity currently faces a crippling debt of more than R400 billion. At this point in time, Eskom cannot even afford to repay the interest.
So what brought Eskom to this breaking point?
In 2007 the state had endeavored to build two new power plants: Medupi and Kusile. Both these plants, more than ten years later, remain incomplete with a number of problems that have not been resolved.
Both plants are lagging behind schedule and are over budget. The sections that are complete don't work properly. This is despite the hefty price tag , with the two stations having cost more than R300 billion to complete.
Coal shortages, corruption and mismanagement have only served to aggravate the situation further.
Municipal debt has risen to more than R30 billion, but Eskom cannot cut them off from the supply. Added to this cable theft has spiraled out of control.
All these issues have played their part in creating the end product- Stage 4 load shedding.
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