ESKOM: THE ROOTS OF A CRISIS AND AVENUES FORWARD

The document analyzes the crisis facing Eskom, South Africa's state-owned energy monopoly, attributing it to a combination of historical reliance on the 'minerals-energy complex', financial mismanagement, and costly, corruption-mired power station projects. It evaluates the proposal to 'unbundle' the utility into generation, transmission, and distribution entities, drawing on cautionary examples from Kenya and Uganda. The paper argues for a 'Just Transition' that protects workers and communities while transitioning to renewables, suggesting the use of international climate finance or public pension funds to alleviate Eskom's unsustainable debt.

• Eskom's financial position deteriorated severely by 2019, with total liabilities rising from R77 billion in 2006 to R604 billion by 31 March 2019, representing approximately 17% of total sovereign debt.
• The construction of the Medupi and Kusile power stations was plagued by mismanagement and corruption, with costs for Medupi alone reaching over R200 billion against a 2009 projection of R90 billion.
• The 'minerals-energy complex' (MEC) historically shaped South Africa's economy by coordinating the state, SOEs, and private business to provide cheap electricity to energy-intensive mining and minerals processing industries.
• The proposed 'unbundling' of Eskom into separate generation, transmission, and distribution entities is viewed by some labor unions as a precursor to privatization.
• Case studies of energy reforms in Kenya and Uganda suggest that unbundling in developing countries often leads to higher electricity prices and does not necessarily guarantee efficiency gains.
• The Renewable Energy Independent Power Procurement Programme (REIPPP) is criticized for potentially creating private monopolies and benefiting wealthy businesses and international corporations rather than the broader public.
• A 'Just Transition' is proposed as a people-led shift to a zero-carbon economy that prioritizes job creation and the protection of vulnerable coal-dependent communities.
• One proposed financial solution involves raising R150 billion to R200 billion from international climate change mitigation funding to lower Eskom's debt in exchange for accelerating the shift away from coal.
• Cosatu has suggested using the Government Employee Pension Fund (GEPF) to take on R254 billion of Eskom's debt as an alternative to unbundling.
• Eskom faces the risk of a 'utility death spiral' where high tariffs lead to lower demand, forcing further tariff increases to cover fixed costs, which in turn further reduces the customer base.

APA

Phalatse, S., & Isaacs, G. (2020). ESKOM: THE ROOTS OF A CRISIS AND AVENUES FORWARD. Institute for Economic Justice. https://iej.org.za/wp-content/uploads/2020/10/Eskom-Working-Paper-20-10-2020-1.pdf

Chicago

Phalatse, Sonia, and Gilad Isaacs. ESKOM: THE ROOTS OF A CRISIS AND AVENUES FORWARD. Institute for Economic Justice, 2020. https://iej.org.za/wp-content/uploads/2020/10/Eskom-Working-Paper-20-10-2020-1.pdf.

Wikipedia

{{cite report |last1=Phalatse |first1=Sonia |last2=Isaacs |first2=Gilad |title=ESKOM: THE ROOTS OF A CRISIS AND AVENUES FORWARD |publisher=Institute for Economic Justice |date=October 2020 |url=https://iej.org.za/wp-content/uploads/2020/10/Eskom-Working-Paper-20-10-2020-1.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{phalatse2020eskom, author = {Phalatse, Sonia and Isaacs, Gilad}, title = {{ESKOM: THE ROOTS OF A CRISIS AND AVENUES FORWARD}}, institution = {Institute for Economic Justice}, year = {2020}, month = oct, url = {https://iej.org.za/wp-content/uploads/2020/10/Eskom-Working-Paper-20-10-2020-1.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }