CDE viewpoints publication

  • Eskom is commercially unsustainable, and the industry in which it operates is undergoing massive technological disruption. Lumkile Mondi describes the dire state of Eskom’s finances and explains the sources of the organisation’s financial distress before offering suggestions for restructuring and reform.
  • Eskom is the largest state owned company (SOC) within the Department of Public Enterprises (DPE) portfolio. Measured by generating capacity, Eskom is the eleventh largest power utility in the world.
  • South Africa is facing serious problems with falling demand for electricity and rising financing costs. Since 2012, this has resulted in a steady decline in its profits as measured by return on assets, and a rapid increase in finance costs, as a percentage of its assets.
  • Eskom’s revenues since 2008 have grown only because tariffs have risen rapidly, effectively tripling in real terms between 2008 and 2017
  • Mondi argues for the market to be restructured and Eskom to be split into three parts: generation, transmission and distribution.

Other publications in this series: Viewpoints | Why land expropriation without compensation is a bad idea Viewpoints | The future prospects of South African universities

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