• Eskom is facing a financial crisis. Dirk de Vos argues that Eskom’s highest priority is servicing its debts. Failure to do this would have significant repercussions for the government’s credit worthiness.
• Eskom’s imminent crisis is a result of its decision to build Medupi and Kusile, two massive coal-fired power stations. Both Medupi and Kusile are behind schedule because of bad project conception and design, dodgy procurement and poor execution.
• Eskom’s debt is nearly R500 billion, 2.5 times greater than its gross revenues.
• Eskom can become more efficient by regularising coal contracts at power plant level; decentralising authority to power stations; creating a renewable energy division inside Eskom; setting an efficient price for electricity; ring-fencing distribution and private participation; and providing subsidies for poor people.
• Unbundling Eskom into three distinct entities, responsible for generation, transmission and distribution, respectively, will only alleviate the current crisis if a clear and detailed plan is formulated to tackle its financial, operational and environmental sustainability.

Previous publications in this series: Viewpoints