Eskom is falling apart – the private sector will have to provide electricity
Efficient Group chief economist Dawie Roodt said Eskom is a bankrupt company which cannot be saved, which means that the private sector will have to provide the country’s electricity.
Speaking to the SABC, Roodt predicted that Eskom would go the same route as South African Airways (SAA) and the Post Office.
The private sector has already taken over many of SAA and the Post Office’s functions, like providing local and international flights and delivering packages across the country.
“Because state-owned enterprises are falling apart, the private sector is taking over services which the state used to provide,” Roodt said.
Roodt said it is unlikely that Eskom can be turned around because there is no political will to do what is needed.
Eskom has a bloated workforce. It currently employs around 43,000 people, which Roodt said must be reduced by 20,000.
“The only way to save Eskom is to cut the number of workers who are overpaid and underworked,” he said.
“If Eskom was a private company, it would be in business rescue, and tens of thousands of people would have lost their jobs.”
However, it is not happening because the government and politicians do not have the political will to face reality and make hard decisions.
The only reason Eskom has not gone bankrupt, Roodt said, is because taxpayer money is used to bail them out.
The inevitable end for Eskom is that it will slowly grind to a halt. The private sector will then step in to provide electricity.
“This is what has happened at other state-owned enterprises, and it is what will happen at Eskom as well,” Roodt said.
He highlighted that it has already started to happen, with many households and businesses generating their own power through solar installations and battery backups.
As privatisation is the inevitable conclusion to Eskom’s troubles, Roodt advised the government to manage the process in that direction.
Eskom employees and power production
An analysis done by Daily Investor backs up Roodt’s arguments regarding a bloated workforce which performs poorly.
The analysis showed that power generation increased between 1990 and 2005, when the company’s employee numbers decreased.
However, between 2005 and 2018, when Eskom’s workforce dramatically increased to a peak of 48,700 employees, Eskom’s power generation did not increase.
From 2005, Eskom’s power generation flatlined and then started to decline. By 2018, generation had declined to the same level as in 2003.
The charts below show Eskom’s staff numbers and power generation over the last 30 years.
They reveal that power generation increased with declining staff numbers. When staff numbers started to increase, power generation started to decrease.