Eskom will die

Efficient Group chief economist Dawie Roodt predicts that Eskom would follow the same path as South African Airways (SAA) and the South African Post Office (SAPO) and “simply come to an end”.

“Eskom is completely bankrupt. It has been operationally and financially run into the ground. It does not work anymore,” Roodt told delegates at PIF 2023.

He explained that around 40,000 people work at Eskom with an average salary of R70,000 per month.

“Last year, Eskom employees received a 7% increase. It is irresponsible. These workers are already overpaid,” he said.

Roodt said the government is trying to run things they cannot run, which causes them to collapse. Good examples are SAA, Denel, and the SAPO.

Roodt previously explained that SAA had ten turnaround plans, and they all failed. “The company was ultimately run into the ground financially and operationally.”

“The same is currently happening to the South African Post Office. It is simply coming to an end. It is under provisional liquidation, and it is also just dying.”

He predicted that Eskom would go the same route as SAA. “It simply came to an end. It just died,” he said.

“The same is going to happen to Eskom. It is simply going to come to an end.”

The only part Roodt expects to survive at Eskom is its transmission network. It is a natural monopoly, and it makes sense for the state to keep it.

Dawie Roodt
Efficient Group chief economist Dawie Roodt

Roodt previously explained that the best way to handle Eskom is to treat it like a private sector company and place it into business rescue.

That would mean tens of thousands of Eskom employees will and must lose their jobs.

“It is the only way you will save Eskom and the country. You have to fix it the same way you will fix a private sector company,” he said.

“You cannot give Eskom employees a 7% increase when the company is bankrupt.”

Roodt explained that the private sector is already producing a lot of electricity, and this will accelerate in future. “Eskom will get privatised, whether the government likes it or not,” he said.

“Eskom has been run into the ground, and the only way to get reliable electricity is for the private sector to provide it.”

Roodt’s view is backed up by research from RMB Morgan Stanley, which showed that electricity generated from the private sector will exceed Eskom’s generation fleet’s output by 2025.

This assumes Eskom will maintain an Electricity Availability Factor (EAF) of 53%, which is unlikely as the EAF has deteriorated markedly in the last 12 months.

In 2025, RMB estimates that Eskom will generate around 25,200MW of electricity, just over 47% of its nominal capacity.

Alternative energy sources will produce 26,600MW in 2025 – up from 13,300MW at the end of March 2023.

The private sector is, therefore, filling the void left by Eskom in a similar fashion to how private airlines filled the void left by the collapse of SAA.

For instance, in the first quarter of 2023, South Africa imported five times as many batteries as it did in the whole of 2022.

Imports of solar panels also reached an all-time high of R3.6 billion in South Africa during the first three months of 2023. This is estimated to add 667MW to 1,000MW of generation capacity.

However, this does not mean load-shedding will come to an end.

RMB estimates that the supply deficit will be significantly reduced but will remain around 400MW in 2025.

By 2030, even with alternative energy sources producing above 36,000MW, a shortfall of over 1,000MW will remain.

This will be predominantly due to the further deterioration of Eskom’s generating fleet.


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