End of Eskom and Transnet as you know them

Eskom and Transnet are being privatised by stealth, with the government’s policy agenda resulting in the private sector performing these utilities’ functions.

This can be seen in the rise of rooftop solar and other alternatives to Eskom, as well as Transnet opening its railways and ports to private operators. 

Efficient Group chief economist Dawie Roodt explained the process of “backdoor privatisation” in an interview with Newsday. 

Roodt explained that this is a direct result of the government’s historic mismanagement of these state-owned enterprises (SOEs). 

Eskom’s operational mismanagement has resulted in an unreliable power supply and surging electricity prices. 

This makes alternative electricity suppliers and sources increasingly attractive to households and businesses, leaving Eskom with a dwindling customer base. 

“There is no need to do much about the SOEs because they are doing it to themselves. They are being privatised through the back door, not officially, of course,” Roodt said. 

“What is happening with Eskom is that people are putting solar panels on their roofs to stop using electricity from the utility. They are doing all sorts of things.”

“They are taking over Eskom in a decentralised way. Eskom is being privatised through the back door by households and businesses.”

Energy expert and EE Business Intelligence Managing Director Chris Yelland has previously said that even those who cannot afford solar are cutting off the utility. 

Yelland said households are investing in energy efficiency by switching to gas stoves and heaters, as well as solar geysers, to reduce their energy bill. 

Roodt explained that Transnet is in a slightly different situation, with parts of the ports and rail operator’s functions explicitly privatised as part of government policy. 

“Transnet is actually being privatised through the front door because the policy plan is to get the private sector involved,” Roodt said. 

“Private players are getting involved in the railways and the harbours and all of that. This is full-on privatisation happening here.” 

This marks the end of an era for Eskom and Transnet’s unfettered dominance over their respective sectors of the South African economy. 

Once controlled by these SOEs, the energy and logistics sectors are now open to private participation, ending their monopolies. 

The process is not complete, but Roodt explained that the writing is on the wall for Eskom and Transnet as they are going the way of other SOEs. 

“The other SOEs, like the Post Office, are just disappearing as companies like PostNet take over their functions. In a way, that is privatisation,” Roodt said. 

“Even the police are being privatised. The number of private security officers is double that of uniformed police members.” 

Roodt said that if he had his way, he would privatise SOEs entirely and turn them into competitive businesses rather than state-run operations. 

“I would privatise these enterprises completely. I would do it officially, not unofficially, like what is currently happening,” he said.