Eskom cannot be saved – here is how it will end

Efficient Group chief economist Dawie Roodt said Eskom is financially and operationally unsalvageable and will come to the same end as South African Airways (SAA).

Public Enterprises Minister Pravin Gordhan appointed a new Eskom board with a mandate to increase the energy availability factor (EAF) to 75%.

Many people, including President Cyril Ramaphosa, backed the new board to address load-shedding and other problems at the power utility.

Roodt is less optimistic, saying the new Eskom board will not be able to save the company and put an end to load-shedding.

Speaking at a Free Market Foundation webinar, he said that to see how the “Eskom movie will play out”, you merely have to look at what happened to another state-owned enterprise – SAA.

“SAA had ten turnaround plans, and they all failed. The company was ultimately run into the ground financially and operationally,” he said. “Eskom will go the same way.”

Roodt said Gordhan, with a strong communist bias, is partly to blame for the problems at SAA and Eskom.

The best way to handle Eskom is to treat it like a private sector company and place it into business rescue.

Roodt said this 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 said Eskom will get privatised, whether the government likes it or not.

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

Roodt’s view may seem radical, but it is not far away from what Eskom employees have been saying.

One Eskom executive, who asked to remain anonymous, told Daily Investor that the only solution to problems at most of Eskom’s power stations is to dismiss all staff and re-employ the best ones.

He said corruption, apathy, and poor standards are so entrenched at Eskom that it is impossible to change.

He added that only a small group of Eskom employees are trying to keep things together, while the others are either dead-wood – or worse.

Daily Investor asked Eskom for feedback on its operational challenges, but the company did not respond.