Load shedding, hey?
At least it gives something to talk about, other than the weather (four seasons in a day!), traffic (starts at 2PM on a Friday leaving the Cape Town CBD), and Bitcoin.
Jokes, nobody is talking about Bitcoin any more.
Sadly, it’s not really a laughing matter, because over the course of the last 10 years (but spanning back even further), the ANC have absolutely gutted Eskom, leaving it on the brink of complete collapse.
Think I am being melodramatic? How about this Citizen headline?
Let’s just dip our toes into that story:
With a R900 billion hole in its balance sheet, extreme depreciation of assets and a R419 billion debt burden, experts say the cash-strapped Eskom is beyond redemption.
Energy expert Ted Blom said no amount in bailouts would save the power utility and the only solution was to place the utility under business rescue…
The power utility is currently kept afloat by a government debt guarantee of R350 billion and Blom says Eskom is an “energy skunk on quicksand”…
“Eskom is kaput. It is game over for them. No supplier wants to work with them because of nonpayment,” said Blom.
“The only way out is to put Eskom on business rescue, get rid of excess staff and get rid of its asset value,” he said.
I would find the phrase ‘energy skunk on quicksand’ quite enjoyable if it wasn’t dragging us all down together.
Over on MyBroadband, things are similarly messy. They’ve gone with “How the ANC government broke Eskom – 2008 versus 2018”, and have an infographic that illustrates the mess rather well:
Bloated and overpaid – much like the party and government that ran it into the ground.
The most in-depth analysis of how this SOE unravelled can be found on Moneyweb, and again, it ain’t pretty reading.
We will get the ball rolling with more ugly numbers:
Economists estimate that the South African economy could have been 10% larger by the end of 2014 if it had not been for crippling power shortages. That 10% translated to more than R300 billion ‒ or more than one million job opportunities ‒ lost.
And it could all have been avoided. In 1996 Eskom warned the South African government for the first time that the country was running out of electricity. It laid out predictions for future energy demand and explained that new power stations were needed. It then asked for approval for a new build programme. The request was turned down. In 1998 the government was warned again that the country was running out of electricity. This warning too led to nothing and in November 2007, as predicted, South Africa ran out of electricity and load shedding struck for the first time…
Here’s a stat: In 2008 Eskom held an A1 investment grade credit rating. Last week, ratings agency Standard & Poor’s maintained Eskom’s rating at CCC+, several levels deep into junk territory (and with a negative outlook). This is a company that is making record multi-billion rand losses every year and is expecting its debt to increase from R387 billion to R600 billion within the next four years (as per its results presentation for the year to March 31, 2018).
So, just how bad can things get? Well, there’s no way to really sugarcoat this:
The very worst thing that could happen to South Africa in terms of electricity is a blackout or total grid collapse. There is no worse scenario. Consider the fact that in the event of a blackout there will be no power in the country for weeks, if not months. The impact of that could be catastrophic, and this is the real reason behind load shedding.
And finally, what immediate action should be taken to try and keep this country afloat?
Again, we may have rid ourselves of Jacob Zuma and some of his more rotten cohorts, but the hole we must climb out of is pretty damn deep.
Energy skunk on quicksand…
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