EXPLAINER- What is causing South Africa's power crisis?

It is owed tens of billions of rands by municipalities and says the country's energy regulator has failed to grant it tariffs that would allow it to recover its costs. Finance Minister Enoch Godongwana is expected to announce a plan for the government to take on between one-third and two-thirds of Eskom's debt at the 2023 budget later this month, part of efforts to stabilise its finances.

South African President Cyril Ramaphosa is under increasing pressure to help resolve the country's power crisis, as state-owned utility Eskom implements the worst outages on record.

After over 200 days of power cuts last year and outages every day so far in 2023, Ramaphosa is expected to address the crisis in his annual State of the Nation address on Thursday. What is causing the crisis and why has it been so hard to fix?

AGEING PLANTS Eskom's ageing fleet of coal-fired power stations, most of which were built under apartheid, regularly break down. Often about half of its generation capacity of 46,000 megawatts is offline because of faults or repairs.

South Africa failed to build new power stations to keep up with demand in the years after the end of the white minority rule, when more households and businesses were connected to the grid. Two huge new coal plants, Kusile and Medupi, were approved for construction in the late 2000s, but they have been beset by delays, cost-overruns and technical faults.

CORRUPTION AND CRIMINALITY Eskom has also been blighted by corruption and criminality. A graft inquiry established in 2018 pointed last year to a string of management failures and a "culture of corrupt practices" at Eskom during the presidency of Jacob Zuma, who was in power for nine years from 2009. Zuma denies wrongdoing.

Eskom's current management, appointed under Zuma's successor Ramaphosa, says it continues to be the victim of organised criminal behaviour, citing cases where power station equipment has been deliberately sabotaged, as well as the theft of coal, diesel and copper cables. In December, the government deployed the army to six Eskom power stations where it said criminal syndicates operated. Last month Eskom said police were investigating the alleged poisoning of its outgoing chief executive Andre de Ruyter, who has tried to clamp down on corruption.

SCEPTICISM ABOUT RENEWABLES A programme adding private, utility-scale renewable energy projects to the grid was frozen for years under Zuma.

And despite pledges by Ramaphosa to cut red tape and boost supply of renewable energy from independent power producers, the country is still mostly reliant on Eskom's coal fleet. Some union leaders and prominent members of Ramaphosa's governing African National Congress (ANC) have remained sceptical of embracing renewable energy, fearing massive job losses in the country's coal belt.

ANC chairman Gwede Mantashe, mining and energy minister in Ramaphosa's cabinet, had a public spat in 2021 with Eskom's de Ruyter over the shift to cleaner energy sources, likening it to committing "economic suicide". FINANCIAL WOES

Eskom is mired in financial crisis with debt of roughly 400 billion rand ($22.66 billion) that it cannot service without government bailouts. It is owed tens of billions of rands by municipalities and says the country's energy regulator has failed to grant it tariffs that would allow it to recover its costs.

Finance Minister Enoch Godongwana is expected to announce a plan for the government to take on between one-third and two-thirds of Eskom's debt at the 2023 budget later this month, part of efforts to stabilise its finances. ($1 = 17.6486 rand)

 

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