Abstracts

2 Introduction Eskom is South Africa’s state-owned and vertically integrated electrical utility. It generates and supplies effectively all the country’s electricity. The utility has struggled to reliably supply South Africa with electricity since the load shedding 1 episode of 2008 that escalated into a national emergency. Eskom’s mismanagement of coal-based, electrical capacity expansion projects, aimed at resolving these initial shortages, has contributed to its financial troubles. Its R454B ($32B) 2 debt burden as of September 2019 represents about 15% of South Africa’s sovereign debt and makes the utility the most serious risk to the country’s national budget and economy (Eskom, 2019b, 1 As a last resort and preventative measure to prevent the collapse of the electric grid, consumers are rotationally cut off from electric supply to shed excess electricity demand (Leprich, 2019, p. 11). 2 This article assumes an exchange rate of $1 = R14, rounded to the nearest billion. p. 5; Leprich, 2019, p. 24; National Treasury, 2019, p. 51). Yet, as recently as 2001, Eskom was recognized as the Financial Times Power Company of the Year at the Global Energy Awards (Du Toit, 2019). Government policy failures, over-reliance on coal, state capture, and mismanagement have contributed to the recent decline of the utility. Given its dominant role in the electricity sector, restructuring Eskom and transforming the sector are virtually synonymous. Calls for the broad reformation of the electricity sector from global investors, industry, and civil society are louder now than in all its century-long existence. In response to pressure for action on Eskom, President Cyril Ramaphosa promised to unbundle Eskom into separate generation, transmission, and distribution entities in his February 2019 State of the Nation Address. The Department of Public Enterprises (DPE) subsequently released a document detailing the government’s plans to restructure Eskom: Roadmap for Eskom RESTRUCTURING ESKOM: TRANSFORMING SOUTH AFRICA’S ELECTRICITY SECTOR Tino Petros South Africa’s electricity sector is dominated by the state-owned and vertically integrated electrical utility, Eskom. Once named the Financial Times Power Company of the Year, Eskom now struggles with reliably supplying electricity to Africa’s second largest economy. It is the most serious risk to South Africa’s national budget and economy. This article discusses how South Africa’s electricity sector can be transformed to resolve Eskom’s debt crisis, fuel competition, and embrace renewable electricity generation. Perspectives on Business and Economics, Vol. 38, 2020