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SA takes important next steps to solving its power crisis

In its current form, Eskom’s sheer size and complexity gets in the way of making it accountable to its shareholder.

In his maiden budget speech, South Africa’s Finance Minister Tito Mboweni, confirmed the depth of the financial crisis at South Africa’s power utility Eskom. He also underscored the serious risks this poses to economic recovery in the country.

Mboweni allocated R23bn a year over the next three years to Eskom, to be extended over the next ten years if needed. Without this support – and additional measures to address the structural roots of operational and governance crises at the utility – the costs could be much higher.

In addition Eskom’s turnaround plan will be formalised in a new shareholder compact with the Minister of Public Enterprises. This will include maintenance plans, technical improvements and management of the capital expenditure programme.

Catrina Godinho, research associate at the University of Cape Town says the interventions and reforms in the budget combine both short term interventions, such as the fiscal support, as well as the first steps to longer term structural reforms.  She says will keep Eskom afloat while the sector transitions.

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