DA calls for a commission of Inquiry into the operational viability of Eskom

17 February 2021

Eskom’s constant push for higher tariffs and the sobering reality that it has become operationally incapable of meeting electricity demand, is a contradiction that confirms that Eskom’s broken model has run its course and cannot be allowed to continue.

The Democratic Alliance (DA) is therefore calling for the establishment of a Commission of Inquiry to look into the operational, financial and governance constraints at Eskom, and the impact it is having on livelihoods, businesses and industry. It does not make any sense to continue plodding along with a broken energy system and expect the economy to grow and create jobs.

Eskom’s broken model is to borrow money, charge consumers for electricity, use the difference in finance costs and consumer income to pay for operational costs, new builds, maintenance and even pay dividends. It cannot do any of this now because it is operationally and financially incapacitated.

When a far less onerous situation presented itself in 1983, the then government appointed a commission to look into Eskom’s management of forecasting, governance, accounting, and investment approach. The commission proposed a structure that made Eskom accountable for profits and losses.

Compared to 1983, Eskom is in a far more dire state now which demands that South Africa rethinks its entire energy system and enact a new model that is able to meet the demands of a new modern economy. Failure to do so will only result in higher tariffs and even worse loadshedding schedules for an economy that is already on its knees.

Eskom’s build programmes at Kusile and Medupi keep being pushed back at huge cost to the taxpayer. Even worse, the much vaunted maintenance approach to keep the Eskom fleet working has failed to stop the debilitating impact of loadshedding. The honest truth is, Eskom is broken and its model has become obsolete.

A commission of inquiry will be key in unmasking operational and financial inefficient as well as issues of ongoing graft. Our energy security will depend on whether we are prepared to address the elephant in the room or continue to ignore it hoping it will go away.

Issued by GhalebCachalia, DA Shadow Minister of Public Enterprises, 17 February 2021