SA is killing itself by keeping failing SOEs on life support
As we wait to see if our fate is junk or a recession, we’re still at the mercy of sovereign-sapping Eskom
On Tuesday, with the release of 2019 fourth-quarter GDP numbers, we will know whether we are in another period of below 1% growth or, in the worst-case scenario, a contraction that would send us into a technical recession. In a month when Moody’s Investors Services may make a call on our sovereign ratings that could send us crashing into “junk” status, it’s not how we would have chosen to enter our autumn, but it is what it is.
Economically we are still at the mercy of Eskom. Its operational challenges after years of maintenance neglect make it nearly impossible to meet demand that is actually less than it was just more than a decade ago when the lights first went out.
More than 12 years later and after billions spent in building three mega projects in Medupi, Kusile and Ingula, with some of that investment lost to mismanagement and theft, we are actually in a worse position on the electricity front, because Eskom’s expansion was built with debt that has ratcheted up to R450bn, stretching the sovereign. Evidence of that tightness is well reflected in last week’s budget speech...