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Free Market Foundation (FMF) senior associate, Nicholas Woode-Smith, says that the only way to end load shedding and restore efficiency is by privatising Eskom and introducing free-market competition in South Africa’s electricity sector.<\/span><\/p>\n This comes after Eskom\u2019s ongoing struggles with load shedding, financial instability, and ageing infrastructure have once again raised questions about its ability to provide reliable electricity. <\/span><\/p>\n Woode-Smith highlights the key issues plaguing Eskom: escalating electricity prices, decades of underinvestment, corrupt practices, and non-payment by municipalities. <\/span><\/p>\n The failure to address these problems has left the utility in a precarious position. In his view, Eskom\u2019s longstanding monopoly, coupled with political interference, has perpetuated inefficiency and stagnation in the electricity market.<\/span><\/p>\n As Woode-Smith explains, “Eskom is toying with aged infrastructure and decayed power units that are long due for maintenance and replacement.” He further critiques the utility’s poor planning, noting that when Eskom had a surplus of electricity, it “failed to invest in any new generation capacity”.<\/span><\/p>\n Despite billions spent on projects like Medupi, corruption and mismanagement have hindered any real progress, with the project\u2019s cost ballooning from an initial R80 billion to R234 billion.<\/span><\/p>\n The failure to secure payments from municipalities, as Woode-Smith points out, further exacerbates Eskom\u2019s financial problems.<\/span><\/p>\n ”Eskom also has an endemic issue with non-payers, further putting a strain on Eskom\u2019s finances. As of August 2024, Emfuleni Municipality owes Eskom approximately R8 billion.”<\/span><\/p>\n Woode-Smith pointed out that many municipalities are deeply indebted to Eskom but refuse to pay their outstanding debts. Additionally, numerous households consume electricity without paying for it.<\/p>\n ”All these non-payers contribute to putting strain on the grid, while not contributing a cent to keeping Eskom running,” he said. <\/span><\/p>\n Eskom\u2019s legacy as a state-owned monopoly, protected from competition by law, is another obstacle in addressing these challenges.<\/span><\/p>\n According to Woode-Smith, Eskom\u2019s inefficiencies are compounded by its inability to plan due to a lack of market-driven pricing. He argues that the utility’s early insistence on providing cheap electricity, “incentivised by political whims”, led to decades of financial loss, preventing it from investing in future capacity.<\/span><\/p>\n Woode-Smith believes the solution lies in ending Eskom’s monopoly and opening the electricity market to competition. <\/span><\/p>\n He argued that competition in the energy sector would mitigate risks, ensuring that if one company fails, others can maintain supply. <\/span><\/p>\n This would also create incentives to prevent price hikes, as companies would be forced to balance profitability with consumer demand.<\/span><\/p>\n “The reality of costs and the incentive to make a profit will keep companies from not charging too little,” Woode-Smith explained.<\/span><\/p>\n Privatising Eskom and splitting its assets among multiple private sector companies would distribute responsibility for maintenance and supply, reducing the burden on a single, underperforming utility.<\/span><\/p>\n “With Eskom\u2019s assets split over many competitors, maintenance can be spread across many institutions, and the responsibility of keeping the lights on will fall on the shoulders of many competent companies, rather than a single incompetent one.”<\/span><\/p>\n Woode-Smith argued that the only way to end load shedding and restore a reliable energy supply is to abolish Eskom\u2019s monopoly and embrace a free-market approach to electricity.<\/span><\/p>\n “Privatise Eskom. End its monopoly. Embrace a free market in electricity \u2014 that is how we end load shedding once and for all,” he said. <\/span><\/p>\n hope.ntanzi@iol.co.za <\/span><\/p>\n <\/p>\n Politics<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" Free Market Foundation (FMF) senior associate, Nicholas Woode-Smith, says that the only way to end load shedding and restore efficiency is by privatising Eskom and introducing free-market competition in South Africa’s electricity sector. This comes after Eskom\u2019s ongoing struggles with load shedding, financial instability, and ageing infrastructure have once again raised questions about its ability […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[18158,14923,8099,1529,16587,18160,2679,8316,18159,11854],"class_list":["post-236537","post","type-post","status-publish","format-standard","category-politics","tag-039break","tag-blueprint","tag-crisis","tag-energy","tag-eskom039s","tag-foundation039s","tag-free","tag-market","tag-monopoly039","tag-sa039s"],"yoast_head":"\nGet your news on the go, click <\/span><\/strong>here to join the News WhatsApp channel.<\/strong><\/h2>\n