Sorting Eskom a decision too long ignored by rent-seeking ANC

Politicians are known for their ability to kick the can down the road for the next generation to make the structural reforms that they are faced with. There are simply too many risks to a political career in causing disruption, no matter how positive, if the fruits will only be borne after the next elective cycle. Call it the unintended consequence of democratic contestation, but for young emerging nations such as ours, this sort of policy indecision by players more concerned with their prospects in party and state inevitably pushes the country to bouts of panic, where we can all feel the country reach ever closer to the abyss. This has been the fate of Eskom for more than a decade, a political hot potato. For while the ANC has comfortably governed for more than two decades, the fierce contests within the party have meant that the party has essentially been run along the lines of a coalition government. And over the past decade it has been a coalition that has been at its most dysfunctional, with factional lines drawn on the pursuit of riches, as exposed by Bosasa executives in recent weeks, and not on policy differences.

In such a climate, those at the main dinner table aren’t going to be concerned with decisions that speak to the long-term health of the country in which a utility that provides 95% of its energy is central.

Kicking the can down the road has certainly been a central theme of former president Jacob Zuma’s years in office.

While his predecessor’s term wasn’t immune to the pursuit of wealth, as espoused by Smuts Ngonyama’s famous quote, the factional battles of former president Thabo Mbeki were largely centred on policy differences. In his economic policy plans, the “1996 Class Project”, as his detractors would later disparagingly call them, he was brave enough to take some unpopular decisions, some of the most contentious being reserved for the fate of state-owned companies.

Despite the unhappiness of some of his allies in Cosatu and the

SACP, Mbeki pushed through the restructuring of Transnet, listed

Telkom and broke up the state-owned steel monopoly, Iscor. The corporate restructuring of Eskom announced this week was among the proposals he just didn’t get to implement because they were spooked by the implosion of US energy giant Enron in the early 2000s.

This push to reform the state would prove politically imprudent, especially as alliance partners felt they weren’t privy to these and other such plans. They would form their own coalition led by their champion, Zuma. His ascension was supposed to help reverse decisions of the “1996 Class Project” and ensure its plans were halted.

And in the decade of his presidency, Zuma proved not to be the leftist champion as promised — structural reforms weren’t the focus of his presidency.

He may have thought it OK to push the hard decisions about Eskom to another day, especially seeing as how contentious debates around them were during his predecessor’s time. It was prudent to duck decisions about restructuring them, if only to avoid a similar fate.

Eskom was instead left to its own devices, with no guidance from its sole shareholder except where to direct its spend. Needing to fund expansion plans, management raised borrowing levels from R40bn in 2008 to more than R440bn today.

Tariffs rose significantly over that time, and all the while demand from its biggest customers kept falling.

Bad debts from municipalities exploded and continue to do so.

Eskom’s fate was long foreseen and it’s now at a point where there can be no political toying with its future. In securing it, President Cyril Ramaphosa has no legroom to consider his own political prospects as creditors threaten to abandon ship.

It was inevitable that Eskom would reach this stage.

Thabo Mbeki was brave enough to take unpopular decisions