Municipalities are important customers for Eskom, buying more than two-fifths of its electricity. But many municipalities are in as much financial trouble as the power utility. Eskom’s financial woes can therefore not be fixed unless and until the business model for municipal electricity distribution is also fixed. Two major changes are needed. Municipal dependence on electricity revenue needs to be replaced with a local business tax. And municipal customers, and municipalities themselves, need to be free to buy electricity from the cheapest source. Neither of these changes will be easy, but both are necessary. Without them, efforts to reform Eskom will be in vain. There is a synergy of interests between the cities and large intensive electricity users, together accounting for more than 70% of Eskom’s sales. Both want and need least-cost, reliable energy. In the face of vested interests, their combined voice may shift the balance of power to effect the necessary changes. The picture...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as exclusive Financial Times articles, ProfileData financial data, and digital access to the Sunday Times and Times Select.

Already subscribed? Simply sign in below.



Questions or problems? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now