POWER PLAYS
NEVA MAKGETLA: Why Eskom-run nuclear power will ruin the country
If you want to understand why the nuclear deal strikes terror into the hearts of economists, look no further than Eskom’s current operations. Already its overinvestment in the face of declining electricity sales is leading to exorbitant tariff increases, hidden government subsidies and efforts to restrict renewables. A core concern is that the nuclear project will bankrupt the country. If utilities overinvest, consumers and businesses end up paying for unused capacity. Since 2007 Eskom’s plant expanded in constant rand from R140bn to R580bn, climbing from 1.5% of SA’s total fixed assets to above 5%. Even without nuclear Eskom plans to keep investing more than R70bn a year. In return we get a 7% decline in the volume of electricity sales coupled with a tariff increase at 150% above inflation. And now Eskom wants 20% more for 2018-19. Thanks to escalating tariffs, Eskom’s sales revenue soared almost 150% in real terms despite slumping sales. But its profit has declined steadily.In 200...
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