The South African government is taking over more than half of the debts of energy company Eskom. This concerns a loan of more than 13 billion euros. With the aid, the state-owned company must pay off debts and interest obligations and pay for the maintenance of the coal-fired power plants.
South Africa has been plagued for 16 years by constant blackouts due to mismanagement, corruption, theft and technical defects at the power stations. President Cyril Ramaphosa declared a state of emergency earlier this month over power shortages, which reached a record level over the past year.
Some parts of the country are without power for up to six hours a day. Hospitals cannot treat patients, companies have to close and internationally the most industrialized country in Africa is suffering a lot of damage to its image.
“Our economy is at enormous risk,” Finance Minister Enoch Godongwana said in his budget speech this week. “Uncertainty is increasing, which requires us to do bold things.” If Eskom does not meet the conditions for the debt relief, heads will have to roll, he later added during an interview with Reuters.
That same evening, Eskom announced that director Andre de Ruyter is resigning immediately. De Ruyter had already resigned in December but would stay on until March 31, so that the company could find a replacement. He may have resigned after all because energy minister Gwede Mantashe accuses him of being unable to solve the crisis. He would also have completely lost the support of President Ramaphosa.
Paste plasters
South Africa has wanted to reorganize the state-owned company for years because of a continuing shortage of power for its population of 60 million people. But it seems like sticking plasters on a system that actually needs to be structurally reorganized.
The loan from the government to Eskom comes with strict conditions. For example, the money may not be used for investments in green energy. This is striking because South Africa says it wants to stop coal production in 2030. The US, UK and European Union pledged $8.5 billion to South Africa for the transition to renewable energy.
But due to the crisis, the energy transition seems to have been put on hold. The government, according to critics, seems to be looking for a quick solution in view of the elections. “The risk of this is that the next crisis will get even worse,” says sociologist Bram Büscher of Wageningen University. The professor is also affiliated with the South African universities of Johannesburg and Stellenbosch. “The other problems, such as the dirty coal mines, will not go away with this loan.”