With the ongoing threat of workers downing tools and load shedding being rolled out across the country, the challenge of patching up Eskom seems more and more impossible.
Analysts believe the power supplier is both financially and environmentally unsustainable, battling with low revenues while trying to keep its workers in check.
Energy expert Chris Yelland said Eskom is in "dire straits".
"Most of Eskom's power stations do not comply with emission standards in South Africa, but they still run because of permission from government to have these regulations postponed for five years. These stations would not be able to operate if these laws were applied, and their emissions would be illegal in most other countries," Yelland said
Cities caught completely by surprise. They're calling this #Loadshedding but this is just the hijacking of the national grid by disgruntled Eskom employees. Now let's see who's really in charge of SA.— Tom Eaton (@TomEatonSA) June 14, 2018
"To ensure environmental compliance, Eskom would need R400-billion. In addition to all its other financial woes, Eskom [management] will also have to keep this figure in the back of their minds, because South Africa committed to the Paris Agreement on emissions. Eskom is the biggest carbon-dioxide emitter on the continent by far."
Yelland explained that Eskom is in a Catch-22 when it comes to building its revenue.
"The product Eskom sells is kilowatt-hours. Its sales volumes have been decreasing every year for the past 10 years. To compensate, Eskom puts up its price. But it is regulated by the National Energy Regulator of South Africa (Nersa), and they are not allowing the hike in prices Eskom wants. The more Eskom puts its price up, the less it sells. But if it doesn't increase its prices, it doesn't make enough revenue. It's a downward death spiral," Yelland said.
In order to focus on the future. SA needs reform of SOE. Eskom cannot hold monopoly. 2. We need board presence of Union. 3. We need strike ballot so everyone has a choice about strikes. 4. Cities must play a greater role in energy generation. ANC won't do above so we need change— Mmusi Maimane (@MmusiMaimane) June 14, 2018
"It's two biggest cost items are the cost of primary energy, which is coal, and staff remuneration. Coal prices have gone up dramatically in the past 10 years, and Eskom is highly overstaffed. It has 15,000 more workers than other benchmark utilities."
He advised that Eskom needs to put a lid on wage and salary increases and reduce its number of staff.
"It will also have to sell more product and put its price up. It's a massive contradiction. So who knows how Eskom will manage this balancing act."
I feel that whilst the reality of #loadshedding sets in, we should take the time to sit in the darkness and remember how Eskom paid R564 MILLION to Gupta-linked Trillion for "consulting".— Daniëlla van Heerden (@DanniTwiet) June 14, 2018
How is Eskom still our only option as consumers?!
Economist Mike Schussler said saving Eskom may put more financial pressure on the average South African citizen.
"Loan guarantees from government to Eskom are put on the shoulders of taxpayers. Eskom does not have the ability to do anything without borrowing. Either way, we as electricity users and taxpayers will bear the brunt," he said.
"Its staff complement increased dramatically, yet it produced less power. It went the other way. The reins were not held tightly at Eskom. Studies have shown that Eskom is overstaffed. It will have to make meaningful staff cuts to survive."