President Cyril Ramaphosa has announced yesterday as part of the economic recovery plan that the government has approved the generation of power by Independent Power Producers for up to 100 megawatts from the previous maximum of only 1 megawatt. Although many view this as marshalling the already cash-strapped Eskom to its grave, he mentioned that this is aimed at alleviating loadshedding and it will instead make Eskom more efficient by reducing the load.
Eskom has been a failing organization for many years now and the government has invested a lot of billions in an effort to save it but this money never made any difference as it went down the drain through corruption and financial mismanagement. The government needed to preserve Eskom at all cost and went ahead to initiate a new business strategy of unbundling the organization into three divisions of Generation, Transmission and Distribution to improve its efficiency.
The planned unbundling of Eskom was heavily criticised by some politicians, trade unions and the general public as a way of privatising Eskom and throwing away the little that the people have to the so called white monopoly capitalists. However, there has not been any visible movement since this was announced and it seems like the government has backtracked on this plan.
Independent Power Producers have for many years lobbied the government to be given an opportunity to generate power and contribute to the national grid but this plea was always rejected in a move to protect Eskom's monopoly. So does it mean that the government has now accepted that Eskom has failed and cannot be rescued?
Eskom will face a stiff competition from Independent Power Producers and once fully rolled-out, people will no longer be forced to use Eskom power, which will have a huge financial impact on the heavily indebted organization and a threat to its survival.
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