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The Zuma years – from R241 to R678 per MWh

The City Press previously reported that “one of the reasons President Jacob Zuma believed criminal charges against him relating to the arms deal should be dropped was because corruption is only a crime in a Western paradigm”. The report stated that “even if it was a crime, Zuma’s lawyers apparently argued, it was a crime where there are no victims”. While the impact of corruption is not as immediate as other crimes, it is incredibly damaging to the country.

Eskom serves as an excellent example of how corruption and incompetence is costing the country billions. The power utility has been at the centre of numerous scandals and has been linked with questionable deals involving the Gupta family. According to the Organisation Undoing Tax Abuse[1] (Outa), the mess at Eskom has resulted in the price of electricity escalating by over 500% in the past 10 years.

“From its respected position at the turn of the century as a leading low-cost energy generator on a global scale, Eskom has sunk to the bottom quartile of energy production utilities,” said Outa. Contributing to this decline are poor decisions, such as Eskom’s CFO ordering that Matla coal – at around R95 a ton – be cut back in favour of Gupta coal – over R600 a ton including delivery. The R3 billion in irregular expenditure[2] highlighted by Eskom’s auditors also did not help the state-owned enterprise.

All of these problems add up, and according to Outa[3], a household which should be paying around R290 for electricity is now paying R1,200 – due to corruption and mismanagement.

The cost to produce electricity

The best illustration of the impact of corruption and mismanagement at Eskom is the cost to produce electricity. When Zuma became president in 2009, it cost Eskom R240.82 per MWh. The price in 2017 is R677.91 per MWh.

Adding to the country’s woes is that Eskom now produces less electricity than it did in 2009. This means the cost to produce electricity increased by 182% in 8 years, despite the fact that the amount of electricity being produced has decreased. The charts below show electricity production and the cost of producing electricity over the last decade.

Cost-of-Electricity

Power-Generation

Now read: Eskom executives must be investigated for corruption – Treasury[4]

References

  1. ^ According to the Organisation Undoing Tax Abuse (www.outa.co.za)
  2. ^ The R3 billion in irregular expenditure (www.businesslive.co.za)
  3. ^ according to Outa (www.timeslive.co.za)
  4. ^ Eskom executives must be investigated for corruption – Treasury (mybroadband.co.za)

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