South Africa is facing an electricity crisis. South Africans have been experiencing a growing number of electricity "blackouts" -- also known as power outages.
The state-operated power company Eskom provides South Africa with 95 percent of its electricity. Eskom officials expect the company to lose billions of dollars over the next four years.
So the government is planning to sell parts of the business in an effort to limit the losses. But opposition lawmakers and labor unions strongly oppose the plan. The government is now seeking to limit the damage to its political power while working to end the biggest threat to the nation's economy.
Eskom's top official, Tshediso Matona, announced this month that the power outages will probably continue over the next year and a half.
Eskom controls the production, transmission and distribution of electric power in South Africa. In industrial countries, a combination of private businesses and government agencies do this work.
Natasha Michaels is a member of the opposition Democratic Alliance. She studies publicly-operated businesses for her party. She says Eskom should end its control over electricity in South Africa.
"The main reason we find ourselves in the crisis that we are in right now basically is due to Eskom having such a complete and total monopoly around the energy production and energy distribution in our country. And I think now, more than ever, it's become apparent that this is a very unhealthy relationship."
The government plans to give Eskom $1.8 billion and sell parts of the company for $2 billion to help ease its financial crisis.
Over the past 10 years or so, many people have discussed selling the power company to private business. But the Communist Party and powerful unions oppose privatization. These two groups have traditionally supported the ruling African National Congress. An opposition party -- the Economic Freedom Front -- also opposes privatization.
Critics of Eskom are working for passage of a measure that would reduce the company's role in the transmission of power. An independent agency would take over that work, and encourage competition.
Shaun Nel represents a group of businesses that use large amounts of energy. He says the group supports the entry into the electricity system of what are called private independent power producers, or IPPs.
"Privatization of Eskom is not ideologically palatable but the use of IPPs, I think, is something which, which, while has been problematic in the past, they've, they've come to realize that they actually can't afford the South African balance sheet to maintain that level of investment. So, IPPs I don't think are unpalatable but the breakup of Eskom and the privatization of Eskom definitely is."
At one time, South Africa did not have problems with its power supply. In the 1980s, the country produced more power than it used. Around that time, South Africa's mining operations, processing and construction industries started expanding. These businesses need a lot of electricity to operate. They soon became the main driver of South Africa's economic growth.
Twenty years ago, South Africa had a large supply of the world's least-costly electricity.
Chris Yelland is an energy expert. He says today, Eskom is in a "financial hole." He says it cannot be rescued until the government makes difficult political choices.
"Ideologically, the government is kind of hamstrung to its partnership with labor and partnership with the South African Communist Party. I personally believe that Eskom should contemplate selling certain of Eskom assets in order to diversify the electricity sector of South Africa and, and raise the money in that way. But, as I say, ideologically, it appears almost impossible that that would happen. Then the economy is gonna suffer from a failing electricity sector so in a way, money is the final, deciding factor. Money will trump ideology ultimately."
Words in This Story
blackout – n. a period when lights are off because of an electrical power failure
outage – n. a period of time when there is no electricity in a building or area
state-operated – adj. controlled by a government
production – n. the process of making something for sale or use
transmission – n. the act or process of sending electrical signals to homes and businesses
distribution – n. the act of delivering something
monopoly – n. complete control of the entire supply of goods or of a service in a certain area or market
privatize – v. to remove (something) from government control and place it in private control or ownership
palatable – adj. pleasant or acceptable to someone
problematic – adj. difficult to understand, solve, or fix
afford – v. to be able to pay for (something)
balance sheet – n. a statement that shows the financial condition of a company at a particular time by listing the amount of money and property that the company has and the amount of money it owes
breakup – n. the separation of something into smaller parts or pieces
ideology – n. the set of ideas and beliefs of a group or political party
hamstrung – v. to damage or ruin the force or effectiveness of (something or someone)
contemplate – v. to think deeply or carefully about (something)
asset – n. something that is owned by a person or company (usually plural)
diversify – v. to produce or sell more kinds of products; to increase the variety of goods or services produced or offered by (someone or something)
sector – n. an area of an economy; a part of an economy that includes certain kinds of jobs
deciding factor – n. something that causes you to make a particular decision
trump – v. to be more important than (something)