Eskom bailout will not solve South Africa power crisis

Significance

The deal will see the state assume or help pay ZAR254bn (USD13.7bn) of Eskom’s debt and comes amid a debilitating increase in breakdowns of generating capacity that mean the ailing utility cannot supply enough power to meet demand.

Impacts

• Eskom’s dire performance will remain a major drag on the economy.
• Eskom’s debt package will be funded largely through new government borrowing, which will slow sovereign debt consolidation efforts.
• Curbing corruption and sabotage at power plants could make a meaningful difference to power supply, but this looks unlikely to happen.