Let me try this again. There are two major reasons why Eskom has failed. First, as energy expert Mike Roussouw said recently in an interview with television station eNCA, the government refused to allow Eskom to build new power stations in 1998 because it had decided to bring in independent power producers. But it failed to do so.
In December 2005, Eskom’s board decided to build the Medupi power station. Construction started in May 2007, only 17 months after the decision. Construction at Kusile power station started in April 2008. If there had been a six-year planning period after the board’s decision, construction of both power stations should have started during 2011/2012.
“The growth of a business is normally funded by a sensible balance between the owner’s equity, accumulated reserves and debt. We need to mobilise greater equity resources to fund the build programme. We need to find other sources of expansion funding, perhaps in the form of a development bond that will enable South Africans to invest in the expansion of our country’s energy system.”
It certainly does not account for the major portion of the huge increase in Eskom’s debt. Also, cost and time overruns are normal in such mega projects. Examples are Sasol’s Lake Charles project, Anglo American’s Minas Rio mine in Brazil and Goldfields’ South Deep mine. Even Tottenham Hotspurs supporters had to wait for ages for chair Daniel Levy to deliver their new stadium, a small project that was way over budget.
Source: News Formal (newsformal.com)
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