Nationalization Never Works

This Monday our national power utility, Eskom, implemented stage 4 load shedding, and I should probably explain what load shedding is for those not from around here. Basically it's a nice way of saying they are not able to provide enough electricity needed to support the country's electricity needs, so they came up with a schedule for shutting off the power for the entire country at different times and regions. The higher the stage the more frequent the outage periods, and right now we at stage 4, which means most place have their power switched off 3 times a day for two hours at a time. Well how did thins happen you might be asking, was there some massive accident, did one of the power stations blow up that caused all this? Unfortunately not, this is what happens when a corrupt government nationalizes a private company and attempts to use it like a personal ATM, and then appointing the top management positions to close friend who are unable to even run a toaster, let alone a massive company.

The problem was identified as long back as 1970 when the company realized the fast growing economy and population would require massive infrastructure upgrades, which they started implementing with the plan to eventually privatize the company completely. The problems started just after 1994 when the new government changed to business structure from selling power at cost to the people to a profit driven entity, as well as providing lower costing power to rural areas. The ANC government also started heavily implementing black economic empowerment with their state owned enterprises, firing more than 80% of their white experienced engineers, and replacing them with black entry level engineers, because that's somehow not racism.

"Theft and corruption in the private sector is as bad as that in government and must be dealt with decisively by law enforcement agencies." - Jacob Zuma

The problems started escalating even more as time pass and because the government placed ANC party members in management positions who had zero experience and all they cared about increasing their own salaries and annual bonuses. The blackouts started in 2007 and plans were implemented build more coal mines, that's around the time Zuma came into power, and at the time Eskom was about R40-billion in debt. Thanks to Zuma and his back handed dealing with the Gupta brothers, who received most of the tenders to supply coal to Eskom, and even received close to a billion Rand in prepayments. Zuma and literally the entire ANC party did everything in his power to delay any and all investigations into state corruption, but eventually the evidence was over barring and the president was fired by the ANC ruling party.

Right now Eskom is a state-owned zombie apocalypse waiting to happen, with more than R440-billion in debt and does not generate enough revenue to even afford pay the interest, let alone salaries, maintenance, and fuel. About the fuel, due to not having upgraded the power plant since the before 1990, some plants are not even functioning and they as a quick fix they have stated using diesel instead of coal to keep the lights on, to the tune of about R150 million a month. Then on top of that the multiple loads from foreign banks and government bails outs, as well as constantly attempting to raise rates, has not put a dent in the massive debt.

"The lights are out for two reasons: corruption and mismanagement. For most countries, it would take a terrorist attack of unimaginable proportions to shut down the power grid. Here, the threat came from within, from the leaders elected to serve us and protect us."

"Nationalized industries are notorious for their inability to operate at a profit." - J. Paul Getty

^source

You're either laughing or you're learning.

Join me tomorrow for more lessons on these really easy to understand concepts.

Thanks for popping in, hope you liked the post. Please leave me your thoughts and or opinions in the comments below, have a beautiful day.

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