The encyclopedia · Finance & Accounting · Financial decision · 2008–2024
Eskom was built to power South Africa — then corruption and debt broke it
South Africa’s power utility ran up R419B in debt, lost billions to Gupta-linked corruption, and plunged the country into years of rolling blackouts.
Eskom · 2019-02-20
What happened
Eskom provided 95% of South Africa’s electricity and was once one of the world’s best-run utilities. In the 2000s it launched two massive coal-fired power stations — Medupi and Kusile — to meet growing demand. The projects were plagued by corruption, cost overruns, and delays, with the Special Investigating Unit finding that 11 contractors stole R139 billion from the projects.
The Gupta family, connected to President Jacob Zuma, captured Eskom’s procurement and coal supply contracts. amaBhungane found the Guptas received R11.7 billion from Eskom for coal between 2014 and 2017. Consulting firms McKinsey and Trillian (Gupta-owned) made R1.6 billion in fees. The Zondo Commission into state capture found the corruption cost South Africa up to R1.5 trillion in lost economic output across all state-owned enterprises.
Eskom’s debt reached R423 billion by 2023. The government provided R254 billion in bailouts to keep it solvent. Rolling blackouts — known as load shedding — began in 2008 and escalated to Stage 6 in 2023, with power cuts lasting up to 12 hours a day. The utility lost roughly R1 billion per month to theft and corruption. CEO André de Ruyter survived a cyanide poisoning attempt. Load shedding shaved 2% off South Africa’s GDP.
Why it happened
- The Gupta family captured Eskom’s procurement, awarding R11.7 billion in coal contracts to themselves. The power stations’ construction was looted, with R139 billion stolen by contractors.
- Eskom’s management was replaced with Gupta-connected executives who enabled the looting. Whistleblowers were silenced, and the board exercised no meaningful oversight.
- The cost overruns at Medupi and Kusile left Eskom with a debt burden that exceeded its revenue, making it technically insolvent and dependent on endless government bailouts.
The lesson
A utility can be too big to fail and too corrupt to run. The bailouts kept the lights on but did not fix the governance — the money was just fuel for the next round of looting.
Sources
- Eskom — Wikipedia
- State capture — Wikipedia
- BBC News — Zuma, the Guptas, and the sale of South Africa
- BBC News — One president, three brothers and a nation betrayed
- BBC News — S Africa gambles on new minister to keep lights on
- BBC News — Wealthy Gupta brothers arrested in UAE
- BBC News — Can disaster measures ease South Africa power crisis?
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