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July 2016

Eskom’s holding us hostage – again

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Demanding an end to private power producers damages the economy – again.

Mike Schüssler | 26 July 2016 00:02

The International Monetary Fund’s (IMF’s) latest annual assessment of our economy is blunt and highly critical of some economic policies, as well as the management and performance of State-owned enterprises (SOEs).

The IMF wants more competition in the South African economy and in the labour market. The IMF and rating agencies have also long pointed to SOEs’ big influence on the economy – by creating growth bottlenecks and their insatiable need for government guarantees when they expand capacity.

David Lipton, first deputy managing director of the IMF, speaking at Wits Business School, said: “Then there is the matter of State-owned enterprises. They play a crucial role in the economy, but they are plagued by inefficiencies, poor management, and weak balance sheets.… Moreover, the private sector is unable to enter key sectors dominated by SOEs. This only fortifies the bottlenecks in the economy.”

A few days later Eskom announced it no longer wished to buy more power from independent power producers (IPPs). Read More