This paper examines the investment practices of Eskom, the South African electricity utility, and argues that its state-owned status has led to a pattern of excessive investment. The paper argues that, in the past, Eskom’s pricing model has encouraged it to invest in large-scale projects even when there were not strong economic justifications for doing so. The paper concludes by urging caution as Eskom pursues ambitious expansion plans. It argues that, without effective regulatory oversight and market discipline, Eskom’s past tendency toward excessive investment could reemerge.
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