Reader Mail: South African Power Crisis


An update to our post yesterday on South Africa’s Power Outages.

Is it really as bad in South Africa as our correspondent wrote yesterday? We have no idea, but promise to report back first-hand if we end up going later this month.

One reader says we didn’t tell the whole story.

Dear Dan

On the stuff you printed in today’s daily reckoning, where did you get that utter bull—- story on South Africa from?? I have never seen such utter emotional diatribe concerning the South African economy. If you are going to circulate such trash at least try and counter it with a bit of realism. Agreed, there are power and security issues and some highly paid management at Eskom did stuff it up, but — it’s not like this Markets down.

The fact of the matter is – Eskom have not planned for growth for 10 -20 years. South African economy is buoyant and continues to grow at an alarming rate. Demand for power now outstrips supply causing frequent power outages – simple economics. Many of the mining operations (refer Randgold commentary in last weeks Bloomberg editorials) have actually developed their own power plants and operations remain unaffected (which is the case in all Australian mines)

OPPORTUNITY – Invest and build more power plants, contributing to the grid. There is also a Kudu gas power project in Namibia which plans to be a significant contributor to Africa’s power needs, once fully operational.

As for the crap mentioned on weather and water – never has been an issue. As for the roads, this is Africa – buy a Landover!

Kind regards
Geoffrey H.

Fair enough. There is opportunity in any crisis. It takes capital, though. And right now, the global infrastructure business is running full tilt. The waiting list is long. That’s good for firms like Worley Parsons (ASX:WOR), though.

Dan Denning
The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.


  1. “Eskom have not planned for growth for 10 -20 years. South African economy is buoyant and continues to grow at an alarming rate.”

    5% but predicted to fall this year.

    Also, there was a substantial electricity surplus in 1994, and the government have had over 10 years to get started on sorting it out. In 1998, Eskom’s management warned the government of the prospect of shortfalls, but no action was taken. The government felt that the “private sector” could make up the shortfall. However, Eskom’s electricity is highly subsidised, which means that under current conditions no private company can compete, especially with the near-free electricity available to lower-income residents.

    10 years later, and the government still did nothing. c. 5% growth for a decade, no plant construction (hell, the government even mothballed some existing plants the National Party government built in expectation of increasing demand, even in those days of sluggish growth) and it’s no suprise that SA is in a hole.

    Anonymous Guy
    February 16, 2008
  2. Dear Dan

    With reference to Geoffrey H’s response to your Power Crisis article, I note Geoffrey as a classic frog in a pot. “As for the roads…this is Africa – buy a Landover!” Well add to that list; a generator, a shotgun, a couple of hundred meters of barbed wire and while you are at it, a pot large enough to fit your complacent self in. I left SA 10 months ago and now reside in New Zealand. I knew things were bad when I left but only now that I have stepped out, do I grasp the enormity of the extent of the demise of what was a fantastic place to live and raise a family. Those that believe it will get better are far from realistic.


    Wayne Smith

    Wayne Smith
    March 5, 2008
  3. Geoffry H lends greater definition and meaning to the word “deluded”.

    Actually, engineers and others have been warning the so-called ANC government for the past decade of the impending power shortages, but, of course, these clowns refuse to take sincere and intelligent advice, especially from any lily-white males. They would rather bask in their ill-gotten gains, take showers after having sex, afford credibility to the likes of Mad Bob, attend to the usual nepotism, disinformation, fraud and all of those things that they do so very well. I have left South Africa permanently, because this country is definitely well onto its way to becoming yet another African banana republic run by some tinpot moron, with litle chance of any real or rational democracy.

    Aside from power issues, South Africa now also has almost completely disfunctional hospitals, policing, transport, communications, schooling, justice, whatever …. and I would be truly amazed if the 2010 World Cup is not confiscated and given to some other competant host. Let time tell !

    By rights, Angola and the DRC with their mineral wealth should be extremely rich countries, Zimbabwe was and should be the food basket of Africa, and so on … so why do you imagine that the resources that South Africa has must make it any different from yet another African failure?

    Geoffry, I am a South African, and as an expatriate, I can assure that I am right at the front of the next wave of mass emigration from South Africa …. so, would the last businessman to leave South Africa please switch the lights off; uh … actually don’t bother!

  4. I guess you better add the Mob killings of foreigners to the list of great qualities of South Africa.

    Suppose you think that the economy will continue to grow at an alarming rate eh Geoffrey?
    I left 3 years ago for the US and have never looked back. It was a great place to be and now I wouldn’t even consider going for a vacation. Firstly because of the crime and secondly..all my school mates, childhood friends and family have emigrated!
    Better get you landrover quick so you can get to your subsistance farm my friend.


Leave a Reply

Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.
If you would prefer to email the editor, you can do so by sending an email to