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Rethinking Eskom: Lessons from electricity sector reform in India and Mexico

Key Messages

  • Reforms should reflect the South African context and impacts beyond economic efficiency. Electricity sector reforms in India and Mexico cannot be said to follow the "standard model" of reform. They are nationally specific. 
  • Unbundling and privatization in isolation will not fundamentally improve the economics of the electricity sector.
  • Power auctions and opening up to private generators have driven growth in renewables, but this may not be acceptable in the South African context. 

South Africa is debating the reform of its heavily indebted state-owned electricity utility Eskom. This paper explores two international examples of electricity sector reform in emerging economies with comparable characteristics—India and Mexico. It finds that the "standard model"  of electricity sector reform does not adequately address the challenges facing the sector. In addition, reforms should consider the South African context and impacts beyond economic efficiency and consider the need to keep prices affordable for the poor, vulnerable, and small, medium, and micro enterprises (SMMEs), provide decent jobs, reduce coal dependence, and acknowledge calls to retain forms of public and community ownership.