Eskom, the national electricity utility, is one of the key institutions involved in delivering the goals of the Reconstruction and Development Programme. From 1991 to 1994, Eskom electrified about 685 000 households, and it plans to make a total of 1,75 million new connections between 1994 and 1999. Notwithstanding real electricity price decreases of 24 per cent from 1987 to 1994 and the operating losses it has encountered to date on the electrification programme, Eskom has consolidated and strengthened its income statement and balance sheet significantly in recent years. The present analysis suggests that its capital expenditure on power stations is fundamental to the utility's financial health. In real terms investment in 1994 was considerably lower than at the peak of 1985, and since supply capacity exceeds current demand electrification can readily proceed. Eskom enjoys a sound financial position and, with rationalisation and restructuring of the electricity supply industry, the utility might play an even more significant role in the electrification programme. The trend, however, appears to be in the opposite direction.
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Energy and Development Research Centre, University of Cape Town.