Eskom and the South African Electrification Program (a)

13 Pages Posted: 21 Oct 2008

See all articles by Patricia H. Werhane

Patricia H. Werhane

University of Virginia - Darden School of Business

Michael E. Gorman

University of Virginia - School of Engineering & Applied Science

Multiple version iconThere are 2 versions of this paper

Abstract

Eskom, a South African electric utility company, spends roughly 30% of its annual profits to implement a national social-initiative project, a countrywide infrastructure development program to provide electricity to the citizens of South Africa, who were often denied access to basic services under apartheid. In this way, the company hopes to fulfill its goal of becoming a "model corporate citizen." The case examines social, political, and corporate historical information, together with consumer and marketing data, vis-a-vis a viable plan for financing the program and distributing electricity to more than 9 million end users. But after four years, the program costs Eskom more money to operate than it gets from annual sales.

Excerpt

UV-E-0162

Rev. Jun. 27, 2012

ESKOM AND THE SOUTH AFRICAN ELECTRIFICATION PROGRAM (A)

The Beginning of the Electrification Program

The year was 1994, and Tienz sat at his desk contemplating the enormous scope of the job that was in front of him. Eskom and the provision of electricity had always been an integral part of the economic and social evolution of the South African nation. Because of its important role in helping to shape the formation of South Africa, Eskom now saw itself as a necessary participant in the reconstruction process that the new African National Congress (ANC) government was outlining in an effort to rebuild the country in the postapartheid era. The company even participated in the creation of upliftment programs under apartheid. For example, in the late 1980s, the company had implemented an affirmative action policy to recruit black South Africans into management positions; they had also created programs to improve the school systems within black South African communities.

The present situation was somewhat more complicated than Eskom's past initiatives: in 1994, the new government had specifically stated that electrical access to all citizens was essential to the Reconstruction and Development Program (RDP), which laid out initiatives to help the country rebuild itself. Management informed Tienz that the company had decided to aid the new government in its reconstruction process and implement a nation-wide electrification program—a far cry from simply extending the grid a few kilometers from urban centers.

. . .

Keywords: financing, business and society, business ethics, business planning, business/government relations, capital investment, corporate social responsibility

Suggested Citation

Werhane, Patricia H. and Gorman, Michael E., Eskom and the South African Electrification Program (a). Darden Case No. UVA-E-0162, Available at SSRN: https://ssrn.com/abstract=1277706 or http://dx.doi.org/10.2139/ssrn.1277706

Patricia H. Werhane

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4840 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/werhane.htm

Michael E. Gorman

University of Virginia - School of Engineering & Applied Science ( email )

Box 400246
Charlottesville, VA 22904-0246
United States

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