Eskom and the South African Electrification Program (C)

Abstract

Eskom had committed to spending approximately $400 million annually to provide 1.75 million South African households with electricity by 2000. The company had to forfeit an additional $300 million because of consumers' nonpayment for service. Moreover, the company also faced rising operational costs as a result of consumers' illegally tampering with their electrical connections. In fact, these costs had increased to such an extent that annual costs were higher than annual sales in many of the areas Eskom served. This illegal behavior, however, had evolved under an oppressive regime that forced many consumers to steal from the existing infrastructure in order to access basic services. Following the end of apartheid, Eskom hoped to receive an adequate return on its investments in the electrification program. See also the A, B, D, and E cases (UVA-E-0162, UVA-E-0163, UVA-E-0165, and UVA-E-0166).

Keywords: business and society, business ethics, business planning, capital investment, community relations, consumer behavior, corporate social responsibility, corporate strategy, cultural conflict, developing countries, ethical issues, financial planning, financial policy, indirect costs, international business, liability management, long-range planning, management by objectives, management philosophy, managerial ethics, managerial psychology, personal values, planning, project management, public policy, return on investment, risk analysis, risk management, strategic planning, strategy implementation