Eskom and the South African Electrification Program (D)
3 Pages Posted: 21 Oct 2008
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Eskom and the South African Electrification Program (D)
Eskom and the South African Electrification Program (D)
Abstract
After Eskom implemented a viable plan for providing electricity to more than 1.75 million South African households, many of its customers failed to pay for service, which resulted in a debt of approximately $400 million by 1997. This negative consumer behavior, however, was not necessarily unjustified, as South Africa's black citizens had historically used consumer boycotts as a means of protest against the apartheid state. Consequently, the country's consumer base had evolved in an environment where nonpayment was often seen as a social norm rather than negative behavior. The D case concerns Eskom's commitment to provide employment in rural areas by training residents to work on local electrification projects. The company discovers, however, that its employees, for a small fee, often help customers make illegal connections to power lines, thus avoiding payment for service. In some communities, as much as 80% of the electricity is illegally obtained. How should Eskom deal with this problem? See also the A, B, C, and E cases (UVA-E-0162, UVA-E-0163, UVA-E-0164, and UVA-E-0166).
Keywords: business and society, business ethics, corporate strategy, developing countries, risk analysis
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