Eskom and the South African Electrification Program (D)

3 Pages Posted: 21 Oct 2008

See all articles by Michael E. Gorman

Michael E. Gorman

University of Virginia - School of Engineering & Applied Science

Patricia H. Werhane

University of Virginia - Darden School of Business

Multiple version iconThere are 2 versions of this paper

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

Suggested Citation

Gorman, Michael E. and Werhane, Patricia H., Eskom and the South African Electrification Program (D). UVA-E-0165, Available at SSRN: https://ssrn.com/abstract=908433 or http://dx.doi.org/10.2139/ssrn.908433

Michael E. Gorman (Contact Author)

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

Box 400246
Charlottesville, VA 22904-0246
United States

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

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