Question

Why is eskom , with its monopoly status, not viable and must constantly be bailed out

Answer 1

Answer:

Explanation:

Established in 1923 Eskom is a South African electricity distributor company which is said to be controlled by rich politicians through corruption and malpractices. It need to be bailed out because it has monopoly and it serves as the only distributor in that country and have super normal profits due to high electricity charges. Since electricity is a basic need people will take this high charge anyways. Also since there are no competitions in the market it is lax with its rules and favors some people.

Answer 2

Eskom is a monopoly Being the only energy provider to private, mining and commercial buildings in South Africa, Eskom has a monopoly. A monopoly market system is a market in which only one producer owns substantial resources that restrict the possibility of new firms entering. However, the price-maker is a monopoly corporation implying that prices are not competitive, which makes the firm more likely to benefit super-normally.

Explanation:

• In January 2008, Eskom controversially launched "load shedding" in moments and scheduled rolling outs based on a revolving schedule when insufficient supplies endangered the stability of the grid, . In order to reduce the occurrence of load shedding, demand management has concentrated on motivating customers to retain capacity to peak hours. However, blackouts and inability to match demand with supply has aggravated Eskom's problems.
• After 2007, following its national energy shortage,  Eskom began an ambitious expansion of electricity supply. In January 2018, Eskom's Acting CFO said, after 34% decline in interim income due to decreased revenues and rising financing costs,  the company cannot afford a new structure.
• The fundamental reason why Eskom is doomed to fail is its "structure as a state-owned", monopoly electricity provider. That is, the main problem of "everything" that went wrong with Eskom is its role as an energy monopoly supplier. Eskom clearly cannot "receive & interpret" the requisite critical market signals to determine the price of its electricity. When demand increases since Eskom is a political entity, prices cannot be adjusted to reflect this rising demand, thereby violating the basic law of economics.
• Unfortunately Eskom would have to supply electricity inefficiently if it were allowed to change prices depending on demand because of the lack of competition inhérent in its legislative monopoly, however, at least then, it could ensure itself 's survival, even if it Is detriment to  and at the cost of customers and the economy in general.
• The other root causes are "gross mismanagement & rampant corruption". Two huge new power stations—Kusile & Medupi —are years behind schedule (long delays) & billions of dollars "over budget". Eskom is struggling to finish those plants. Moreover, Eskom is struggling to service its debt, which increased because of surge in fuel cost, salary, and debt-servicing costs, together with mismanagement and corruption scandals.

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What happen if eskom's monopoly is broken - Brainly.in

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