Answer to Question #88373 in Microeconomics for Annita

Question

How will eskom interventions of covering up for all the debts and coal shortages impact the consumers

Answer 1

Eskom supplies power in most parts of South Africa. The company has a huge municipal debt. The company needs money to buy coal and diesel for their operations. Eskom is not operationally and financially sustainable and they must do maintenance to keep the power system running The Company has enough capacity to meet the demand for most hours during the day. During peak hours, the power system becomes constrained during peak hours (Simon & Bernstein, 2008). Therefore the cover-up for all their debts and coal shortages will lead to a shortage of power supply. Demand for power will be high while the power supply will be low. This might inconvenience consumers to seek other power alternatives which might cost them extra money. Eskom Company might increase their prices in order to recover their debts. This would cost the consumers.