Enough: Soweto residents picket outside Eskom’s offices in Megawatt Park. The power utility this week moved
to stage six load-shedding. Photo: Phill Magakoe/AFP
Whenever there is a crisis in South Africa, the first thing lazy members of the middle class commentariat do is to blame workers for having caused it. They also like to turn everything — the July 2021 riots, for example — into a national security issue. As Eskom’s incompetent and clueless board and executive committee — none of these 18 people have a background in power generation — plunged the country into stage six load-shedding this week, the first thing they did was to blame the workers for having caused the crisis.
Although the acts of violence by some workers must be condemned, we must remember that Eskom itself is the biggest threat to national security. With the expanded unemployment rate at 45.5%, the country cannot afford another day, week or month of load-shedding.
The International Monetary Fund and the World Bank have forecast GDP growth of 1.5% a year from 2022 to 2026. There is a relationship between GDP growth and job creation. Each day of load-shedding results in lost output. It reduces GDP growth and the ability of the economy to create jobs.
Under President Cyril Ramaphosa and his new Eskom board, the crisis has gone from bad to worse. From 2018 to 2021, there were 2 685 hours (112 days) of load-shedding. The hours of load-shedding have increased each year — 127 hours (5 days) in 2018 and 530 hours (22 days) in 2019.
Andrè de Ruyter became chief executive in January 2020. Since then, load-shedding increased to 859 hours (36 days) in 2020 and 1 169 hours (49 days) in 2021. Under Ramaphosa’s predecessor, Jacob Zuma, (2009 to 2017) there were 973 hours (40.5 days) of load-shedding, according to the Council for Scientific and Industrial Research.
During the first four months of 2022, accounting firm PwC says there were 25 days of load-shedding. “While this was fewer than the 29 days recorded during the first four months of 2021, the total intensity of the rolling blackouts … was worse. A total of 1 054GWh [gigawatt hours]was shed during these four months. This was 25% higher compared to the same period in 2021.”
There are two main reasons Eskom is in a financial and operational mess. First, the government refused to allow the utility to build new power stations in 1998 because it had decided to bring in independent power producers. But it failed to do so. So, there was a period of more than five years when there was no build. When demand started exceeding supply, as the economy grew faster from 2004, the government turned to Eskom in a rush.
Energy expert Mike Roussow said: “Eskom was under pressure to bring these projects into operation as soon as possible. But such projects need five to seven years of upfront work before putting contracts in place. As a result, there was insufficient design work done before construction started. This created an ongoing problem with contracts that were not sufficiently specified.”
In December 2005, Eskom’s board decided to build the Medupi power station. Construction started in May 2007. Construction at Kusile power station started in April 2008.
Second, Eskom had an inadequately capitalised balance sheet, which could not support its capacity expansion. In the 2009 annual report, former Eskom chair Bobby Godsell said: “It is not possible to fund the first major expansion of our electricity grid for several decades through revenue generated from tariffs alone. The growth of a business is normally funded by a sensible balance between the owner’s equity, accumulated reserves and debt. We need to mobilise greater equity resources to fund the build programme..”
From 2007 to 2021, Eskom spent R661-billion on its capital expenditure programme. This was equivalent to 34.5% of its revenues of R1.9‑trillion during this period. From 2008-09 to 2021-22, the government provided funding of R221.7-billion to Eskom.
Over the same period, employee benefit costs declined to 16.1% of revenues from 23.6%. This was the only item on the income statement that declined. Over the past four years, wages paid to the 28 300 members of the Eskom bargaining unit remained flat at about R17-billion, according to the National Union of Metalworkers of South Africa (Numsa).
By comparison, primary energy costs (coal and renewables) shot up 8.9 times from R13-billion (32.5% of revenues) in 2007 to R115.9-billion (56.7%) in 2021. “Eskom has been pissing money on these contracts, but they have the nerve to blame us for this crisis,” Numsa spokesperson Phakamile Hlubi-Majola says.
Eskom’s net finance costs soared 20 times from R1.5-billion (3.9% of revenues) in 2007 to R31.5-billion (15.4%) in 2021. Workers are not the cause of the Eskom crisis. But the company took the unjustified scapegoating and deflection from its incompetence to new heights this week.
Let us remember that Eskom regularly has 20 000 megawatts — 43% of nominal capacity — down and has unplanned breakdowns of between 15 000MW and 17 000MW when there is no labour unrest.
The first and second Eskom load-shedding statements were before the unrest. They did not blame the workers. Two days after the spontaneous and unprotected strike — “this was not our action,” Hlubi-Majola says — the statements started blaming the workers. “They can’t blame three or four days of worker protests for the stage six load-shedding,” she says.
Everything Eskom says does not add up. For the past decade it has spent about 8% of revenues on maintenance. Last year it spent R16.6‑billion. Its planned maintenance ratio is above the target of 10.5% and has averaged around this level for about a decade.
The only logical conclusion is that nobody at the top knows anything about power generation. They must be fixing the wrong things. The conspiracy theories about sabotage only make sense to people who do not understand numbers. Such a scale of regular breakdowns — about 30% of nominal capacity on average in recent months — can only happen under conditions of a civil war or terrorist groups attacking Eskom’s infrastructure all the time.
South Africa needs a short-term solution to its never-ending energy crisis. De Ruyter must stop his endless deflection and stay in his lane. We do not want to hear anything about the future state of Eskom or the restructuring plans, which will not address the immediate crisis. We must do whatever it takes to get the existing fleet to work.
The views expressed are those of the author and do not necessarily reflect the official policy or position of the Mail & Guardian.
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