Brazen: Procurement corruption and sabotage at Tutuka power station has resulted in it being Eskom’s worst-performing power plant. Photo: Deon Raath/Gallo Images
With equipment being sabotaged, failing plant equipment and poor generating capacity, Eskom’s recently appointed board is calling on Minister Pravin Gordhan’s department of public enterprises to accept that load-shedding will continue for the next 18 months.
Over the past nine months, South Africa has experienced daily curbs on electricity supply that has exacerbated the slow economic growth in the country.
The board — led by chairperson Mpho Makwana, who was appointed last month — was mandated to achieve a 75% energy availability factor (EAF) for the power utility to end load-shedding, which a source close to the board says is a near impossible target at this juncture. The availability currently is 59%.
The source said the new Eskom board is renegotiating this figure to at least 69% in the coming two years as it awaits the renewable energy programmes to kick in in 2024. This means the country will be stuck with load-shedding until then.
The board’s stance may bring it into conflict with Gordhan, who has said reaching the 75% mark would improve the country’s energy position and reduce the negative effect of load-shedding on the economy. Politically, the continuation of load-shedding till 2024 may affect the ANC’s performance in the general elections that will take place in the same year. Political analysts say the ruling party will face its biggest test yet in 2024, with some saying it may lose its majority.
Makwana said Eskom’s priority was to ensure there was electricity.
“We are planning how to return the EAF to healthy levels. Under normal conditions, the EAF is 86%, However, now our EAF is much lower. The president has challenged the Eskom board to get back to 75%. That is a tall order given the state of the systems in the country.”
He added that the board had been conducting assessments on the power stations to establish the root causes of what needs to be done to improve the capacity.
“We want to be given the space to conduct a proper assessment. We are visiting various power stations, establishing the root causes and what needs to be done to improve generation capacity. Only by dealing with the root causes will we really be able to solve these problems permanently, and this takes time,” he said.
The source said that not only is the parastatal having to deal with an increasing number of breakdowns, it also does not have enough people with the skills to fix the equipment, adding to the utility’s battle to restore stability to its generation fleet.
Eskom has to deal with other difficulties relating to maintenance and repairs. “Procurement regulations and cash flow problems have made reliability maintenance plans difficult to implement,” said the source. “We are currently waiting for the treasury to help us with a definite amount to manoeuvre around the debt element so we can plan towards revamping the utility.”
On Wednesday, Finance Minister Enoch Godongwana announced that the government will take a significant portion of the utility’s R400‑billion debt to help ensure its long-term financial viability.
“While the selection of the relevant debt instruments and the method of effecting the relief is still to be determined, the quantum is expected to be between one-third and two-thirds of Eskom’s current debt. The debt takeover, once finalised, together with other reforms will ensure that Eskom is financially sustainable,” Godongwana said in his medium-term budget policy statement.
The source said the shortage of sufficiently trained technicians has hindered the utility’s progress.
This was exacerbated by theft and sabotage of the utility’s systems.
Last week News24 reported that Mark Swilling, of Stellenbosch University’s Centre for Sustainable Transitions, said that the task set for the new board of Eskom to achieve an energy availability factor of 75% is impossible.
He was speaking at the Kgalema Motlanthe Foundation forum on inclusive growth held in the Drakensberg on Saturday.
“I have an uneasy feeling that some recent decisions in the appointment of the new board are inappropriate, and I’m referring specifically to the mandate to this board to achieve a 75% energy availability. In fact, our energy availability factor has been declining for about 17 years,” he said.
He added that the board faced a difficult challenge of fixing the plant equipment. “Now, to achieve that, you have to fix those 90 machines across the 15 power stations. The problem with these machines is that they are like aeroplanes. If you want to fix an aeroplane, you can’t do it while flying. You can only fix an aeroplane by landing it, putting it into a hangar and opening it up. That takes a long time.”
He said that to fix the plants, Eskom would have to take them off the grid in a systematic way, “shut them down, repair them, rehabilitate them, and bring them back onto the grid. But you can’t do that because you would plunge SA into permanent load-shedding.”
Analysts at professional services firm PwC said that despite progress on some structural economic reforms in recent years, South Africa’s electricity supply situation has shown no improvement.
“The low EAF and unreliable supply of power is the primary constraint on faster economic growth and will limit medium- to long-term potential growth to around 1.5% per annum. Prolonged load-shedding will lead to a downside scenario where South Africa’s GDP growth falls to just 1.2% next year,” it said.
The source close to the Eskom board added that renegotiating the 75% energy availability factor to 69% would ensure the power utility phases the rebuilding of the power stations’ capacity in a manner that does not lead to stage six load-shedding.
“The implication is that we will still have load-shedding. However, we also understand that load-shedding has a negative impact on the economy and the livelihoods of South Africans, but we also see that reaching 75% alone without any help will be difficult,” said the source.
He added that a 69% energy availability factor would help in finding solutions to sabotage and develop better maintenance plans for the power plants, because the utility is in no position to build new power plants
Swilling said that although it was usually the task of the chief executive to inform the board of directors on operations and the options available, in this instance, the board was mandated to achieve a 75% energy availability across the fleet without input from the chief executive.
Grant Pattison, the former chief executive of Edcon and Massmart, highlighted that the load-shedding is not a result of poor strategic direction and purpose, but that Eskom had limited powers to retire its debt or assume control of Eskom without political pressures.
He questioned whether the board had the power to hire, fire, give incentives to senior management and restructure and retrench.
“Can they build new power plants, and are they in control of liabilities added to their balance sheet? What role do they have in influencing the energy policy of coal, nuclear, and renewables?”
He said the government and ministers were in control of most things, while labour laws, unions, and government policy prevented significant progress at Eskom.
“To fix Eskom, you must tackle politics around the state utility, poorly skilled staff, a lack of training, affirmative action, poor budgeting, and corruption. The board is toothless in addressing these issues,” he said.
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