Change is not new at Eskom, although it faces some novel challenges. Reg Rumney reports
PEERING down into the garden of the cavernous three-storey atrium at the centre of the Megawatt Park HQ, with its hanging baskets of greenery, one is struck by the scale of what has been dubbed Eskom’s hanging gardens of Babylon.
Size is what strikes one about Eskom, in everything from its multi-billion rand budgets to its plans for a Southern African power grid.
Eskom, by sales of electricity, is the fifth largest electricity utility in the world. And size is where the force of the changes that are sweeping the world will probably hit Eskom hardest, rather than in the socio-political area one would expect.
For unlike other institutions that straddle the apartheid era and the New South Africa, Eskom has not had to face a paroxysm of internal change. Its affirmative action drive began in a fairly leisurely way as far back as1988, not as a furious post-February 1990 catch-up exercise, though the political ascendancy of the African National Congress has given momentum to the
Nor has Eskom had to struggle to embrace the aims of the Reconstruction and Development Programme (RDP). In a sense, as Dolly Mokgatle, senior general manager in the growth and development group says, the RDP has meant merely that Eskom has refocused projects that are already up and running.
The drive to move away from a technocratic stance and encompass social goals began as the result of the shake-up chairman Johan Maree brought to Eskom in the late 80s. However, electrification has been given renewed impetus by the RDP.
Eskom started electrifying black households in earnest in 1991, where it achieved a figure of 30 000. In 1992 that leapt to 150 000, and has increased steadily. This year Eskom is expected to electrify 300 000 households. With the local authorities, Eskom is expected to connect 450 000 households a year for the next five years.
Achieving that will mean around 65 percent of South Africa’s households will have been connected to the electricity network by the turn of the century. However, the most recent annual report notes that nearly R1-billion was outstanding in arrears for electricity payments at the end of 1994 – and non-payment, which the Masakhane campaign has not overcome, could derail the whole electrification drive.
Mokgatle points to a 10-point plan in which Eskom describes its vision as being to provide the lowest cost electricity for growth and prosperity, a fairly modest statement that encompasses ambitious aims. Among these are:
l Cutting the adjusted-for-inflation price of electricity by 15 percent, to enable South African industry to compete on world markets, and encourage home-based and small business.
l Bringing electricity to another 1,75-million
l Seeing to it that at least half of Eskom’s managerial, professional and supervisory staff should be black South Africans.
l Spending R50-million a year on community development, electrifying schools and clinics.
l Paying for all these things from Eskom’s own resources and foreign development funding.
Along with this Eskom employs 370 black trainees and bursars each year – its continuing commitment to technical education for graduate and post-graduate levels receives high praise in academic circles.
These initiatives cannot be sustained without increasing efficiency every year. Eskom doesn’t have a bottom-line in the same sense as a private company, but it must be able to attract skilled technical people, maintain its power stations, and keep a lid on costs just for a
Clearly, the dreaded p-word, privatisation, shelved since Eskom was identified as a prime candidate in the PW Botha era, will surface
At a parliament-sponsored bosberaad last week on parastatal restructuring, Eskom chief executive Allen Morgan gave a presentation that seemed to say privatisation of Eskom was being considered in all but name.
Morgan referred to the introduction internationally of competition in supplying electricity and the separation of utilities into core businesses of generation, transmission and
Clearly, some kind of privatisation is on the minds of management.
But is privatisation the right path?
Firstly, Eskom is already streamlined. One rather hard-nosed, if not hard-hearted, measure of efficiency in a world increasingly fond of words like “downsizing” is job cuts.
Eskom shed more than 26 000 jobs between 1985 and 1994. Simultaneously, it doubled productivity, as measured by Gigawatt hours of electricity sold per employee.
How much more can be done to assuage what Professor Jan Reynders dubs a “perceived pressure to reduce staff”?
Reynders, dean of the Faculty of Engineering at the University of the Witwatersrand, says Eskom’s past successes in keeping costs down have been based, in the utility’s view, on the high technical quality of its systems.
The shedding of staff, he says, is denuding Eskom of experienced, technically trained people. This in turn could affect Eskom’s ability to maintain that technical edge.
On the other hand, Reynders says that many of those who have moved outside the utility are now contracted in to do specific jobs, a more logical process. This also makes space within the organisation for affirmative action.
That is proceeding, but Eskom staff freely admit they face the problems familiar to the corporate sector of staff being poached, particularly by government, as it faces up to its own affirmative action pressures. At the top, Eskom’s affirmative action aims have been achieved, says Mokgatle. Five out of 10 executive directors are black. But at senior and middle management level the figure is only 11 percent or so.
The staffing situation, and the pressures to conform to perceived commercial pressures, are also a concern when considering the ambitious plan to move electricity around the sub-
Eskom is also pinning its hopes on a Southern African power grid, which is seen as a huge leap forward for the sub-continent in co-operation and in electricity supply, with a memorandum of understanding recently signed by 10 countries in the region to establish such a grid. Basically, Eskom will eventually be able to buy from the most efficient source of electricity, be it hydro-power in Zimbabwe or a power station in
This, put forward in the dark days of apartheid isolation by former Eskom managing director Ian Macrae as a somewhat visionary basis for future harmony, is becoming reality.
A 416km line from Matimba power station in South Africa to Bulawayo in Zimbabwe is being completed and, besides planning to reinstate the line to the Cahora Bassa project in Mozambique by 1997, Eskom is looking at a line from Angola.
The potential is mind-boggling. The Ingu Falls in Zaire could generate an estimated 50 to 150 000 MW of electricity. The whole continent’s electricity demand is around 40 000MW.
Reynders says that the subcontinental electricity grid will pose an enormous challenge technically and managerially for Eskom. He points out that, in a sense, countries will be competing with each other to provide electricity, decreasing the need for competition inside the country.
Would the shareholders of a privatised company be able to keep their eyes off the balance sheet long enough to see the vision that Eskom managers saw in the 1980s? Would they take up the challenge of the RDP so vigorously? That must be on the minds of senior ministers.
But given that Eskom has assets of around R47- billion, and the need for the government to cut into its pile of inherited debt, the potential for raising money from a sale in whole or in part, must at some point prove too tempting. And then, it could be argued that Eskom, like other parastatals, may not always be the paragon of cost-containment it is now.
It could return to the days when the construction of Megawatt Park with its hanging gardens caused an outcry about such profligacy, and Eskom’s bigness will again look far from