Public Enterprises Minister Pravin Gordhan had been forced to give up his plan to import technical assistance for Eskom from Rome. This follows questions raised in the energy sector about the appointment on a pro bono basis of Enel, an Italian multinational energy company, to assist the embattled power utility.
In a prepared speech delivered in writing to Parliament on February 12, Gordhan said government was calling on Enel, which he described as one of the world’s leading energy suppliers, to provide it with technical assistance. Enel would send two or three coal power station engineers to South Africa to investigate the scale of the problem.
At that time, Eskom had implemented five consecutive days of load-shedding because of maintenance problems and power unit breakdowns.
In the same address Gordhan blamed poor design and construction flaws at the new coal-fired Medupi and Kusile power stations for contributing to the problem in power supply because the two power stations were generating less electricity than intended.
But the appointment of Enel rankled some in the sector, including the National Union of Metalworkers of South Africa (Numsa).
“Numsa rejects Pravin Gordhan’s assertion that Enel will be resolving the load-shedding crisis when we know that Enel is a beneficiary of [the government’s] IPP [independent power producers] project,” the union said in a press statement last month.
Enel has been in South Africa since 2011 as Enel Green Power South Africa and has several wind and solar operations. Last month the company said its Nxuba Project in the Eastern Cape was expected to generate more than 460 gigawatt hours a year and will be the group’s third wind farm in that province.
Opposition to Enel was not limited to Numsa.
Insiders at Eskom said questions were raised about the manner in which the multinational company was identified and selected to provide assistance to the country.
“Even if they offer services for free, a fair and transparent process must be followed to identify and select such consultants,” said one insider. “Engineers in the country raised concerns about that announcement.”
Because of this opposition, Gordhan, Mineral Resources Minister Gwede Mantashe, the chief executives and senior executives of the Minerals Council and executives of coal-producing mining companies met three days after the Enel announcement and recommended that Eskom draws on expertise from inside the country.
“The organisations indicated that a number of local experts — from within their ranks or from their associated structures — are available immediately to assist government and that they will provide lists of possible candidates,” said public enterprises spokesperson Adrian Lackay. “On this basis, the technical review team for Eskom was established as an urgent intervention into the
operational and generating problems Eskom face, which lead to irregular power supply and load-shedding.”
He said the technical review team would “advise the ministry and/or the Eskom board whether or not
they will require any further assistance or international expertise in order to carry out their duties. Within reason, we will approach any international company who is willing to assist the technical review team.”
Lackay said they had also dealt with the issue of perceived or actual conflicts of interest within the technical review team, given that some of the members are part of the industry that does business with Eskom.
“As far as the ministry of public enterprises is concerned, these professionals should be commended for their willingness to assist government free of charge in order to resolve the electricity crisis,” said Lackay.
The ministry had taken into account concerns raised about possible conflicts of interest in the review team, he said.
“Instead concerns of conflicts of interests [are] being raised, merely by virtue of where they are employed. Members of the technical review team have all submitted a declaration of interest.
“A number of potential candidates had been disqualified in the selection process where direct
conflicts of interest were discovered or where perceptions of conflicts may otherwise reasonably have arisen.”
He said mechanisms had been put in place to ensure that members did not review parts of Eskom where their employers are involved.
The concerns raised appear to have swayed the decision against the appointment of Enel.
But others believed there was no need for any further investigations into the scale of the Eskom problem, saying that a four-year-old report’s recommendations should have been implemented instead.
The redacted version of the Dentons report commissioned by Eskom in 2015 to probe issues of poor performance at plants, high energy costs and financial difficulties has never been implemented by the power utility.
“The report shows what problems caused the load-shedding then. The same problems still exist, [so] what is needed is to implement rather than importing Enel consultants from Italy,” said an insider.
The report identified a number of failures at Eskom, including inflated diesel and coal prices, an increasing cost base parallel to faltering sales volumes and collections.
Eskom did not respond to requests for comment.