/ 22 March 2019

Get out of the way, Eskom

Rand guzzlers: The Medupi coal power plant
Rand guzzlers: The Medupi coal power plant (above) and Kusile could cost the taxpayers R450-billion. Although Eskom placed all its bets on them, they are still incomplete. Photo: Per-Anders Pettersson


About a blink of an eye ago, it seemed that Eskom might be able to see its way out of the financial woods. The government, in the person of Finance Minister Tito Mboweni, agreed in the February budget to a R23-billion a year lifeline, which could last for at least 10 years.

READ MORE: Eskom’s plight the fault line in Tito Mboweni’s 2019 budget

It was mooted to plug a R150-billion hole in Eskom’s finances, but then the National Energy Regulator of South Africa rejected its 17%-15% tariff application for the next three years, allowing for 9.4%-8.1%-5.2% instead.

The pundits estimate this means a R100-billion or so shortfall over and above what Mboweni has already stumped up on our behalf.

So the world’s 11th-largest power utility is not by any means out of the financial dwang.

But, its parlous finances aside and as we have seen this week, it is operationally a disaster. According to most analyses, it may be grossly overstaffed by overpaid people, but patently these people do not know how to run a power utility.

They may know how to spend money but they do not know how to build power stations, how much coal to order, how to keep the coal dry, how to do basic maintenance, how to keep adequate water supplies, how to manage contracts and, even, how much diesel to order.

Some are bemoaning the loss of expertise because capable people have run from the apparent looting of recent years, but we have been lavishing money on its top crew for some time now.

Former finance minister Trevor Manuel told the Zondo commission of inquiry into state capture on February 28 that, in the past decade, Eskom has had 12 chief executives, six chairpersons, 60 directors and 30 executives, which cost a whopping R514-million.

It is not entirely incorrect to imagine that corruption has brought this energy giant to its knees. Anti-corruption tsar Pravin Gordhan has suggested that the looting of state enterprises has cost R100-billion; we know that Eskom has been at the epicentre of state capture.

But the genesis of the current crisis goes back further, to the decision to allow Eskom to continue to monopolise the electricity sector. As the only game in town, it put our energy future into just two enormous, pricey power stations. There was no plan B; a budget-busting R300-billion later, Medupi and Kusile are delayed by years, are even more years away from completion, and when complete will perform at best suboptimally. The final cost, according to one expert, will be nearer R450-billion.

Eskom has responded to the catastrophe it has brought to our homes and places of work by coming up with a nine-point “plan”. This includes fixing new plants, fixing full load losses and trips, fixing units on long-term outages, fixing partial boiler tube leaks, fixing outage duration and slips, fixing human capital, fixing coal stockpiles and preparing both for increased open-cycle gas turbine (diesel) use and for rain.

This is no more than a list of what it should be doing if it was doing the job it is paid handsomely to do.

A 10th point, noticeably absent, would mean agreeing it is not up to the job and that it will get out of the way, encouraging government to scrap impediments that prevent others who are ready and able to step in.

Kevin Davie is the business editor of the Mail & Guardian