/ 20 January 2023

Thabo Mbeki, Jacob Zuma, Cyril Ramaphosa: The people who killed Eskom over 25 years

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Of all the projects that the administrations of presidents Thabo Mbeki, Jacob Zuma and now Cyril Ramaphosa have undertaken over almost 30 years of democracy, the catastrophic management of the expansion of the country’s electricity generating capacity will prove the most detrimental to the country’s long-term prospects. 

At the centre of those urgent expansion plans first brought before policymakers as far back as 1997 was the power utility, Eskom

The urgency of doubling Eskom’s generating capacity became evident to the company’s directors 25 years ago as the economy and, in particular, the mining and industrial sectors creaked back into life after the crippling international sanctions of the middle 1980s as a result of apartheid. 

The administration of Nelson Mandela also brought electricity as part of the Reconstruction and Development Plan (RDP) to millions of South African households previously excluded. 

Although South Africa has largely under-performed global growth over the past three decades, per capita GDP growth has improved, growing 1.6% a year from 1994 to 2000 and by 2.2% between 2000-09 compared to the global growth of 3.1% over the same period.

It’s an expansion that the Thulani Gcabashe-led Eskom had warned would come just as the bulk of its coal-fired power stations, spread across Mpumalanga, were nearing their end of life.

Former president Thabo Mbeki

The average age of the coal fleet, excluding the most recently built Medupi and Kusile, is about 41 years. Historically, plants have retired at an average lifetime of 46 years globally but can operate for as long as 50 to 60 years if properly maintained.

Expanding Eskom and the country’s generating capacity was a must and something with which the administration of Mbeki and the governing ANC was well acquainted. 

Factional battles with what was at the time strong alliance partners in the labour federation, Cosatu, and the South African Communist Party over privatisation would, in the end, delay the decision to give Eskom the go-ahead to start not only replacing its ageing fleet but building additional capacity. 

Indecision in the Mbeki administration was followed by the confidence-sapping, directionless and corrupt era of the Zuma administrations — hampering the country’s response to an electricity crisis forecast in 1997. The Ramaphosa administration comes slap-bang in the middle of the crisis — and its response has been bewildering.

The Mail & Guardian this week has tried to paint the complete picture of just why South Africa is emerging into a new year with load-shedding that has the country grappling with up to 12-hour power cuts.

The most critical period of the project of rebuilding Eskom’s generating capacity was when Jeff Radebe, the former ANC policy head, was minister of public enterprises from 1999 to 2004.

Former president Jacob Zuma.

Radebe failed to respond to the challenge of securing electricity supply, focusing instead on economic regulation and competition in the 2000 policy framework for public enterprises.

Radebe’s successor, Alec Erwin, an architect of the framework along with Radebe and then finance minister Trevor Manuel, did respond to the electricity crisis, which began in 2005, but failed to come up with a plan to halt the load-shedding, which began on his watch.

Erwin’s initial response to the first episodes of load-shedding in 2005 — the breakdowns at Koeberg power station — was to falsely claim sabotage, setting the tone for the governing party’s response to the crisis since.

In January 2008, Erwin said the government “did foresee load-shedding” but promised that it would be over within about four weeks.

In May of the same year, Erwin shot down a call from within the ANC — and the opposition benches — for an independent inquiry into Eskom after an internal report pointed towards mismanagement in the entity. 

The governing party had planned to call on Mbeki to appoint the inquiry at the national electricity summit in May 2008, initiated by the ANC and its alliance partners, but Erwin killed the move in parliament, telling MPs that the National Electricity Regulator of South Africa (Nersa) was already investigating and dismissed the call as an opposition plot.

“Nersa is charged; it’s got a responsibility to investigate Eskom,” Erwin said in a parliamentary debate at the time. “Eskom has been and will be investigated and Nersa is obligated to make available its reports on Eskom and the load-shedding. To call all the time for an independent inquiry is just an attempt to get on a commission themselves. The structures are there.”

Erwin also made an about-turn on earlier support for proposed Eskom tariff hikes — which he had earlier publicly endorsed — saying that although this was the fastest way to deal with the crisis, there were other ways of doing so. He failed to provide the budget necessary for maintenance and new construction.

Erwin did acknowledge the need to “double our generating capacity over the next 20 years” and to “diversify our primary energy sources away from coal”, along with the need to stimulate a domestic manufacturing sector focused on renewable energy.

Addressing the public enterprise’s portfolio committee, Erwin conceded that planned power stations would “be able to alleviate the crisis in the short term” and that the reserve margin — which had fallen from 22% in 2002 to between 8% and 10% in October 2008 — meant four years of load-shedding to reduce demand.

President Cyril Ramaphosa.

Erwin told parliament he was happy with the progress in the planned building of new power stations and that the supply problem would be resolved within five to eight years.

It wasn’t.

Much has been written on the systematic corruption of Eskom during Malusi Gigaba and Lynne Brown’s terms as public enterprises minister, much of it thanks to the Zondo commission

Brown facilitated the secondment of Brian Molefe to Eskom from Transnet at the “insistence” of the Gupta family, the Zondo state capture report noted, after four senior executives, including chief executive Tshediso Matona, were suspended on orders issued during a meeting at Zuma’s home. Of the four, only Matshela Koko was reinstated. 

By then, the Eskom board was weighted with allies of the family at the centre of state capture. Brown was aware of it but told the Zondo commission: “I spoke to a number of them at the time and I did not think I should fire them because they were linked to the Guptas.”

Molefe briefly persuaded the country that he could contain load-shedding by “playing Tetris” with the grid. It meant focusing on maintenance, and finding the money for it no matter how, but constantly adjusting the work schedule to bring enough generation capacity back on line to compensate for unplanned outages and keep the lights on.

Load-shedding did cease for about a year — mainly as a result of weak demand — but Molefe cautioned that it would return unless the country procured 9.6 gigawatts of additional nuclear generation capacity. In 2016, he refused to sign R58 billion of purchase agreements for renewable power projects, deeming it impractical and overpriced. 

At the same time, Molefe claimed Eskom could manage the cost of a nuclear build and convinced then energy minister Tina Joemat-Pettersson to designate the utility to lead the procurement process. 

The reckless nuclear drive was eventually halted by a legal challenge in the Western Cape high court, but had by then caused havoc in the form of Zuma removing finance minister Nhlanhla Nene for refusing to sign a letter of commitment with Russian authorities.

Meanwhile, Zuma had assigned Ramaphosa to oversee the turnaround of Eskom, the South African Post Office and SAA. Ramaphosa led “the war room”. Neither SAA not the Post Office have survived the government’s ineptitude. 

The war room comprised the departments of energy, cooperative governance and traditional affairs, public enterprises, the treasury, economic development, and water and sanitation as well as Eskom experts. The blueprint of the war room was the cabinet’s five-point plan, which included interventions such as extending existing contracts with the private sector, swapping diesel for gas and “launching a coal independent power producer programme”.

(John McCann/M&G)

In the background, Molefe and then mineral resources minister Mosebenzi Zwane had effectively wrestled Optimum Coal Mine from Glencore to allow Tegeta to acquire it and sign a R3.7 billion contract with Eskom to supply its Majuba plant. When managers baulked at accepting sub-standard coal from Tegeta, Koko stepped in and told them to use it. The deal was finally found unlawful and set aside by the Pretoria high court in 2020. 

The following year the same court ordered Mineral Resources and Energy Minister  Gwede Mantashe to release planning documents relating to 1 500 new megawatts of coal-fired generation included in the 2019 Integrated Resource Plan. It dismissed his argument that he could not do so because the plans were not reviewable. Mantashe has railed at foreign funding for a just energy transition as “colonial interference” and obstructed the procurement of more renewable energy to the grid.

As Anton Eberhard, of the University of Cape Town’s Graduate School of Business, pointed out days ago, not a single megawatt of publicly procured renewable energy has so far been added to the grid on Mantashe’s watch.

In December, Mantashe finally signed contracts for 13 projects approved during bid window 5 — which followed seven years after the previous round — but these will only come online in 2025 and add just 975 megawatts to the grid. Here the necessary context is that the first four bid windows resulted in some 100 projects producing 6 400 megawatts.

Mantashe’s stated objection is that Eskom’s problem is not one of generation but transmission, yet the $8.5 billion Just Energy Transition Plan he deplores makes provision for alleviating the problem. 

What is required to allow the addition of more renewable energy is reconfiguring a grid historically geared to transmit power from the coal fields in Mpumalanga and the North West to connect solar and wind power generated in the Northern, Eastern and Western Cape. 

(John McCann/M&G)

It is a costly, long-neglected exercise that energy experts argue can only be solved through structural reform in which Eskom is relieved of responsibility for transmission, leaving it to be run by a separate company that is not tethered to the utility’s debt woes. 

But Eberhard suggested this week that unbundling has been delayed by Public Enterprises Minister Pravin Gordhan’s ideological aversion to relinquishing state control to an independent structure. 

Only Ramaphosa can overcome these obstacles in his cabinet — and consider the wisdom of leaving Mantashe in charge of energy when, as he has promised, Eskom returns to that portfolio.