Brigadier Jap Burger is central to the fraud and corruptions claims made by the power utility’s former chief executive André de Ruyter. (David Harrison)
It has taken stage six load-shedding to push the government to allow private sector generation capacity to be added to the grid
When Group Chief Executive at Eskom André de Ruyter debated with CEO of Minerals Council South Africa Roger Baxter at the Mining Indaba last week, the pair spoke with a tangible comfort. Perhaps it’s because they’ve known each other for years, or because both are set to leave their roles in the coming weeks, so they could speak a little more openly than usual. Despite their somewhat casual interaction, the topic the pair were discussing is a serious one.
As Minister of Mineral Resources and Energy Gwede Mantashe had highlighted the previous day, load-shedding costs the South African economy around R1 billion per day. And, as President Cyril Ramaphosa shared, mineral production contracted by 9% year-on-year in November 2022, in large part due to the energy crisis. “The electricity crisis has had a huge impact on the mining industry, as well as on other industries,” he said, adding that the government is working hard to address these issues. He also stressed that the private sector has an important role to play.
During their chat, Baxter recalled being involved in the compilation of the energy policy paper back in 1998. Several years later, he was part of a team who sat down with the government to discuss their findings. At the time, they explained that Eskom would have to start implementing power cuts by around 2007 if they were not given approval to start building new power stations. This advice was not well received, and in 2007 and 2008 the first period of load-shedding began.
“Ultimately, we need more capacity, and we have needed it since 1998,” noted De Ruyter. This additional capacity, he explained, is necessary to give Eskom the room it needs to carry out important maintenance on its coal fleet. “For this reason, we have really struggled to keep our system performing as best we can. And clearly ‘as best we can’ has not been good enough.” He was quick to point out that things aren’t going to get better anytime soon. When you add up the amount of power generation capacity that is currently down, for various reasons, South Africa is missing as much as 4GW of capacity. “So 2023 is going to be a tough year,” he warned.
Painting a picture of the challenges Eskom faces on a daily basis, he advised that licensing delays, outstanding invoices, long maintenance lead times, security and slow legislative reforms are major stumbling blocks. For example, while Eskom has been doing a lot of maintenance and has ramped up maintenance speed at coal-fired power stations, the lead times to get replacement parts and spares is sometimes up to two years. Paying to complete this maintenance is a challenge, he added. “Some of our customers don’t pay us. In fact, when you add up what certain municipalities owe us, the total is around R57 billion. This is money we need to carry out our maintenance programme.”
But rather than only looking back on what should have been done and focussing too much on how grim the current situation is, De Ruyter gave kudos to those who have helped Eskom weather the crisis as well as possible. “I think credit should go to the mineral sector for being true partners in helping us manage this crisis. I think the level of cooperation that we get from entities like the Minerals Council is very heartening, because it enables us to handle our unreliability in a far better way than would otherwise have been possible.”
In addition to this, he highlighted that there are many positive developments in the pipeline. “Increasingly, we are attracting more private sector generation capacity to the grid,” he commented, adding that projects like these have potential to add as much as 9 000MW of new capacity. This will mean that from 2024 onwards, we should see a reduction in the incidence of load-shedding.
“I think the important thing to emphasise, though, is that we can’t stop here. We have an ageing fleet, and we have an unreliable fleet that has been poorly maintained. So we cannot sit back and become complacent again. We can’t allow ourselves to think that an extra 9 000MW means we’re fine for now. We’ve got to double down,” he said.
Both De Ruyter and Baxter cited the reforms detailed in the government’s electricity recovery plan, which were announced by the president in July 2022, as a real step in the right direction. “In my view, these are some of the biggest structural reforms that will unlock the private sector’s ability to invest in the energy system,” said Baxter, outlining that reforms like this play an important role in lightening the load currently on Eskom.
“Unfortunately, it has taken a major crisis and stage six load shedding to galvanise the government into action,” concluded De Ruyter. “I just wish it didn’t have to come to this, and that we could’ve taken steps to address this issue earlier. While things are improving, our constraints are considerable and structural. If we don’t get to grips with the many issues we face, we will not be able to resolve this crisis and move forward anytime soon.”
— Joanne Carew