Of the 248 municipalities that Eskom supplies, more than half had overdue accounts, totalling R58.5 billion by March last year, with the majority of debt due to Eskom concentrated in 10 municipalities. (Delwyn Verasamy/M&G)
On 31 August Eskom indicated that we should expect more “load-shedding” in the summer months ahead. “Load-shedding” is a euphemism for rolling blackouts to alleviate pressure on the national transmission grid, given that demand outstrips generation supply by between 4 000MW and 6 000MW.
Each stage represents increasing increments of power unavailability. During stage six, around 6 000MW are shed, for up to six hours a day. Since January, 91 days of load-shedding have been implemented.
July marked the height of Eskom’s dysfunctionality, and once again brought the state-owned electricity utility to the centre of national governance debates. For the second time since 2019, South Africans experienced stage six load-shedding.
According to the latest report by the Council for Scientific and Industrial Research (CSIR), South Africa has experienced at least seven distinct periods of load-shedding over the past 15 years, with the trend worsening since 2018. Between 2020 and 2021, the number of load-shedding hours increased by more than 300, or 12.5 days, for an approximate total of 1 169 hours, or 48 days.
The amount of energy shed in 2021 alone constituted a near-40% increase in total energy shed compared to 2020.
This provides a clear picture of the severity of Eskom’s capacity constraints. Against a full 2021 year, July 2022 outages overtook previous years with a total of 1 270 hours, or 53 days, of national outages. This year, South Africa experienced nearly as many outage hours as 2019 and 2020 combined.
Public reaction has been strong. Eskom’s chief executive officer, André de Ruyter, has pleaded for the government to permit the private sector to increase its power generation to feed the power grid.
President Cyril Ramaphosa has answered De Ruyter’s call by announcing that red tape for private sector generation will be reduced and that the fifth and sixth bidding rounds for the Renewable Energy Independent Power Producer (REIPP) Programme will be sped up (and the megawatts required increased).
Additionally, the minister of mineral resources and energy, Gwede Mantashe, has called for a second “Eskom” under the auspices of his department. Before this kind of initiative can be considered, however, the history of South Africa’s energy sector must be understood to avoid making more mistakes.
Before its founding as the Electricity Supply Commission, or Escom, electricity in South Africa during the late 19th and early 20th centuries was generated by private companies and distributed by municipalities. The development of a more centralised electricity industry coincided with the diamond and gold mining booms that attracted a high volume of economic activity to the Kimberley, Witwatersrand and Free State regions during this period.
Coal mining in what is now Mpumalanga was subsequently established as a key resource that could supply energy and stimulate economic activity in the adjacent colonial settlements that had developed.
Coupled with the increasing global demand for South African diamonds, gold and coal was the generation of electricity-powered urbanisation and early industrial development.
The then Transvaal colony under British rule sought to capitalise on this in passing the Electricity Act of 1910 that defined electricity as a public service, with the generation utility to be owned and operated by the government.
General Jan Smuts’ administration then passed the Electricity Act of 1922 that outlined the basis for developing a state-run electricity supply industry in South Africa that would provide “wherever required, a cheap and abundant supply of electricity”.
Under the Electricity Act of 1922, networks that would otherwise have been naturally integrated were racially segregated and local authorities were granted sole control over electricity distribution within their jurisdictions. Local authorities often purposefully failed to supply the black population with electricity. In doing so, they underestimated the total population and therefore future demand.
Between 1950 and 1960, the total installed capacity grew from 1 500MW to 4 000MW. By 1970, it was at around 13 000MW, growing to 23 000MW in 1980. By 1990, the total installed capacity was 40 000MW and Eskom was supplying some of the world’s lowest-cost electricity, dominated almost entirely by coal.
Ultimately, the colonial and apartheid government’s respective intentions to produce and supply cheap electricity to stimulate economic growth were successful.
However, “success” was partly the result of deals that benefited oligopoly businesses and elites at the expense of failing to meet the service delivery requirements of the majority of the population. This meant that formerly black areas of administration (which constituted almost 75% of the population) were neglected and left without electricity through much of the 19th century.
It was not until democratisation in the late 20th century that the national electrification policy prioritised equal access to electricity.
In 1994, under the ANC, South Africa’s energy sector experienced a surge in demand as the newly elected democratic government undertook to electrify previously neglected residential areas and provide low-cost electricity for economic growth.
According to the World Bank, in 1996 access to electricity in rural areas was around 23.8% compared to 85.3% in urban areas. By 1997, access to electricity in rural areas had risen to 40.4%, while it reached 85.4% in urban areas.
The rapid pace of electrification resulted in infrastructure and capacity constraints. Specifically, the widespread electrification without simultaneous budgeting, planning and other resource allocations for maintenance and long-term sustainability affected future capacity.
In December 1998, the White Paper on Energy Policy was released, noting that “for an assumed demand growth of 4.2%, Eskom’s present generation capacity surplus would be fully utilised by about 2007”.
Following this, Eskom requested an expansionary budget to build new power stations to minimise the likelihood of power interruptions.
However, under former president Thabo Mbeki, the ANC government followed a policy of fiscal discipline to attract private investment with its Growth, Employment and Redistribution policy and some members expressed a desire to privatise Eskom itself and, therefore, denied the request for expansion.
Thus began the ideological battle within the ANC between those who wanted to privatise Eskom and those who thought it should remain a state-owned entity. Ultimately, and with the influence of South African Communist Party members, it was decided that Eskom should remain a public utility.
By 2007, access to electricity had expanded to 82% of the population, according to the World Bank.
However, this was accompanied by the relatively absent development of generation capacity and transmission infrastructure. This led to a national grid overload and South Africa’s first national outage.
Following this outage, Eskom warned that the system would be constrained over the next five or six years. In 2008, in response to the now intensifying energy crisis, the government decided against utilising the private sector’s balance sheet once more and instructed Eskom to commission two new coal-fired power plants, the Medupi and Kusile plants.
However, due to construction delays, cost escalations and design defects, the newly constructed power plants were inefficient solutions to Eskom’s generation woes.
They are still not operating at full capacity, with the first phase of Kusile having only just come onstream. Bloomberg has estimated that the final price tags on the two projects stands at around R464-billion.
In response to the national 2007 grid outage, the government introduced load-shedding as a means of coping with the high-demand–low-supply dilemma, that is, cutting power supply to certain areas of the grid. They posited a “load-shedding schedule” that outlined (at first) four, six, and then eight stages of load-shedding, each with a correlating amount of electricity supply it would remove from the grid.
In April 2008, South Africans first experienced scheduled outages which totalled approximately 100 hours or four days, shedding approximately 176 GWh of energy. According to the National Energy Regulator of South Africa, the 2008 outages cost the South African economy R50-billion.
Ramaphosa recently announced an energy crisis action plan to increase energy security and end load-shedding. Among these initiatives is the removal of licencing thresholds for private energy providers that feed into the electricity grid, buying electricity from existing independent power producers as well as importing power from Botswana and Zambia. Additionally, installing solar panels in businesses and residential homes has been encouraged.
In an article in next week’s Mail & Guardian, we will closely examine these key reforms and the implications associated with them, particularly Eskom’s debt burden, and alternative energy sources given South Africa’s declining energy-availability factor and the role of the National Energy Crisis Committee established by Ramaphosa.
If Eskom is to have any hope of recovery, or meeting its mandate of electricity for all, the South African government would seriously benefit from analysing its past oversights critically, lest it falls prey to them again.
Busisipho Siyobi is the lead researcher in the natural resource governance programme at Good Governance Africa.
Mischka Moosa is a data journalist at Good Governance Africa.
The views expressed are those of the author and do not necessarily reflect the official policy or position of the Mail & Guardian.