JOHANNESBURG – Shifting goal posts and signs of instability are not helping to rebuild trust between citizens and Eskom. Eskom has extended its request to citizens for load shedding to continue from previously projected 18 months to about 29 months (to March 2022).
The biggest concern from Eskom is the unpredictability of their aged power stations, but also constant breakdowns in the newly built power stations. This points to gaps in the capacity to contain breakdowns and manage maintenance in a stable and predictable way.
This requests from Eskom happens on top of many challenges that are not being addressed decisively and urgently. Concerns by Treasury regarding the alleged irregular processes of appointments and corrupt contracts require urgent attention. This goes along the cracks that are appearing in the board with the resignation of a board member over the disagreements on a key petroleum contract, and on the matter of chief operating officer’s corruption allegations.
There has been great uncertainty regarding the process of unbundling as well. With the DA’s sponsored Independent Electricity Management Operator Bill failing to pass in parliament (politically foreseeable), we are yet to see any possible legislation that will enable Eskom to seamlessly unbundle.
I’m not sure if I’m the only one who can see that there has never been harmony between Departments of Public Enterprises, Minerals and Energy, and National Treasury on Eskom unbundling. It would seem there are deep divisions, whether ideological or territorial that seems to deeply affect energy transition. Minister Gwede Mantashe has had his own views on the model for a new Eskom, punting more of a Dutch model where the state sells its entire generation capacity and focus on transmission, where generation is publicly and privately owned. This is also in line with Treasury’s proposed strategy.
It would seem the Department of Energy has also delayed new determinations desperately needed to support Eskom. In December 2019, the Department of Energy released a Request for Information (RFI) for power projects that can deliver power to the grid in the shortest possible time on a ‘least-cost’ and ‘least-regret’ approach. Of course, this could be attributable to Covid-19 pandemic and lockdown.
In as far as the roadmap for energy transition is concerned there has not been a clearly united front amongst key departments entities to settle the model and legislative processes that will enable seamless transition. Critical in this alignment is saving Eskom and making it a stable and reliable entity. The Integrated Resource Plan (IRP) published for implementation in October 2019 by Minister Gwede Mantashe does not give certainty about the future role of Eskom, it “requires a strategy to be developed for Eskom to participate in the new generation capacity”, which is not clearly addressed in terms expected outcomes of the roadmap.
How we address the big elephant in the room, the R488 billion Eskom debt, is also not resolved, and no clear path has been laid down.
The assurances given by Deputy President David Mabuza, who is the head of the political task team on Eskom, do not align with the challenges that are facing Eskom at this point and time as outlined above. Mabuza was answering oral questions in the National Council of Provinces on Thursday on September 3, 2020. He hinted that load shedding will be the thing of the past as Medupi become fully operational by the end of the year.
Eskom is the single most important institution in South Africa, and some may argue that even in sub-Saharan Africa because of its size and significance not only in South Africa but other neighboring countries as well. It is a microcosm of the South African economy, such that if you fix it you are half way in developing a thriving industrializing economy. It virtually affects everyone. Hence in economic terms it is referred to as a “too big to fail”.
With the challenges going on at Eskom and failure to arrest the situation, it would seem we have not accustomed to the fact that Eskom is a “too big to fail”, of course this does not amount to urgency to unbundle as it seems some people perceive. Too big to fail simply means you need to deploy strong, and best leadership, with accompanying resources and policy/legislation to arrest the situation as a matter of urgency.
With every task team, high-level delegations and deployees to Eskom, we always seem to be more debating about the diagnosis and prescription. Even the Eskom leadership seems to be ‘wondering and shocked’ about unpredictability and breakdown of power stations. In any advanced economy that is not tolerated. I have often argued that Eskom is a science and therefore if managed optimally we should not have variances that are simply attributed to old power plants.
We have been informed of the German engineers who have arrived in the country to assist, but this too has not been clearly communicated and it seems it is not related to general maintenance of power stations and dealing with load shedding.
The allegations of ongoing irregular appointments of white engineers and those that are claimed to have worked with the current chief executive are not helping the situation. This paints a picture of an environment that is still infested with incompetence and corruption. To the extent that if the leadership is competent and stable you would have clear understanding of the skills gaps and appropriate skills will be sourced irrespective of the color of the skilled person. There should be no suspicion of selective appointments as though white people are the only people endowed with required skills.
Clearly, we need a stronger and more united leadership from all levels. As observers and citizens, we must repeat this until it is done. The mission must be clear: save Eskom, customers, taxpayers, and protect our economy”.
Dr Bheki Mfeka, is the Economic Advisor and Strategist at SE Advisory; and former Economic Advisor to the Presidency. | Twitter: @bhekimfeka | Website: www.seadvisory.co.za | Email: email@example.com