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Eskom’s rolling blackouts — 26 years of ANC meddling, manipulation and vested interests

Eskom’s rolling blackouts  — 26 years of ANC meddling, manipulation and vested interests
(Photo: Waldo Swiegers / Bloomberg via Getty Images)

When President Cyril Ramaphosa tells the ANC faithful at the Free State elective conference he’s asked Eskom to suspend the statutorily approved 18.65% electricity price hike, he continues the political interference that’s marked the governing party’s relationship with Eskom in particular, and with state-owned enterprises in general.

It’s a toxic swirl of blurring the lines between party and state, vested interests and electoral populism, now with a firm eye on the 2024 elections when rotational power cuts are set to be a central electioneering tool. That churn has continued regardless of expert advice, presidential committees’ and others’ recommendations and more. 

It all goes back more than two decades — to late 1996 when the governing ANC first looked at Eskom with a view to bringing the power utility — which had served apartheid white South Africa and the mining and manufacturing industries — firmly under state control.

“Eskom is not vested within the government. Therefore, legislation is necessary to place the entity under government control and this should happen early next year,” the then public enterprises minister, Stella Sigcau, was quoted as saying in the Mail & Guardian in late 1996. 

The 1998 Eskom Amendment Act was followed by the 2001 Eskom Conversion Act, which made the power utility the public entity it is today, Eskom Holdings Limited, with the public enterprises minister in a shareholder compact with this state-owned enterprise (SOE).

That properly ended the power utility’s status as a self-financing entity funded from debt and accumulated reserves and, according to its 1992 Annual Report, with 44,142 employees. By 1995 the Eskom reserves stood at R18.8-billion, with assets of R43-billion and debt at R27.2-billion, according to the power utility’s Statistical Report then. 

All this came on the back of a politically sussed Eskom that had read the changing political winds; from late 1994 it had integrated the former TBVC (Transkei, Bophuthatswana, Venda, Ciskei) Bantustans’ power grids, and announced a mass electrification programme targeting 700,000 black households by 1997. Meanwhile, the Reconstruction and Development Programme (RDP) in 1996 set a target of electrifying 2.5 million households by 1999.

By the time the Eskom Conversion Act became effective, new investment should have been made in the electricity and energy supply side, according to the wide-ranging — and widely well-received — December 1998 Energy White Paper, the government’s official policy statement approved by Cabinet.

The unbundling plan

Talking about affordable energy, improved governance and tighter regulation and diverse supply, including independent power producers, this document proposed that Eskom be unbundled into transmission, generation and distribution entities — “initial exploratory steps will include the unbundling of Eskom’s generation and transmission groups”.

Such a plan re-emerged in the October 2019 Eskom Roadmap released by now Public Enterprises Minister Pravin Gordhan. This plan is now running many months behind schedule; while the transmission division is established as a separate entity, its board has still to be appointed.  

Movement on the other roadmap’s milestones remains sticky, as Eskom’s debt stubbornly hovers around R400-billion. In July 2018, the then ANC treasurer, Paul Mashatile, said there were discussions about an Eskom debt-for-equity swap of some R120-billion, possibly with the Public Investment Corporation (PIC), the government’s manager of R2.5-trillion in employee pensions and social savings. 

“It’s top of the agenda at Luthuli House. We have to get the economy right and be able to create the necessary employment, particularly for young people,” Mashatile told the Cape Town Press Club then, followed by various officials signalling for a debt-equity swap. 

It didn’t happen. Instead, Budget 2019 provided Eskom with an amortised R250-billion bailout in annual instalments over a decade. Another bailout — or in the preferred government jargon, cash injection — for Eskom’s stubborn R400-billion debt, is expected in Budget 2023.  

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Back to the 1998 White Paper that the governing ANC left in limbo after protests from, among others, its alliance partner, the labour federation Cosatu. Ditto, the ANC stalling on SOEs’ role in the developmental state — from the August 2000 Cabinet-approved policy framework on “accelerated agenda towards the restructuring of SOEs” to the 2012 presidential SOE review committee. Recommendations of rationalisation, better governance and adequate funding were repeated across all.

Instead, what unfolded in the early 2000s was the ANC’s establishment of its investment arm, Chancellor House, with interests in energy, mining and IT. Named after the Joburg downtown law offices of Nelson Mandela and Walter Sisulu, its establishment was wrapped up in 2003 under the term of then ANC treasurer Mendi Msimang.

It took until November 2006 for Chancellor House to hit the headlines. Then the Mail & Guardian exposed its targeting of sectors where the government was readying to allow large-scale procurement.

On the energy front, Chancellor House secured a 25% shareholding in the local subsidiary of Hitachi Power Africa. That came at a time when moves were under way in the government to finally catch up on the much-ignored and delayed action to bring on additional energy and electricity supply.

With the 1998 White Paper 2000 deadline for extra, diverse and affordable energy supplies ignored, by 2004 Eskom, and others, including then public enterprises minister Alec Erwin, told Parliament in public, and no doubt Cabinet in private, that new sources of energy were urgently needed because capacity was running out.

Kusile and Medupi

In 2006, Kusile and Medupi, the largest new-build power stations in South Africa, designed to bring on board a total of 9,600MW, were loading. By 2007, when construction began, it emerged that Hitachi Power Africa got the largest contract on this new build — as did its 25% shareholder, Chancellor House.

A total of $5-million was paid in dividends to Chancellor House, effectively the ANC, according to the US Securities and Exchange Commission charges against the Japanese Hitachi parent company for the “inaccurately recorded improper payments to South Africa’s ruling political party in connection with contracts to build two multibillion-dollar power plants”.

In September 2015, Hitachi paid $19-million “to settle” charges the US Securities and Exchange Commission brought under the Foreign Corrupt Practices Act for the arrangement that “gave the front company and the ANC the ability to share in the profits from any power station contracts that Hitachi secured”, according to the commission’s statement at the time.

Today, Medupi and Kusile are almost a decade behind the 2014 completion schedule, and each is tens of billions of rands over budget, with design faults continuing to bedevil timelines and budgets.

In 2007, widespread rolling blackouts hit South Africa — and have continued to do so ever since. Today’s rotational power cuts that hit every day so far this year — and over 200 days in 2022 — have left South Africans going for up to 12 hours a day without power. Small businesses are buckling, and hospitals, courts and home affairs offices struggle with enforced downtime, while the citizenry’s health is jeopardised as water and sewage treatment fail.

Jacob Zuma’s presidency

The Thabo Mbeki presidency pretty much ignored calls for energy and electricity investment until the last innings as Mbeki was recalled by the ANC in September 2008. The governing ANC had long been roiling internally ahead of the 2007 Polokwane conference where ANC deputy president Jacob Zuma was elected as party president, ready for the Union Buildings.

The Jacob Zuma presidency facilitated Eskom’s looting, as at other SOEs, through a series of deals, middlemen and facilitation fees — mainly, but not solely, by the Gupta brothers and their business partners. International consultancies and auditing firms stepped into State Capture, giving the prevailing dynamics that facilitated making money hand over fist.

Eskom became a revolving door of executives and board members, key interventions that are the sole prerogative of the government, which since 1994 has been the ANC. A crucial moment was the appointment of the 2014 board, and the subsequent suspension of then Eskom CEO Tshediso Matona, a veteran public servant, alongside three senior executives in Lynne Brown’s stint as public enterprises minister. 

“In the case of Eskom, Ms Lynne Brown participated in state capture by using the powers of her office to help remove from Eskom executives that were seen as unlikely to cooperate with the Guptas, to install persons as members of the Eskom board of directors, who would facilitate or at least not oppose the Guptas’ state capture scheme and appointed Eskom executives who would cooperate with the Guptas,” according to the Zondo State Capture commission report.

Matona’s successor, Brian Molefe, was a key focus in November 2016 when then Public Protector Thuli Madonsela’s State of Capture report talked of “persistent allegations” of Molefe’s cosiness with the Guptas. 

“It is worth noting that such allegations are backed by evidence and a source of concern that nothing seems to have been done regardless of the duty imposed by section 195 of the Constitution on relevant state functionaries,” said that report, which ultimately led to Molefe tendering his resignation from Eskom later the same month while dismissing the findings as “in accurate [sic]” and/or “unsubstantiated”.

Predating the Zondo State Capture commission report, the 2018 parliamentary Eskom State Capture inquiry found Brown and fellow one-time public enterprises minister Malusi Gigbaba “grossly negligent”. 

The Zondo Commission of Inquiry into State Capture ultimately bore testimony to how Eskom, and other SOEs, were hollowed out and the institutional cultures twisted. As Eskom CEO Jabu Mabuza testified in early 2019: “I learnt that the name is corruption but the game is procurement.”

Today little seems to have changed. 

Talk of sabotage

“The criminality is quite well organised and well embedded,” Eskom CEO André de Ruyter told MPs on 24 January 2023. Aside from rocks and metal bits regularly found in coal headed to mills to trigger urgent maintenance call-outs, he recounted how three procurement officials recommended a R430-million contract to an individual who after due diligence was found operating from a Germiston suburban home, with a default judgment for falling behind with bond payments and a repossessed car. All procurement officials were suspended, and one left within 24 hours.

Talk of sabotage within Eskom seems to have receded as talk of sabotage by Eskom is upped by politicians. Whether that’s Mineral Resources and Energy Minister Gwede Mantashe describing how rotational power cuts are “agitating society against the state” and the ANC, or International Relations Minister Naledi Pandor likening the rolling blackouts to “oppositional attacks”.

It’s blame-shifting. It’s another twist in ideological navel-gazing; SOEs were meant to be the drivers against poverty and joblessness as part of the developmental state. And it’s a turn to victimhood to cover a possible election defeat in 2024, or to galvanise voters to ensure another governing ANC victory. 

“I have personally said to Eskom, ‘Eskom, it will be an injury to our people if we implement this 18% now when we are going through load shedding. Put it in suspense for a while,” Ramaphosa told the Free State ANC elective conference earlier this month in reference to the 18.65% price hike approved by the statutory energy regulator, Nersa.

It was taken as a call to action “to ease the burden on society”, Eskom board chairperson Mpho Makwana told MPs on 24 January, pushing for a date when rolling blackouts would end.

Read more in Daily Maverick: “Global firm to validate Eskom stats as rolling blackouts remain reality for next 24 months, Scopa hears 

“We have committees to look at what can be done to cushion where we can. As soon as we have found the mechanism of easing the pain, we will go back to our shareholder [the public enterprise minister] and Necom [National Energy Crisis Committee]…”

Right now, this signals how political interference in Eskom stays put, without much pushback. It seems a case of the more things change, they stay the same. Lest we forget. DM


Comments - Please in order to comment.

  • André Pelser says:

    Government prevarication public enemy n0.1

  • Miles Japhet says:

    Send this to the ANCYL – time to take the blinkers off their eyes

    • Patterson Alan John says:

      In your dreams.
      They are just waiting their turn at the trough. Maintaining the status quo suits them fine, provided the money does not run out too soon and before their turn arrives.
      Hence the call for young Ministers with no experience, but long, sneaky fingers.

  • Geoff Krige says:

    Thank you for a clear summary of the Eskom story over the past 25 years. What is absolutely clear is a re-statement of what we have all known for years, that the ANC cares nothing for South Africa or the people. Their sole aim is to enrich themselves and the party. Load shedding and all the associated woes will not end until we have replaced the ANC with a good government

  • Alley Cat says:

    A good summary of the timelines since the ANC took over Eskom, thank you. It just makes me angry that this has persisted for so long with NOTHING being done! Irrefutable proof that the entire ANC is corrupt! But then we knew that anyway.
    And our president’s only answer is to ask that the increase be waived. This is a childish comment but also not surprising.
    Brings a tear to a glass eye.

  • Jon Quirk says:

    Once again the ANC, by Ramaphosa’s comment on the agreed rate hike, seeks to politically interfere in the running of Eskom, exacerbating the last ANC intervention when, someone within the ANC orbit – be it RET or not – the attempt to poison the Eskom CEO.

    It clearly needs driving into the thick ANC skulls that they, and they alone – as so clearly articulated in Marianne’s article – are responsible for the disaster that Eskom has become precisely because of their continued meddling.

    The absolute definition of a fool and stupidity, is doing the same thing, time and time again, and expecting a different result.

    The Zondo Commission clearly spelt out the disastrous consequences of Cadre Deployment and BEE, and you were there in the witness box at the time, Mr President,, so you cannot feign ignorance, so get the right professional team involved and enable them to manage the mess as best they can.

    • Eyes Wide Shut says:

      The only team who can fix this is not the ANC. It’s time for those who vote ANC just because of the “white fear” and populist ANC, EFF and PA spread around actually start to use their brains for a moment and vote in parties who have the best interests of the country and its people at heart. There are other very viable parties who are willing to work together and make things better. The ANC is too rotten. You can’t “unrotten” a rotten apple. You have to throw it away.

  • Patterson Alan John says:

    Every corner of South African society has been invaded by the ANC as they trawl for illegal takings.
    This has encouraged rank-and-file citizens to emulate the looting in so many different, innovative and extensive ways. If the cadres are in on the act, why not me and me and me?
    Nothing can save the country when you see how the ANCYL and associated ANC organisations defend the many devious actions and blatant looting.
    Zimbabwe Version 2 awaits.

    • Paddy Ross says:

      Zimbabwe 2 awaits only if SA civil society lets it happen. Voters must ensure that the ANC is removed from all levels of governance next year. The solution is there for all to see but “there are none so blind as those who will not see”.

  • Confucious Says says:

    It doesn’t matter what anyone writes or advises and the facts are clear. Everyone knows what a disaster the delusional ANC is… but the ANC doesn’t care. They know how useless they are. They just do not care.

  • Cunningham Ngcukana says:

    We have an energy crisis that is threatening the fabric of our economy and millions of jobs and driving investments away. The ANC is responsible for this crisis for all intents and purpose and there is no denying that. We can write about the origins of the crisis until cows come home, but the challenge that we have is whether do we have a leadership that can rise to the occasion and deal with the crisis decisively. More importantly, a leadership that can inspire confidence to all South Africans in businesses, households, schools, hospitals, news agencies and investors that something is being done and is tangible and visible to move the country from the current crisis. We have seen and heard experts from various angles and corners speaking on the crisis and nothing that inspires hope that there is a resolution of the problem in the horizon. The statements on the causes of blackouts neither inspire confidence that there are people managing the entity and the worst is what the board said to SCOPA that they intend doing. We do not hear about any credible plans to build generation capacity nor proper maintenance of the Eskom fleet. We hear of diesel in an entity largely having a coal fleet. We have yet to hear about problems at Kelvin power station that is older than many Eskom power plants. We hear of sabotage in a national key point. The question is where is leadership at operational, executive, board and political level?

  • Craig Cauvin says:

    And yet the first EVER public protest of this horrendously criminal state of affairs was yesterday!

    In most other countries in the world this electricity crisis would have caused a national revolt already – but in South Africa the largely (willfully) illiterate electorate are more than happy to suck up whatever bull….. they get fed. South Africans will remain mindless shackled sheep until they wake up from their communist induced coma.

  • Andrew Wright says:

    The obvious problem is really simple to identify : the ANC takes up nearly 100% of Ministers’ time. Especially when internal elections are taking place. As usual, the PARTY is waaay more important than the citizenry!!!

  • Louis Nel says:

    Do you think it is by chance that NERSA’s price increase was only approved on 12 January (after being postponed till after cANCer conference), cheaper way of buying votes. Give the people discount on an increase. Good cop, bad cop. The politics will never stop. Turn down Eskom’s application to buy cheaper diesel and sign a deal with a Turkish Karpowership which I almost want to bet will cost much more than helping Eskom and all it’s employees.
    I wonder what benefits are involved with this deal?

    • Ou Soutie says:

      Now where did I read that it’ll take most of a year just to get a Karpowership up’n’running? The way the ANC work it’ll be more likely longer.

  • Johan Buys says:

    The twist in the tail on this is interesting : the energy transition to renewables is accidentally being accelerated by the very people that campaign against it. They are FUBAR’ing coal power stations far faster than their designed economic lives and citizens are sorting themselves out. Certainly far faster than an organized plan to reduce coal and gas and diesel would ever have achieved. Well done cadres!

    Eskom does not actually need to make plans for 30GW supply. They had 40GW, have 20 now, will have 15 by 2025.


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