These five German energy companies are reviewing Eskom’s operations, Scopa finally told
International consultants from a consortium of five Germany-based companies are reviewing Eskom’s operations. At least some of their recommendations must be implemented before the troubled power utility can access its R254bn bailout as announced in the 2023 Budget.
It was the direct question, “Who are they?” from Parliament’s public spending watchdog Scopa chairperson, IFP MP Mkhuleko Hlengwa, that finally got MPs some answers amid the “best team” rah-rah talk by National Treasury Deputy Director-General Duncan Pieterse to an EFF question about the international consultants.
The National Treasury on Tuesday briefed the Standing Committee on Public Accounts on state-owned entities’ bailouts — R329-billion over the past decade, with Eskom the biggest benefactor while rotational power cuts have left South Africans without electricity for up to 10 hours every day in 2023.
Pieterse’s response, however, was less than the 132-word public statement put out by the international consortium’s leader, vgbe energy, on 7 March, confirming its appointment for “independent assessment of the operational situation” at Eskom, with Dornier Power and Heat GmbH, KWS Energy Knowledge eG, RWE Technology International GmbH and Steag GmbH.
“The services provided by vgbe energy and its partners include a review of all coal-fired power plants with regard to performance, operation and maintenance as well as a skill assessment and advice on operational improvements. The assignment is going to be completed by mid-2023. The results of the study are expected to foster the improvement of South Africa’s tight electricity supply situation in the near term.”
This is part of the Energy Action Plan, first announced by President Cyril Ramaphosa in July 2022 and updated on 21 January in a Presidency statement.:
“A team of independent experts has been established to work closely with Eskom to diagnose the problems at poorly performing power stations and take action to improve plant performance.”
A controversial appointment
Perhaps the most controversial in the consortium is RWE Technology. It owns the abandoned village of Lützerath where the nearby scaled-up mining sparked protests in January 2023 — and the detention of Swedish climate activist Greta Thunberg for an ID check.
“The village, owned by energy company RWE after residents abandoned it, is expected to be the final one demolished for the lignite mine. RWE has said the coal under the village is needed as early as this winter,” reported the BBC at the time.
RWE Technology, in a media statement on 11 January, put it differently.
“The coal under the former settlement of Lützerath, which is located close to the current edge of the Garzweiler opencast mine, is needed to make optimal use of the lignite fleet during the energy crisis and thus save gas in electricity generation for Germany,” said the company.
On its website, RWE Technology states, “We support companies and organisations worldwide in their activities related to the energy transition. Across the entire value chain of a project, we deliver tailor-made and client-specific solutions for renewable energies, efficient mining, conventional generation and grid stabilisation.”
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Steag — “We provide secure energy” — operates six coal-fired power stations that contribute about 5% of Germany’s electricity to the nation’s grid, according to its website, which also talks about renewable energy generation.
“Steag Power is making a major contribution to avoiding a real shortage of natural gas. By returning the hard coal-fired power plants in Bexbach and Weiher to the market from the grid reserve and continuing to operate the plants in Bergkamen and Völklingen that are scheduled for decommissioning, we are helping to secure the energy supply. In total, we operate hard coal-fired power plants at six locations in Germany.”
Its other division, Iqony Energy, offers solutions for decarbonisation and a value chain of green energy — from solar, wind, hydrogen, geothermal energy and storage technology.
Dornier Power and Heat GmBH describes itself as “a global one-stop shop for engineering services with a focus on the infrastructure sector”. Its business units include renewables and nuclear, but also “mobility” (transport) and water.
KWS Energy Knowledge offers training for various work, from renewables to nuclear, at power plants across the globe, according to its website. It also appears to have a host of members for its not-for-profit Kraftwerksschule, roughly translated as “power station school”.
In January, MPs didn’t ask for details when Eskom board chairperson Mpho Makwana spoke of a pending contract with international service providers for a second opinion and “comfort” to the board when getting systems updates from the power utility’s executives.
Read more in Daily Maverick: “Global firm to validate Eskom stats as rolling blackouts remain reality for next 24 months, Scopa hears”
Since then, the international consultants’ review recommendations have become part of the conditions for the struggling power utility’s R254-billion bailout.
As Finance Minister Enoch Godongwana put it in his February Budget speech: “And that Eskom implement the recommendations emanating from an independent assessment of its operations, which has been commissioned by the National Treasury.”
On Tuesday, Pieterse told Scopa that Eskom “itself had confirmed they very much look forward to the outcome of this work” by the independent international consultants.
“Of course, it’s not necessary that everything the team recommends will just be blindly implemented,” said the National Treasury deputy director-general. “We will look at it with DPE [Department of Public Enterprises] and Eskom and then decide how these [recommendations] will be reflected in future conditions for Eskom as well as which parts of those should be implemented or not.”
Earlier, the National Treasury, in response to questions from DA MP Alf Lees, confirmed that the Eskom restructuring officer announced in the 2019 Budget as a condition for the multiyear bailout then, was never included in any conditions.
“[The restructuring officer] was a big, big announcement. I’m really surprised no such person was appointed,” said Lees later.
And so questions are raised about preconditions for bailouts, which officials had insisted to MPs was leveraging the correction of underlying issues bedevilling SOEs. DM