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These five German energy companies are reviewing Eskom’s operations, Scopa finally told

These five German energy companies are reviewing Eskom’s operations, Scopa finally told
An Eskom regional office in Braamfontein, Johannesburg. (Photo: Leon Sadiki / Bloomberg via Getty Images)

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. 

Merten Eskom Consultants

Police officers detain climate activist Greta Thunberg at a demonstration against the expansion of the Garzweiler coal mine near the village of Luetzerath on 17 January 2023 in Erkelenz, Germany. (Photo: Hesham Elsherif / Getty Images)

“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 

Bailout conditions

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

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Comments - Please in order to comment.

  • Joe Soap says:

    This is hopefully the start of the collapse of the ANC’s centralism delusion. The ANC somehow believes it needs to control everything in SA, even though history has shown the ANC cannot and thus should not control anything.

  • Andrew Blaine says:

    Without a serious commitment to the eradication of criminality in and in association with ESKOM staff, theses efforts will have little effect?!

  • Jane Crankshaw says:

    Does “comfort to the Board” mean the same as “opportunity to eat”? Just asking!

  • jon81 says:

    How about also getting a consortium of international law enforcement agencies to take a close look at how to best stop the crime at Eskom?

  • Peter Oosthuizen says:

    Irrespective of the recommendations, South Africa will remain dependent on coal as the primary energy source for electricity for years.
    By the time Eskom, the DPE and Treasury have “examined” the recommendations, the last of the power stations will probably have shut down.

  • Hennie Visser says:

    As someone who grew up living on Eskom power stations and later studied electronic engineering at the University of Pretoria, I am struggling to understand why Eskom has appointed so-called independent experts to review their operations. My father worked as a Construction Engineering Director at Babcock International, and I have seen firsthand how efficiently these coal-fired power stations can run when they are well-maintained.
    During my postgraduate training in the UK and Germany, I also learned about the importance of maintaining a constant supply of high-quality coal to these power stations.
    Samples of coal were tested daily in laboratories on Eskom sites to ensure that the right quality and quantity of coal were being fed to the ball mills, ID and FD fans, and steam flow to the turbines.
    Given this knowledge and experience, I find it puzzling that Eskom has not called upon companies like Siemens, Babcock and SteinMuller to assist in fixing their coal-fired power stations. and they could provide valuable insights into how to improve Eskom’s operations.
    As someone with personal experience in the field of system engineering and a deep understanding of how these power stations operate, I believe that Eskom should be looking to industry experts who were originally involved in the design and construction of our power stations for guidance- like Siemens, SteinMuller and Babcock Engineering.

  • Dennis Bailey says:

    Agreed coal will be with us for a bit, but realistically , not as long as expected, given SA’s capacity to resolve technical, legal, security and pretty much anything that requires implementation management of tenders. SA is doomed to be a powerless state! Viva, ANC, Viva.

  • Colleen Dardagan says:

    Um, we already know what’s wrong with Eskom! I find it interesting that another newspaper decided to publish a story measuring de Ruyter’s performance. Just ridiculous. de Ruyter tried to break the cause of Eskom’s woes by tackling corruption, the root of the problem. His life was put in danger and then he was forced to leave – well, we don’t need international consultants to tell us what’s wrong with Eskom, let’s start where de Ruyter left off by arresting some of these miscreants.

  • Sam Shu says:

    Another assessment, another committee. How many have we had? And yet the situation grows worse. The governing party and thus government will not execute on any recommendations for fear of causing further ANC disunity. So the criminality, ineptitude, and fossilized Stalinist thinking are the issue that will always hamstring real action.

  • Gordon Bentley says:

    Tell them like it is, Hennie – I agree with your new take on the matter.

    In addition SA(ANC) is mostly barking up the wrong trees as usual. Why are we appointing new board members to Eskom (who appear to be useless to date) and new electricity minister(ditto) – clearly a case of mismanagement, costing us the Taxpayers, millions a month.

  • Pieter Steyn says:

    These entities have been involved with Eskom since 2006 and know it inside-out. There will be no major relevations, but the same sad story about maintenance, competency, etc. For obvious reasons they will not touch the issue of socio-political interference as a major contributor to the problems at Eskom.

  • Cunningham Ngcukana says:

    The appointment of consultants to review the operations of Eskom before it takes the R254 billion debt is to be welcomed as this ought to have been the process for all SOEs before the bail outs have ballooned to what they are. It means that in the past public money was fed to the a hippo mouth without a proper basis for doing so including an exit strategy. This points to the failure of parliament and the opposition to ensure that public funds are not disbursed without a proper basis and a sustainable exit strategy. The question of those who are doing the operational audit and their competence to do the job will emerge from the report. However, the absence of retired managers and engineers from Eskom is a lacuna that is very serious because they would be helpful to the audit with their experience.
    This was a responsible act by the National Treasury and they must extend the audit to the Public Enterprises and their fiduciary duty as a shareholder representative in ensuring that Eskom is operationally effective in the utilisation of public resources.

  • Nos Feratu says:

    Maybe I missed something but I count 4 (previously unknown) German companies…..
    As usual the ANC decry local expertise and opt for expensive (Rand is 18.3 to the $ today) foreign consultants. I’m sure Mr Visser is not the only local person who could contribute massively to the problem. The ‘problem’ is largely operational with staff bent on feeding at the trough, instead of putting in the hard hours required. The plant may be old and require plenty of TLC to keep it going but I’m sure it is possible to extract more from it than is presently being achieved.

  • Andrew McWalter says:

    Of course, ANC politicians will appoint themselves as the Uber-analysts, turfing out any and all of the International Consultant Consortium’s recommendations that can’t be cadre-ised or corrupted. So what’s new?

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