Business Maverick


Eskom’s road to recovery: Why original equipment manufacturers must be brought back into the loop

Eskom’s road to recovery: Why original equipment manufacturers must be brought back into the loop
The Kendal coal-fired power station in Mpumalanga. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

Eskom finds itself at the forefront of a daunting challenge: How to arrest the constant rolling blackouts hampering the nation’s progress, economic growth and sustainability.

This is an all-encompassing and persistent challenge that requires significant investment, exceptional leadership, a purpose-driven, goal-oriented implementation plan, and ultimately, a shift from coal-generated power to more sustainable forms of electricity.

What is clear though, is that this shift is not going to be immediate and that South Africa will need to extract every available kilowatt of electricity from existing sources until we are ready to fully embrace a low-carbon future.  

To do that, we need power stations that deliver. In February this year, National Treasury announced that it had appointed the German VGBE Energy Consortium to assess and investigate the operations of Eskom’s coal fleet. 

This assessment, expected to be completed by the end of July 2023, will consider putting in place a concession model which could see Eskom’s original equipment manufacturers (OEMs) brought in to turn around and improve the energy availability factor (EAF) of Eskom’s coal-fired power plants. 

Read more in Daily Maverick: It’s possible now to see a future without load shedding – Eskom chair Mpho Makwana

Critical to this are the major power generation OEMs in South Africa, all of whom are large global organisations with strong local operations that are Level 1 BBBEE contributors, deeply embedded into South African industry for many decades. It is these OEMs who were and are responsible for the design and construction of Eskom’s boilers, turbines, generators, control and instrumentation systems and other plant. 

But it seems that, over the years, Eskom has moved away from using OEMs for its boilerserve and turbine maintenance requirements, citing costs, as well as the need to support local small and medium-sized businesses. What is also clear is that this approach has, in part, contributed to the current crisis.

One of the compelling advantages of OEMs lies in their ability to work on a risk and reward basis, based on the institution of long-term contracts. In an era of fiscal constraints, this arrangement offers Eskom a practical way to achieve efficiency gains without incurring excessive costs upfront.

Billions blown as Eskom burns through its emergency-use diesel

By aligning their objectives with Eskom’s success, OEMs are motivated to deliver tangible results promptly. This approach fosters accountability and incentivises and rewards continuous improvement. Moreover, it mitigates the risk of investing in unproven technologies or strategies, as OEMs bear a significant portion of the responsibility and risk.

Recently, on 13 July 2023, EE Business Intelligence hosted an industry-wide webinar to discuss the role and purpose of OEMs in helping South Africa extract optimum output from its power plants. Thomas Conradie, Eskom’s Head of Generation, and Silas Zimu, an adviser to the Minister of Electricity, both keynote speakers at the webinar, recognised the benefits of developing closer, long-term working relationships with OEMs.

They agreed that while Eskom and its team need to remain at the heart of finding solutions, OEMs bring a wealth of global and local skills to the table precisely because they designed and built Eskom’s plants. This makes them invaluable allies in resolving South Africa’s electricity crisis and transferring skills, not only to Eskom directly, but also to smaller companies that can be part of the solution. 

Read more in Daily Maverick: 

How to beat load shedding at home… and other ideas

These specialist OEMs have a proven track record of working with diverse power systems all over the world. Their exposure to myriad challenges equips them with a broad perspective and innovative problem-solving approaches. By blending global expertise with local insights, OEMs can tailor their solutions to Eskom’s specific needs, thus optimising outcomes on South Africa’s commitment to a rolling blackout-free future. 

South Africa finds itself at a crucial juncture where every technical and credible skill is essential for surmounting the electricity crisis. OEMs not only possess the expertise to rectify immediate challenges, but also hold the key to long-term sustainable solutions.

Their involvement can revitalise Eskom’s infrastructure, introducing modern technologies and processes that enhance operational efficiency and reliability. By embracing the technical prowess of OEMs, South Africa paves the way for a brighter future, where a stable and robust electricity supply becomes a catalyst for progress across all sectors.

The urgency to address South Africa’s electricity crisis calls for bold measures and strategic partnerships. Eskom’s collaboration with OEMs offers an invaluable opportunity to tap into a global pool of skills, knowledge, and experience.

With a risk and reward approach, OEMs are aligned with Eskom’s success, ensuring the efficient allocation of resources. South Africa must embrace these OEMs, leveraging their technical expertise and experience to build a reliable and resilient electricity system capable of fuelling the nation’s development for years to come.

Eskom’s infrastructure is currently the backbone of South Africa’s electricity supply, and its efficient functioning is indispensable for economic growth and societal wellbeing. The electricity crisis dictates that every single capable, experienced and knowledgeable technical skill needs to be deployed. 

Yet, there are OEMs with the required capabilities, track record and technical expertise that are sitting idle, and not being put to use. Babcock Ntuthuko Engineering is one such example, where a deeply capable, local, top-tier OEM is currently excluded from maintaining Eskom’s boilers due to litigation related to the simple matter of the omission of a welding certificate in a tender submission.

While the high court has already found Eskom’s actions to be unlawful in excluding Babcock on this basis, Eskom is doubling down and appealing against this high court decision. This is a company that has consistently delivered the highest ratings in EAF for the boilers that they have maintained for Eskom for more than 100 years.

It is simply inconceivable that this level of expertise is not at the table. This needs to be remedied quickly. DM

Chris Yelland is managing director, EE Business Intelligence.


Comments - Please in order to comment.

  • Patterson Alan John says:

    ‘. . litigation related to the simple matter of the omission of a welding certificate in a tender submission . . Eskom is doubling down and appealing against this high court decision.
    The two extracts from this article clearly illustrate the intractable problem facing South Africa. Who in Eskom is driving this appeal and for what ulterior motive?
    After reading Andre’s book, it is patently obvious that procurement people are using non-OEM companies to milk the BEE model to ensure that their buddies get the business to allow them to keep feeding at the trough. So why does the one keynote speaker, advisor to the Electricity Minister, sit on his hands instead of tearing up the litigation documents?
    In the event that one or more OEMs do get to work on the Eskom problems, how do they deal with the creative and constant sabotage that will ultimately force them to throw in the towel?
    Sorry Chris, but your common-sense recommendations will be thwarted at every step of the way by the ANC, because each SOE is a wonderful private piggy bank – Satisfies Our Expectations / Expenses.

  • Richard Baker says:

    Utterly nonsensical not to have had the OEM’s fully engaged and embedded at Eskom at all times. The thermal plants-up to Medupi and Kusile-were designed and built by reputable and substantial European and US companies (with Eskom project teams!) and were of top-standard for their eras (don’t agree with de Ruyter that they were old Volksie beetles!) and would still be fully functional and reliable had they been maintained and life-extended properly and as planned using OEM expertise and components where required. Most companies had created large local manufacturing and back up bases and had technical agreements with Eskom Rotek Rosherville with access to the skills and world-class facilities there. Offshore specialists were brought when necessary with further skills transfer.
    OEM’s were instrumental in bringing back at least 2 very badly damaged 600 units after major smash-ups in the early 2000’s-saving hundreds of millions by imaginative sourcing of major spares.
    OEM’s have built up their companies and resources over many years and have the designs and proprietary IP to keep their machines running.
    Their costs pale into insignificance against the calamitous options chosen-would our ministers and the newly enriched take their high-end SUV’s to anywhere else but the OEM for service and repairs? But OEM’s beware-you take your lives in your hands if you start making things work-the power mafias control Eskom!

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