South Africans do not realise that Eskom is technically in business rescue. It is unable to generate enough cash from its operations to pay for its costs, including debt and interest payment.

This is the reason why the minister of finance has invoked section 16 of the Public Finance Management Act to support Eskom. The chief restructuring officer will be appointed to effectively assume the role of a business rescue practitioner at Eskom.

But the real objective of the chief restructuring officer is to unbundle Eskom into generation, transmission and distribution companies. The hidden objective is to isolate the system’s operator and to set up a fully functional independent system and market operator to ensure deeper penetration of independent power producers.

I am persuaded by those who say a deeper penetration of independent power producers will boost power production and help lessen the impact of load shedding, given the current low levels of energy availability — but it will do nothing to solve the liquidity problem faced by Eskom. The liquidity problem faced by Eskom will also not be solved by the R150-billion bailout provided by the National Treasury. As a matter of fact, no amount of bailout will solve Eskom’s liquidity problem.

The liquidity problem at Eskom is caused by declining sales volumes, escalating coal and diesel costs, high independent power producers’ costs, and the costs of Medupi and Kusile.

These problems are not caused by State Capture and they require brave men and women to confront them, rather than leadership that regurgitates old excuses. It is in days like these that I am reminded of the rich Eskom history often referred to as A Symphony of Power (ED: The title of a book by Allen Morgan, who became group chief executive of Eskom in 1994).

It is a story of outstanding leaders who served the organisation remarkably well through prosperous and turbulent times.

In turbulent times, leadership is everything. In my 31 years of association with Eskom, I have learned to appreciate the strength of leadership during crisis. Leaders who continuously blame their predecessors often fail dismally. The worst Eskom crisis in its 96 years of existence was in 1983. The government responded to this crisis in May 1983 by appointing the Commission of Inquiry into the Supply of Electricity in the Republic of South Africa.

The inquiry was chaired by Dr Wim de Villiers and became known as the De Villiers Commission. It took the strong leadership of the then chairman of Eskom, Jan H Smith, who was capably supported by then general manager of operations, Ian McRae, to make the crisis go away. They harboured no conspiracy theories. They were capable and they saved South Africa.

In November 1983, simultaneous failures at Kriel, Duvha and Matla power stations started a chain reaction that saw a large part of the electrical system shut down. This was unprecedented. Drakensberg Power Station could not help because the multiple failures happened at about 4pm on a Friday and it was the end of its weekly cycle for the Drakensberg pumped storage scheme, with the top dam nearly empty. There were no open-cycle gas turbines to help the system then.

Like Medupi and Kusile power stations, Kriel, Duvha and Matla power stations were new and recently commissioned. The availability of Kriel, after its initial teething problems, peaked at a good 82% in 1979, but plummeted to 57% by 1982. Duvha and Matla, although performing better, were nowhere in the top league by world standards. In 1983, the average availability of the Eskom fleet reached its lowest ebb at just under 72%. System performance was further hampered by the fact that Koeberg’s commissioning was running behind schedule after a sabotage attack late in 1982 by uMkhonto weSizwe cadres. The required maintenance engineering resources were stretched to the limit and there was a serious shortage of skills.

The acute plant shortages as a result of low availability of newly commissioned power stations and the unavailability of Umgeni, Ingagane and Camden power stations due to severe drought and water shortages plagued the electricity supply system, and load shedding was a frequent occurrence in 1983.

Medupi and Kusile boilers are now going through similar teething problems and this is not unexpected. The Kendal Power Station boilers, which were designed by Combustion Engineering in America, were also unable to perform at the early stages of their lives. After extensive modifications to the firing system, Kendal’s boilers are now tamed and today Kendal boasts exceptional and world-class performance.

I have no doubt that Medupi/Kusile’s design and construction defects will be tamed and the two power stations will produce a performance that is world class. It will take a competent leadership of Eskom to work in partnership with the designers of these plants to systematically resolve these defects. The current Eskom leadership must appreciate, too, that the life cycle of power plants goes through a phenomenon called a bathtub curve. They must stop the falsehood of State Capture as the cause of the current performance at Medupi and Kusile.

The highest failure rate of any new 6x800MW coal power plant typically occurs in the first 36 months of operations. This time period is called the “burn-in” period. Failures within the first 36 months are considered early infant mortality failures. Over time, these failures go away as engineers iron out lingering issues. The bathtub effect was experienced at Kriel, Matla, Duvha, Kendal, Matimba and Majuba power stations. It is repeating itself at Medupi and Kusile power stations and this is expected.

To achieve better resolution of the early infant mortality failures, Eskom requires a good partnership with its design partners. It is a pity that the approach adopted by Eskom is adversarial towards its design partners. This will not yield the desired results and it is a sign of inexperience on the Eskom side.

Over and above the infant mortality failures at Kriel, Duvha and Matla power stations, Jan H Smith and Ian McRae were faced with even bigger problems in 1982/1983. The devastating effect of a countrywide drought and shortage of water was considered to occur only once every 200 years. During May 1983, South African dams were only 40% full. The Vaal dam stood at less than 30% and it was feared the dam would be empty by October 1984. The Chelmsford Dam in KwaZulu-Natal, which fed Ingangane power station, contained 5% of its full capacity.

As a result of water shortages, Eskom stopped production at Umgeni and Ingagane power stations, while the output at Camden was drastically curtailed. The biggest challenge for Jan H Smith and Ian McRae was the Grootdraai Dam in the Vaal River near Standerton, which supplied most of the water for Kriel and Matla power stations. Tutuka power station was not yet operational.

It became clearer that the answer lay in reversing the flow of the Vaal River from the Vaal Dam back to the Grootdraai Dam, and this had to be done before October 1983. This was a test of leadership during crisis.

It required Eskom Guardians to save South Africa by reversing the flow of the Vaal River back to the Grootdraai Dam, which was 200km away, to keep the lights on despite the high infant mortality failures at Kriel, Duvha and Matla power stations.

The falsehood of State Capture in Eskom did not exist at that time and the leadership of Jan H Smith and Ian McRae delivered. Almost one month ahead of schedule, 84 huge pumps pumped water all the way back up the Vaal River starting from the Vaal Dam and ending at Grootdraai Dam. This brought relief to Eskom power stations in the then Eastern Transvaal and the Sasol complexes at Secunda. South Africa was saved through effective leadership and less political interference at the utility.

The impact of Cyclone Idai on the power system in South Africa is insignificant compared to the devastating effect of drought and shortage of water of 1982/1983. The 900MW from Cahora Bassa should never have thrown the power system over the edge.

The De Villiers Commission was critical of Eskom’s high load forecast and the resultant large capital expansion programme and financial implications. It found the generation performance unsatisfactory and was unhappy with cost-containment measures. The commission focused on the need for change in the industry, but maintained the objective of Eskom as a supplier of the last resort.

The objective of Eskom as a supplier of the last resort remains critical to this day, and the leadership of Eskom should make it happen, just like Jan H Smith and Ian McRae did back then. DM