Opinionista Michael Kahn 17 December 2019

Between a wreck and a hard choice

Ernest Hemingway is quoted as explaining that he went bankrupt in two ways. Gradually, then suddenly. So too, Eskom. Last week, we have been offered the DA remedy to the bankruptcy – Ghaleb Cachalia wants to send in a ‘Red Adair’ type. For its part, the bright sparks in the ANC will send in the spooks. Neither will solve the myriad problems that two decades of ‘transformation’ shock treatment have wrought.

The DA solution is bizarre, to say the least. Red Adair flamboyantly extinguished flaming oil wells by blowing them up with explosives. Truth be told, his success rate was nothing compared with the Soviet method of mounting two Mig 21 jet engines on a T-34 tank to blow out the fires with a hose, whoosh, birthday cake style. Techie solutions come in many shapes and sizes. Blow job vs blow up. Subtlety vs brutality. Technology vs kaboom.

The ANC solution is no solution at all since its starting premise is to blame someone else for the mess. “Fire, what fire? No, you have it wrong, we are dealing with a temperature-induced anomaly.” The spooks will tell us who messed with the settings. Really?

Eskom is in the state it is through myriad causes. Its death is the result of a perfect storm of decisions that have created the howl of a positive feedback loop. The less electricity we produce, the more you must pay. Eskom is a price setter; communities must pay for, or steal what they can.

Eskom circa 1994 was a vertically integrated behemoth that was rated as among the lowest cost and most effective coal-fired power utilities in the world. Like everything else in apartheid South Africa, its highly skilled pool were whites, and its mainly pale artisans constituted a labour aristocracy.

Equity, dignity and stability called for change. Add the transformation agenda of the national democratic revolution and the pressure was on.

Transformation instrument No 1 was employment equity that opened up all ranks to newcomers. In the short era of “fiscal discipline”, this meant a replacement policy, rather than job-shadowing. The message went out – promotion avenues are closed to incumbents. Move out, so newcomers can move in. Take your skills, and trek, Mr Welder, take your skills and trek. This automatically erased institutional memory and technical capacity. No problem, hire in the consulting engineers, they’ll fix it. We are flush with cash.

Instrument No 2 was to open the services supply chain. This took the form of the 10% sweetener allowed on the face value of tenders placed by new “black-owned” companies. This instrument legalised fronting, added some cost, but did not significantly erode the quality of what was sourced.

Instrument No 3 was truly earth-shaking. This was the decision to open the coal supply chain to newcomers. The consequences of this disruption will be felt for decades to come. Once upon a when, coal moved from collieries by rail or conveyor belt in a predictable, controlled manner. The new supply chains now snake across Limpopo, Mpumalanga and KwaZulu-Natal in the form of eighty-tonne truckloads of coal, moving hundreds of kilometres from hole to hearth. A huge trucking industry emerged, as did huge holes in the rural road network. Quality control weakened.

Then came the full deployment of the procurement acts, and cadres in high places. Fortunes were made; the new, and the now massively expanded labour aristocracy celebrated with the National Union of Mineworkers running the show. Meantime the generation and transmission infrastructure began to buckle through a combination of loss of control of coal quality, and lack of maintenance. The higher the coal ash content, the shorter the maintenance cycle must be. Network failure became commonplace. The balance sheet developed holes. No money, no maintenance. No functioning network, no income. No problem, just charge more. For what, exactly? Eskom became a terminal case.

The ruling party is clear on the status of the instruments that have combined to create the meltdown. They are non-negotiable. To suggest otherwise is to risk branding as an unreconstructed racist. This leaves precious little high-level solution space for a Red Adair, let alone a De Ruyter.

Back then to a Soviet-style technological solution. No kabooms. Instead, study the problem carefully. Determine where the weaknesses lie. Address them, one by one, much as were the hundreds of burning Kuwaiti oil wells that Saddam Hussein’s army ignited.

In the Eskom case, the hotspots are talent management, quality control and the maintenance cycle. Stated differently, this comes down to all systems being fit for purpose: quality staff, quality facilities, quality inputs. Fit, not fat. DM

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