It’s been 13 years since President Thabo Mbeki first took the podium and explained to the nation why we were experiencing rolling blackouts. We are still suffering the consequences.
He confirmed then that, indeed, the expert engineers from Eskom had gone to the government in the mid-1990s immediately after the first historic democratic elections and strongly motivated for billions to be made available to invest in new power-generation capacity lest we plunge the entire country into darkness.
The answer they received, we were told by Mbeki, was that there was no money because of many competing priorities at that time: the HIV-AIDS epidemic, abhorrent poverty levels, a cash-strapped… no, in fact bankrupt state with very low foreign reserves, if any. The government could barely afford the 1994 general elections – in fact it had to borrow money from the IMF to hold the elections so it could not make money available for this energy shortage challenge right then.
This revelation was made public, with an apology, in 2008, just weeks before Mbeki was unceremoniously ejected from the west wing of the Union Buildings.
We were then told that there was a plan to build one of the largest power plants to address our energy needs and requirements once and for all. And what a monstrous disaster it turned out to be. Incompetence of the highest order.
After almost a decade of building these plants, some genius decided that the coal must be transported on a conveyor belt, and guess what, it breaks every now and again. Then we are screwed. Who came up with such an ingenious proposal? Then, here’s the shocker: just one month after the contractors – who had sucked us dry over the years – hand over the plant, one of the generators explodes. Literally explodes. Now either it was damaged goods already or our incompetence knows no bounds. One month and we cannot manage it.
By the way, the completed plants only generate 60% of the needed capacity. In other words, it’s like most of the ailing power stations anyway – only able to generate at a sub-par level. This is a joke!
When it rains, as it seems for the first time in that part of the country, it appears we cannot find any workable solution to keep our coal from getting soaked. I have seen what industry can do if they put their minds to it. The coal is wet so build bloody sheds as big as rugby fields and dump the coal in these when it rains. What the…? It can and must be done!
So, what seems to be the real problem here? Well, first, it’s the Eskom debt. Jacob Zuma and his cronies inherited a utility with a combined debt of R40-billion, and then Zwane, Koko and many others, together with their Gupta pals, escalated that debt to R400-billion in nine years. Criminal, I know.
Hence we had to get rid of them all, and we did. But the problem remains. So, what to do about it? Removing the board and appointing a good CEO is not sufficient. You are basically asking him to dig us out of this problem but not equipping him with the necessary tools. In short, perform miracles, André de Ruyter.
I believe Canada, of all places, had a similar problem some years back and what they did about the high debt was form a special-purpose vehicle, ring-fence the debt, renegotiate terms of repayment and effectively take the burden of debt servicing away from the electricity utility so it could concentrate on its mandate and not only on debt servicing.
Another hard decision the government must take to assist the management of Eskom is to halve the debt by taking money from the PIC pension fund. After all, the PIC lends money to many companies and, may I add, at times loses loads of it, too – there’s always some risk attached to these sorts of investments, but to spread the message that this is inherently a bad investment is false and disingenuous, to say the least. Just take the hard decision.
Another accomplice in the problématique is in fact the very service providers being used to service the utility. For years they have been benefiting from the mismanagement and chaos at Eskom. They have actively participated in malfeasance and fraudulent behaviour and practices.
We saw recently how the CEO had to stop a ridiculous invoice from being paid where knee pads were priced at a crazy R36,000. Just this week we see another service provider and employees of Eskom jointly participating in defrauding the utility of spare parts to the tune of millions of rands. Imagine what some of the providers are charging for basic nuts and bolts. It has been Christmas at Eskom for many, many years. This rot is finally being stopped because you have the right man at the helm. No more stealing at the expense of the people.
Then there’s organised labour. Yes, our trade union members are so deep in this corruption and malfeasance that they can no longer smell the sh*t they are in, nor what they created over the years – 14,000 employees at Eskom have to be let go – yes, laid off – but political considerations get in the way of pragmatic decisions.
Like SAA, when do we decide to place Eskom in business rescue?
Thirteen years later and still we cannot keep the lights on. Business also has to take its fair share of the blame, as far as I’m concerned. I mean, after a decade of this nonsense you would think our service-oriented businesses like banks, supermarkets, churches, and government departments including Home Affairs and Social Development, would by now have invested in alternative energy generation such as diesel generators.
The situation is not as bad as in Nigeria where you actually live from your generator and should be happy to get some energy off the national grid for a few hours a day. This is not the situation here, and still our private sector won’t make that slight adjustment. One can only attribute this to the fact that profit is more important and a small sacrifice to the bottom line will not be tolerated. How selfish.
Here’s what I propose we do going forward. De Ruyter, how about you tell us, the populace, how long you need to fix this problem? Just be completely honest. It’s going to take two more years if we have consistent Stage 3 load shedding throughout the country.
So, let’s prepare for this eventuality in terms of our cooking, heating and energy needs. Regulate gas and diesel prices or subsidise for the same period. Then, bring the independent power producers on board in a big way, and yes, let’s commission the two nuclear power plants to augment capacity. Cancel the powerships because it’s a rubbish idea and certainly not pleasing to the eye or our environment. Accelerate the plan to break up the utility into three distinct parts. This will go a long way towards easing business and executing its overall mandate.
Accept the money from the Europeans to SLOWLY decommission our coal reliance, but let’s also face reality: coal is cheap and here to stay for many years to come.
I see the Black Business Council called for the resignation of the CEO and the Eskom board, but this is short-sighted, to say the least. We need stability at the top, people who have just come to appreciate the actual challenges to see the job through. You don’t change horses midstream.
Let’s allow De Ruyter and his motley crew to navigate these rough seas and hopefully, with the help of our government with respect to the debt proposal, provide an energy mix that includes nuclear, and effectively deal with service providers and unions. Then they will succeed.
And maybe, just maybe, we won’t have to say Eskom se *$&@! DM