ESKOM POWER OUTAGES COULD DRIVE SOUTH AFRICA OVER THE BRINK

By Wren Mast-Ingle

The call for declaring the rolling blackouts a ‘national crisis’ by opposition political parties reflects the situation where the country’s economy is grinding to a halt – the result of poor policies and planning, unfathomable decisions, and an unworkable employment regime affecting the supply of power from the parastal Eskom.

The cost of this disaster which sees continuous power outages in cities and rural areas alike is running into billions of rands with the steel and engineering sectors alone losing R6bn to add to a lengthy list of other industries. It has affected direct foreign investment and resulted in the burgeoning number of man-hours lost with traffic gridlocks, companies closing up shop and perishable wastage.

And with South Africans, rich or poor , battling to face these everyday realities, the government responses include:  “Go to sleep earlier so that you can grow and be cleverer. Boil less water “- Minister Buylewo Sonjica or “There is no crisis at Eskom. I think the way Eskom gets reported on creates the perception of a crisis,” CEO Tshediso Matona 

However that is not how DA parliamentary leader Mmusi Maimane sees it:  “This crisis has touched the daily lives of all South Africans, and affects every aspect of our existence including our transport infrastructure, our water supply, our hospitals and our schools.  Now more than ever we need to see transparency and honesty from government on the full extent of the crisis, and the plans in place to solve it”

This is unlikely to happen looking at both the parastal and its ministry along a path that dates back to Minister of Trade and Industry Alec Irvin in the middle 90s who turned away industry participation in power generation by insisting on Eskom retaining 70 percent of the capacity.  The White Paper in 1998 showed SA would run out of power by 2007 was never acted upon and building of new power stations was halted as government attempted to privatise Eskom.

In 2003 Former Energy Minister Phumzile Nlambo-Ngcuka said there was no power crisis looming and was assured by the then Eskom CEO Thulani Gcabashe that SA will never run out of power.  Those occupying these positions today continue with this approach.

Some of the alarming statistics: (Eskom)

• Revenue up by R14-billion to R129-billion.  Profit down by R8-billion to R5.2-billion (financial year ended March 31, 2012.
• Debt stands at R203-billion
• Over the next few years debt will increase to up to R400-billion,
• In September Eskom received a ‘support package’ in the region of R50bn, over and above its original plan of R200bn
• Electricity thefts cost the power grid R4.4bn a year
• Qualifying indigent families get 50kWh free electricity a month.  In Tshwane there are some 70 000 alone.
• Eskom is owed R10bn in arrears by municipalities (who have already collected the revenue) around the country

The Eskom BEE policy of moving away from established major coal suppliers to accommodate black-owned coal mines is the basis of the coal supply crisis brought about by interruption in deliveries because some of these suppliers are far away and the quality of coal may not always be up to standard.  Compounding the problem in 2 000 under Gcabashe’s sojourn most of Eskom’s coal stockpiles were sold off. 

Eskom’s claims that the crisis was precipitated by wet coal were debunked by a leading investigative TV team.  Among the revelations was a comment by a coal distribution manager who said the situation was in a state of chaos and had nothing to do with wet coal.

This supply fiasco has also led to Eskom burning additional funds on diesel.  The electricity utility spent a whopping R10.5-billion on diesel fuel in 2013/14 on just two plants in the Western Cape, a situation where it now faces breaching its budgetary allocation for diesel in early 2015 and is forecasting a high risk of load shedding in February and March.

The situation has escalated with the utility forgetting to place a diesel order in early December which led to five days of rotational power cuts. By December 9 motorists in Gauteng were in long queues hoping to get the last of the short supply at fuel pumps. The shortage has been acerbated by the rush to install generates which consume diesel and according to the head of the fuel association ‘A perfect storm is in the making’.

Readdressing the issues of apartheid is a priority in South Africa and affirmative action is an accepted necessity with Eskom described as ‘probably one of the companies in the country

driving affirmative action the hardest.  But the parastatal has done no-one any favours by stuffing its structures in many cases without skills or experience.  The result has affected foreign investment sentiment, contributed the present crisis especially where the lack of maintenance is concerned and angered all South Africans with lack of delivery. 

In recent times Eskom’s workforce has increased by 37% while its output fell by nearly 3%…all on the back of costs rising 23%.  The past decade is littered with vehement denials of a skills shortage at the utility and it is only recently that this has been acknowledged in public.  During this process, one report indicates that despite its cash flow crisis, it is paying its employees an average salary of half a million rand each with the CEO in the mid-twenties of millions for his efforts.

The cream of the crop – executives, managers and specialists – has seen several shake-ups that have turned the once well-oiled mix rancid.  Newly arrived CEO, Tshediso Matona who is without experience in running an organisation of Eskom’s size, comes in at a time when much damage has already been done in key areas.

Previously Collin Matjila, who headed up the Eskom board tender committee and then acted as CE is under a cloud of corruption allegations relating to turbine upgrades for Koeberg and sponsorships for The New Age newspaper.

According Hilary Joffee of BDLive, over the past year Eskom has seen the departure of a CE Brian Dames; a chief financial officer, Paul O’Flaherty and two exco members, Erica Johnson and Kannan Lakmeeharan, with Steve Lennon due to leave in March. Johnson and Lakmeeharan were not that high profile but both were “keep-the-lights-on” experts, as it were — electrical engineers who had run the system operations and planning division, the entity within Eskom that actually balances supply and demand.

In addition two senior GMs are said to have been suspended earlier this year (in information technology and coal). Under the leadership of executive director Mongezi Ntsokolo, who was then acting head of human resources and of transmission now in charge of Eskom’s ailing fleet of power stations, Eskom offered all staff a highly attractive voluntary severance package which some long-serving and competent managers accepted. Now Eskom feels it made a mistake.

 

But while the top echelon does the hot-foot-shuffle, South Africa’s diminishing power supplies continue to disappear across the country’s borders with the ‘stuff you South African users’ approach thinly disguised in the reasoning of ‘long term obligations’, ‘SADC countries depend on one another’ and a bucket of other contradictory reasons. 

The situation however continues to be obfuscated by Eskom and government officials without any verifiable answers to questions such as how much power is being exported? Does Zimbabwe pay for it? And if SADC countries depend on one another, why are the other dependants not helping South Africa presently? 

Recently Eskom chairperson Zola Tsotsi called in to dampen consumers rising temperatures said that the utility will continue to sell electricity to neighbouring countries (in 2008 government announced they had stopped exporting electricity).  “Part of the challenge that we faced in terms of supply to the grid was partially because of the reduction in imports from Mozambique’s Cahora Bassa hydropower scheme, owing to an unexpected break in the transmission line to South Africa.

“Therefore, it is important to stress that SADC countries depend on one another for the provision of power,” he said.  Eskom sells more than 13 000 gigawatt hours (GWh) to South Africa’s neighbours valued at R4.1-billion (6% of all electricity sold), according to its most recent annual report.

More confusion arises around the country’s reserve margin.  The difference between capacity and demand has been calculated at best 8.6% and nearing perilously low levels but spokesperson Hilary Joffe denied this saying Eskom had an ample reserve margin of 16% and it was working to prevent load shedding.

It is beyond comprehension – even excluding the political proclivity for corruption, hidden agendas and nepotism – that the lack of strategy, forward planning and business management could be attributed to ‘surprises’ and ‘unexpected challenges’.  What is without doubt is that all indications point to South Africa becoming a backwater country on a continent expected to show overall growth of 5%/ 

Ignoring decision makers and leaders in Eskom and government who predicted in the 1990s that Eskom would run out of power reserves by 2007 unless action was taken to prevent it, has led to the downgrading of our currency, is driving away investors and costing billions in terms of lost production.

The actual cost of addressing Eskom emergencies (diesel for one), lost business and man-hours as thousands of motorists and workers are stranded in gridlocks, wastage of perishable goods is estimated around R1.2-billion every day.

But it is the cost to every person in this country that could tip it over the brink when considered with the high employment and ever-increasing cost of living.  The Eskom fiasco has moved beyond the realm of politics and economics and has become a ‘people’s problem’. 

Mass action in the form of challenging Eskom’s actions need to be taken in the legal arena.  Control should be placed squarely in the hands of business and industry leaders acknowledged for competency and experience whose only agenda is to supply South Africa with a reliable source of power at reasonable costs. 

Eskom is notorious for its disdain for people and their well-being.  For many years it has fought off compliance with air pollution minimum emissions standards for 16 of their power stations. There is no reason to expect it to be amenable to any approaches now, let alone having its house put in order. 

The challenge will have to be a legal one and the first step in this process is the website www.mi5.co.za that has been set up to co-ordinate the structuring of this approach.   

This is an acknowledgement to the South African media. While Eskom CEO Tshediso Matona thinks that “the way Eskom gets reported on creates the perception of a crisis”, excerpts from News24, Finweek, Business Report, IOL, BDLive, Mail and Guardian, Financial Mail (among others) used in this article show in fact that there is a crisis.

Wren Mast-Ingle is writer describing himself as a wordsmith anarchist and quality of life activist.

He is writing two books – Vibrational Reality and The Fallacies of Predictions based on the 2012 doomsday predictions as a result of information gathered through his website www.mi5.co.za between 2007 and 2012.