OPINION: The Electricity Act of 1922 laid the foundation for the orderly development of a cheap and abundant supply of electricity in South Africa, writes Matshela Koko.
By Matshela Koko
THE ELECTRICITY Act of 1922 laid the foundation for the orderly development of a cheap and abundant supply of electricity in South Africa. It had taken the government of the ANC, led by Cyril Ramaphosa, nearly 100 years later to undo it.
On February 22, 2019, I wrote on Fin24 online that, “Eskom is broken, but it was not the Guptas – and bailouts will not fix it”. Factually, the ANC government broke Eskom in February 2018 when they dismissed the Eskom board and appointed a new board with Jabu Mabuza as the new chairman and Phakamani Hadebe as the CEO.
Mabuza was a compromised fellow who enjoyed the support of Business Leadership SA and Business Unity SA. He testified at the State Capture Commission as follows: “I knew when I was appointed as the chairman of Eskom that I was a chairman, an executive chairman of a company that owns a company that maintains a third of Eskom boilers.”
He also testified that his son Lwazi was contracted to supply coal to Eskom.
This notwithstanding, Mabuza went on to become the chairperson and CEO of Eskom after Phakamani Hadebe – who himself was not suitable for the job – resigned due to “unimaginable demands” that unfortunately had a “negative impact” on his health.
Mabuza unexpectedly resigned on Friday, January 10, 2020. This was a day after Deputy President David Mabuza said that the board of Eskom misled President Ramaphosa on load shedding.
When announcing Mabuza’s resignation, Ramaphosa’s then spokesperson Khusela Diko said: “In his resignation letter, Mabuza apologised for Eskom’s inability to meet the commitment it made to the president, the deputy president and the relevant ministers at a meeting on December 11, 2019, to avoid load shedding over this period.”
Eskom resumed Stage 2 load shedding on December 5, 2019.
It culminated in a sudden Stage 6 load shedding on December 9, 2019. In the wake of Mabuza’s resignation, Diko also announced that the “government will soon announce a reconfigured Eskom board with the appropriate mix of the electricity industry, engineering and corporate governance experience”.
To date, this has not happened. During a panel discussion on Eskom hosted by the Ahmed Kathrada Foundation, in partnership with the Wits School of Governance on November 19, 2021, Andre de Ruyter told the audience that Eskom did not have an engineer, a chartered accountant or an experienced industrialist on its board.
Eskom is an engineering-intensive utility, and it is pure negligence on the part of the government that such a utility does not have a generation engineer and a power delivery engineer sitting on its board. It is also an indictment that, according to De Ruyter, the board of Eskom is without a non-executive director who is a chartered accountant, given the fact that Eskom is faced with serious going concern issues.
I expected Ramaphosa to announce the reconfigured Eskom board when he announced the energy plan last Monday night. He did not. Instead, he announced a National Energy Crisis Committee to be chaired by the director-general in the Presidency. This reminded me of Harry Gwala when he addressed us at what used to be called Jameson Hall at the University of Cape Town. He said: “When our people are looking for bread because they are hungry, do not give them a Bread Crisis Committee.”
The board of Eskom of February 2018 is an incompetent board. We now know based on the evidence at the State Capture Commission that three of the five names that were submitted by BLSA were not even vetted.
This board inherited the power system that had over 4000MW in electricity surplus. On March 23, 2017, alongside the 42nd Southern African Power Pool executive committee meeting in Maseru, Lesotho, Eskom signed a five-year firm electricity sales agreement with Namibia’s national electricity utility, NamPower, and on 15 April, 2017, Eskom signed a three-year firm electricity sales agreement with Botswana’s national electricity utility, Botswana Power Corporation (BPC).
This was a clear signal that Eskom’s performance had improved immensely. We projected the cross-border volumes to increase by 8% by 2021.
The irony about the energy plan that was announced by Ramaphosa last Monday is that it now involves importing power from BPC.
Last Tuesday BPC published that it has noted the announcement made by Ramaphosa and that BPC has improved local power generation capacity and that in the last three months Morepule A and Morepule B were in full operation, dispatching an average of 580MW to the national grid daily.
Morepule A is 33 years old albeit it has been refurbished. Komati, Camden, and Grootvlei have been refurbished as well. Morepule A is older than Kendal, Lethabo, Matimba, and Majuba power stations and its reliability is such that it can be relied upon by BPC to export power to South Africa. The age of the plant does not matter. If Morepule A is this reliable, why then is Kendal the worst performer in the Eskom fleet?
The energy plan has missed the boat. In 2008 Eskom had a generation capacity crisis. That is why we needed new generation capacity. It is for this reason that Eskom returned to service Camden, Grootvlei and Komati power stations and refurbished the Arnot power station. In addition, Eskom constructed Ankerlig, Gourikwa, Ingula, Medupi, and Kusile.
The Eskom document Gx 0001 Rev 26 published on June 1, 2022, shows that Eskom has a dispatchable capacity of 52 292 MW. The peak electricity demand is now 32,000MW. The other 20,000MW is simply going to waste.
Increasing the maintenance budget is also missing the point. The average planned capability loss factor over the last 10 years is 10.5% against the target of 10%. Eskom is doing more planned maintenance than it planned to do. This means that Eskom has more than enough money to spend on maintenance; it is just not getting the returns.
As a rule, you do not add an additional 5 200MW per annum of intermittent generation capacity on to the national grid to recover 20,000MW of baseload generation capacity that is not available because of the failure of collective leadership, including that of the government. It is irrational and it is going to be extremely costly.
National Treasury has committed R31.7 billion to bail out Eskom for FY2022. In addition, the government has expressed its commitment to providing R21.9bn and R21bn in support for the 2023 and 2024 financial years. Eskom will need much more than this if the wish list in the energy plan is anything to go by. The fiscus is not going to afford it.
Simply put, the energy plan was nothing but a eulogy for Eskom, and that eulogy was eloquently delivered by the president of the Republic.
* Matshela Koko is former Eskom executive.
** The views expressed here do not necessarily represent those of the DFA.