Slow movement on public procurement decisions is hampering Eskom’s ability to quickly tackle the extensive maintenance challenges at its ageing power plants, CEO André de Ruyter said on Wednesday.
The embattled utility announced it would reinstitute stage 2 load-shedding after units at its Medupi, Kendal and Duvha power stations were lost on Wednesday morning and a further two — at Kusile and Majuba — remained down for repairs on boiler tube leaks.
This comes after power cuts last week, which quickly escalated from stage 2 to stage 4 — where 4,000MW of capacity must be taken off the grid to prevent a wholesale blackout of SA’s electricity system. For some areas, stage 4 can result in three power cuts a day, amounting to a total of seven-and-a-half hours.
Eskom is experiencing 15,485MW in unplanned outages — essentially plant breakdowns — while planned maintenance is at 4,100MW of capacity. The power cuts are viewed as a risk to SA’s recovery after the economy contracted 6.4% in 2020 due to the Covid-19 pandemic.
“There are significant challenges with procurement,” De Ruyter told a media briefing on the state of the system.
Eskom is bound by the rules of the Public Finance Management Act (PFMA) and requires exemptions from the Treasury to deviate from these processes.
However, De Ruyter said the delay in getting a response to requests for deviations hinders the deployment of resources.
He gave the example of Eskom’s wholly owned subsidiary, Eskom Rotek Industries, which provides construction, maintenance and transport services to Eskom operations. Eskom may not use Rotek Industries’ services without “testing the market first”, said De Ruyter, which “slows us down significantly”.
Though it submitted a request for a deviation from this requirement to the Treasury on June 24, Eskom has not yet received a response, he said. “That does have a significant impact on our ability to deploy resources to site to carry out much-needed maintenance.”
Though Eskom supported the need for good governance with respect to public funds, it needs an “expeditious solution” to the requests it put to Treasury, said De Ruyter.
“Until such time as we have explicit exemptions, we will have to comply with the PFMA. There is simply no alternative.”
Eskom has previously underscored this issue, stating that a typical response time for approvals is 77 days.
De Ruyter has faced intensifying public censure over the power cuts, including calls for his resignation and the resignation of the Eskom board. He took the helm, however, after years of government policy indecision about the makeup of the electricity system, and the troubled construction of new plants Medupi and Kusile. At the same time, corruption and state capture efforts left Eskom’s overtaxed and undermaintained power plants vulnerable to sudden breakdowns.
Despite Eskom’s repeated warnings that SA faces a supply shortage of between 4,000MW and 6,000MW in the coming years, the government has been slow to procure the independent power needed to bridge this gap. The utility’s fragile operations are further hobbled by its debt of more than R400bn, leaving it reliant on government support and making it one of the most acute risks to SA’s overstretched public finances.
Finance minister Enoch Godongwana has become the latest voice to criticise De Ruyter for the power cuts. In an interview with the Sunday Times, Godongwana said De Ruyter has been allowed to do more planned maintenance than his predecessors were and SA has not seen the results.
De Ruyter refrained from commenting on Godongwana’s statement, saying this is “in the political domain”. He referred any response to public enterprises minister Pravin Gordhan.
De Ruyter did, however, take issue with the assertion that he is being afforded more space to do maintenance work than his predecessors, calling it “interesting”.
“It suggests there was a deliberate decision ... to defer maintenance under my predecessors and, of course, that just exacerbates the current challenges we are facing.”
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