Electricity minister Kgosientsho Ramokgopa has urged Eskom to improve staff morale by resuming performances bonuses, which were halted in 2017.
It isn’t clear how these performance incentives will be structured and paid, but according to the electricity ministry the money will come from the savings on diesel.
Eskom’s expenditure on the fuel to run emergency power reserves — open-cycle gas turbines that lessen the need for higher stages of load-shedding — has soared over the past three years and more than doubled to R21bn in the year ended March 2023 from R10bn the financial previous year. The utility has budgeted R30bn for the fuel in the current financial year (ending on March 31 2024), and more than R20bn of that has been spent in the first seven-and-a-half months.
Ramokgopa told parliament’s portfolio committee on public enterprises on Wednesday he had asked Eskom management and the board to introduce incentives for workers at power stations based on the performance of those plants.
The minister told the MPs that when he visited power stations shortly after his appointment in March he found that staff morale was low, especially at those plants that were due to be shut down over the next few years.
“Workforce morale was extremely low because there have not been incentives in place for a number of years due to legacy issues and the quality of performance. Employees at stations due to close down were very demoralised,” he said.
Since then the government and Eskom have decided to delay the shutdown of plants such as Camden and Hendrina — previously scheduled to for closure in 2023 and 2026, respectively — to mitigate the country’s chronic power shortage.
That decision has helped improved worker morale at affected stations because they now “know there is life beyond 2025, and they will be able to continue feeding their families”.
Ramokgopa said introducing performance incentives linked to the functioning of power stations would lead to an improvement in generation performance and worker morale.
In response to question from Business Day seeking clarity on how the performance bonuses would be calculated and paid, the electricity ministry said the performance bonus incentive wasn’t a new announcement.
“The incentive scheme was introduced by the management of [Eskom] generation and funded by the savings generated by improved plant performance and concomitant reduction in the need to burn diesel,” it said.
Eskom told Business Day it hadn’t budgeted for any performance bonus incentives this year but confirmed that a “winter incentive system” was introduced.
The performance of Eskom’s generation fleet, or the energy availability factor (EAF) — measured as actual electricity output as a share of total installed capacity — worsened from 62% in 2022 to 56% in the year to end-March 2023. Performance deteriorated further to 55% for the first seven months of the current (2024) financial year.
The target for financial year 2024 is an average EAF of 60%, according to Eskom’s generation recovery plan.
Eskom’s integrated report for 2023 states that bargaining unit employees, who account for about 82% of the workforce, receive a basic salary that includes a 13th cheque. That is referred to as an annual bonus but is structured as part of the guaranteed cost to company.
Given Eskom’s poor financial results in recent years, no incentive bonuses have been paid since 2018.
Furthermore, the conditions Treasury attached to the R254bn debt relief to Eskom has limited the utility’s “autonomy around decisions related to remuneration and benefits”, it said.
The conditions allow for market-related remuneration adjustments, provided they do not negatively affect Eskom’s financial position. No incentive bonuses were allowed to be paid in the 2023 financial year.
Eskom told Business Day the debt relief doesn’t specifically prohibit any incentive or performance bonuses. The conditions only state that remuneration adjustments should not affect Eskom’s financial position and sustainability, it said.
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