President Cyril Ramaphosa returned to SA last week and felt the anger of millions of South Africans who want heads to roll at Eskom, whose leadership has wrecked the utility’s plants and the economy.
At a virtual cabinet meeting Ramaphosa proposed appointing a new board at Eskom, but ministers asked why top management, led by CEO Andre de Ruyter, was being spared the axe. The dominant view seems to be that the government cannot appoint a new CEO for the incoming board, whose immediate priority should be to evaluate the performance of top management.
Soon after he became president in February 2018 Ramaphosa appointed a new Eskom board. In January 2020 the board appointed De Ruyter to replace Phakamani Hadebe, who had resigned for health reasons. Those were the optimistic days of “Ramaphoria” and the “New Dawn,” which was meant to revive state-owned enterprises (SOEs) and kick-start the economy.
But everything has gone from bad to worse. Most SOEs, including Eskom, are in a worse state now than they were in 2018. Eskom has ruined the economy. But the Reserve Bank has also increased interest rates by 250 basis points since the start of 2022. If Eskom is doing such an effective job of decimating aggregate demand what is the point of piling on more misery and further reducing demand?
In 2018 Eskom had an energy availability factor (EAF) of 78%. The average for the period from 2007 to 2018 was 80%. There were no plant performance issues. In November 2014 there was a broken silo at the Majuba power station that took eight months to fix. For the rest of the nine-year period from 2009 to 2017 the lights stayed on during Jacob Zuma’s presidency.
But since 2018 there has been a collapse in plant performance. The EAF has declined to 56%. Load-shedding cost the economy R700bn between 2018, when the new board was appointed, and June 2022 based on a gazetted cost of unserved energy of R87.75c per kilowatt hour. Since De Ruyter became CEO the cost of load-shedding has been R570bn. If the lights had been on SA would have had a larger economy, a lower unemployment rate, higher tax revenues and a lower debt ratio.
A recent analysis by the National Society of Black Engineers (NSBE) debunks Eskom’s propaganda, including the myth that the utility did not maintain its plants before 2018. The average planned maintenance ratio was 10.6% between 2012 and 2018, above the target of 10%. “The allegation that the good performance achieved in 2016 to 2018 financial years, which brought load-shedding under control, was achieved at the expense of planned maintenance is baseless and must be rejected.”
The NSBE also disputes the argument that Eskom ran its plant too hard. The energy utilisation factor (EUF), a measure of how hard plants are run, declined dramatically from 82.7% in 2016 — above an 80% ideal benchmark — to 71.6% in 2021. The NSBE says there is nothing wrong with running the plants harder — above the 80% threshold — if a 10% planned maintenance ratio is met. This only happened in 2013, when the EUF was 81.9% and the planned maintenance ratio was 9.1%.
It has been claimed that Eskom needs space to take units off the grid for longer periods. But Eskom spent R16.6bn on maintenance in 2021. The planned maintenance ratio increased to 12.3% in 2021. On September 17 Eskom had 15% of capacity on planned maintenance. It is spending on maintenance and taking units off the grid, but the plants are still breaking down.
“The fact that the planned maintenance ratio was 12.3% without translation into improved performance is concerning. It probably means that the quality of workmanship was not up to standard,” the NSBE says. The quickest way to end load-shedding is to fix Eskom’s existing fleet and increase the EAF to 75%.
• Gqubule is research associate at the Social Policy Initiative.
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