Eskom suits holding a press conference on Sunday was something else. The absence of electricity in our lives is suddenly an emergency as the next general election approaches. By my reckoning, 16 months to go.
For me the heart of their message was not that the Eskom board has agreed with management on a power plant performance recovery plan to dramatically raise its energy availability factor (EAF), but rather that this plan is in “the final stages of being approved by the shareholder”.
I had to laugh. Eskom’s new chair Mpho Makwana is a gentle soul who has previously chaired Eskom (and was CEO for a period). “The shareholder” here is the government, specifically the department of public enterprises, the redoubt from which minister Pravin Gordhan runs some of the country’s most critical state monopolies.
Gordhan is an operator. He will swear something will be on in days and you can tell from his eyes and by the set of his jaw he means it. But the world he lives in is a dystopian nightmare of intrigue, broken promises and betrayal. Ten minutes later his answer to “can we go ahead minister” could be entirely different.
So good luck to the chair. He is way too trusting. He is also chair of Nedbank, which may have softened him. It was good though that he used a minute on Sunday to properly bid farewell to outgoing CEO André de Ruyter, something he signally failed to do when energy minister Gwede Mantashe implied late in 2022 that De Ruyter was a traitor.
“I wish on behalf of the board to thank Mr André de Ruyter to see his remaining time in office through to the end of March 31 2023,” he said, “in spite of the ultimate sacrifice he almost had to suffer when an evil, treasonous criminal laced his coffee with cyanide....”
The mere mention of De Ruyter invites some reflection. How bad has he been? Between 2007 and now, nine CEOs later, the fact is that Eskom’s EAF has been a jagged, but unmistakably downward, slide. Some CEOs have done slightly better (or have been the beneficiaries of sound calls made by predecessors) and others not.
But if you consider that the EAF, which measures the average percentage of time all of Eskom’s about 90 generating units are available to make electricity, was almost 95% in 2001/2022, and then pick up the measure in 2007/2008 when it was 84.85% and Jacob Zuma had just been elected leader of the ANC, the picture in subsequent years looks like this: 85%, 85%, 84%, 81%, 77%, 75%, 73%, 71%, 77%, 78%, 70%, 67%, 64%, 62% — and for 2022/2023, 58%.
There have been times when the EAF has been healthy enough to allow a sharp increase in planned maintenance. Figures show for instance a jump in planned maintenance from 10% of available plant in 2014/2015 to almost 13% the following year, which fired a bounce in EAF from 71% to more than 77% in 2016/2017.
So reversals of EAF are possible. But are they sustainable? Maybe, if absolutely nothing goes wrong. The plan Eskom’s management and board have approved suggests focusing deep and expert maintenance on just six power stations. The problem is that things might have fallen too far. One of the six is Kusile, more than a decade late and many tens of billions of rand over budget. Damage done there by poor design is breathtaking. The year planned maintenance nearly hit 13% the percentage of plant broken down was less than 15%. This year it is nearly 30%.
Makwana’s plan (still being considered by the shareholder, it must be repeated, because when the ANC swallows a nail it almost always emerges a corkscrew) is to get Eskom’s EAF back to 70% in the next two years. That is staggeringly ambitious so let’s not get too excited.
What is required of Eskom to meet that target is a focus on detail, excellence and routine such as we have never seen in nearly 30 years of ANC governance. The only hope is that the party becomes so fearful of losing its parliamentary majority in 2024 that it allows Eskom to do its job without interference.
Even then 70% is far away. The 9,000MW President Cyril Ramaphosa is hoping for from newly deregulated private sector producers will come in dribs and drabs and will mostly be for their use. Still, wherever demand on Eskom can be reduced it should be. Eskom sees the beginning of an open power market next year where they can bid, a day ahead, for surplus private sector power.
That would be a real liberalisation, which immediately makes one fear the ANC will find a way to stuff it up, to find another trough to eat from. Complex plans are also afoot to create a way for people who can afford rooftop solar to sell their private surpluses back into the grid. This is common elsewhere in the world. See who gets the smart meter contracts.
I plan to buy a new solar-driven battery at home. It will cost north of R40,000. If I could declare this and get a tax rebate I’d do it tomorrow, lifting one more fraction of pressure off Eskom from next week already. The instant beneficiaries would be people who still depend on Eskom.
• Bruce is a former editor of Business Day and the Financial Mail.
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