There’s an English phrase that churlishly mutters “credit where it’s due”. It is typically delivered begrudgingly, usually when a person or organisation you don’t like has achieved something positive.
Much-cursed Eskom, our national punching-bag, political football and wrecker of hope and dreams, is a good example. It has now managed almost a month of producing enough electricity to satisfy customer demand. So credit where it’s due?
The thing is to work out to whom the credit is due. Why is there no load-shedding? There is good reason to ask the question and plenty of room for suspicion that Eskom, as part of the governing party’s election campaign, has been asked to stop planned maintenance and “keep the lights on” until May 29.
But it seems that’s not the case and, strangely, the answer is possibly worse than that. If you ask organised business, it’s all down to them. I’ve been subjected to a public relations blitzkrieg that seemingly expects Business Day to publish glowing accounts of how business organisations have fixed just about everything. “Working together,” they tell me, “business’s partnership with government is making progress in its three focal areas.” It goes on to claim improvements in energy, logistics and crime are all a result of business organisations’ interventions.
Some media have swallowed it, but of course it’s slightly more complicated than that because the Energy Action Plan has missed its targets, especially the generation recovery plan. The plan was for Eskom’s energy availability factor (EAF) to average 60% by the end of March and to be sitting at 65% during any given day by now. But it hasn’t come even close to this.
It helps to look at the numbers, which I have done with the help of some learned energy experts. Last year was a relentlessly terrible year of load-shedding that wreaked havoc across the economy and society. Eskom shed 16.3TWh over the year, meaning average load-shedding was a touch over 1.8GW in any given hour. That average presented itself as no load-shedding during some hours and stage 6 at other times.
In the first three months of 2024 average demand has dropped by about 1.4GW. That can probably be attributed to two things, the first being a bloodbath in mining and manufacturing. An average hourly demand slump of about half a gigawatt can be attributed to this de-industrialisation, especially in the platinum, steel and ferrochrome sectors.
The second and larger contribution to the slump in demand for Eskom’s electricity has been solar installations, which amounted to 3GW of capacity in 2023. This has led to an average reduced demand of as much as 2GW when the sun is shining across the country.
Combine this slump in demand for Eskom power with running the diesel generators good and hard — as they are — and the standard winter ramp-down of planned maintenance, and Eskom has more than made up the average 1.8GW it was short on in 2023.
Credit is due for apparent progress in terms of unplanned outages, which are no longer at the horrific level of 17GW-19GW we saw last year. That could, to a degree, be attributed to interventions from the private sector, but it is worth pointing out that during the summer months, with as much as 8GW-9GW on planned maintenance, a standard outcome is fewer unplanned outages as there are fewer running units that can break down. It is also worth remembering that unplanned outages have often been a function of crime, criminality and corruption and their interaction with politics, and that an election is imminent.
It does look like good work is happening behind the scenes between organised business and the presidency, but a strange veil of secrecy and embarrassing PR over-reach means it’s difficult to really see what that might be. From the outside though, it is reasonable to make certain deductions. One is that the lights are on largely because demand for Eskom’s electricity has tanked, and that as more private solar comes online that demand will continue to wither.
While it is obviously good for both companies and households to have the lights on, the irreversible abandonment of Eskom by large-scale customers who pay, and the retention of those who do not, is a feature of a utility death spiral, not a bug. Business Day reported last week that municipal debt to Eskom has snowballed to R75bn. There is no rational reason to think this is going to get better.
That brings me to the National Treasury, which set stern conditions for Eskom’s R254bn bailout in 2023. One was that the entity be unbundled, which with a bit of generosity you can mark as green on the PowerPoint. But the rest, such as the vgbe consortium recommendations concerning the coal-fired power stations, which Eskom “must” (to use the finance minister’s language in the budget statement last year) put out to concession for the private sector to run, is less certain.
The Treasury said this needed to happen within three years from April 1 2023. That gives Eskom less than two years to get those power stations into the hands of the private sector, or pay back the money “at market rates”. Does anyone think this will happen? Nor do I, which makes me think the Treasury and Eskom are not finished talking about the utility’s endlessly deteriorating debt problem.
To be rid of its most debilitating millstone the Treasury should be throwing punches right now. It should be demanding that conditions to the bailout are met and that Eskom uses this window of calm to commission and build cheap renewables at a pace that gives it some hope of addressing its vast debt, while the private sector squeezes the last life from the coal fleet on its behalf. This will allow it to decarbonise quickly enough for its customers not to fall foul of rapidly escalating carbon border taxes in export markets.
In the corridors of patronage and power though, that is a political not technocratic discussion, and this is probably why there is so little noise on any of this — because politics is in election limbo. You can be sure of one thing though, whether it be load-shedding or debt, Eskom is not done with us yet.
• Parker is Business Day editor-in-chief.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.