Business is yet to see a tangible plan for fixing Eskom and the government lacks the required political will, Business Leadership South Africa CEO Busisiwe Mavuso told the Sunday Times Top 100 Companies Directors Event in Johannesburg on Friday.
“The reason why 18 years later we have not finished Medupi or Kusile power stations is because of the prevalent crime and corruption.
“Is Eskom supposed to continue being part of the [energy] equation or are we supposed to broaden energy [supply]? Can we salvage Eskom, at least in this current political climate? We are talking about R1bn a month leaking from the system. Where do we begin fixing Eskom in that environment?”
Former Eskom CEO André de Ruyter, who quit in December after three years, has said corruption cost the utility a billion rand a month.
Mavuso, a former Eskom board member, said South Africa had the skills to help turn the power utility around, but political interference was preventing those with the skills from making a difference.
“We have engineers galore, we have skills galore, and we have professionals galore. The problem is that you are put in that environment as an engineer, as the board, as the CEO, with both your arms tied behind your back and you are expected to box in a boxing ring. How are you going to do that? Decisions are being made at Luthuli House, that is where the problem is. Eskom knows what needs to be done, there are plans galore.”
We have engineers galore, we have skills galore, and we have professionals galore
— Busisiwe Mavuso, CEO of BLSA
Mavuso warned that delaying fixing Eskom is a risk to foreign direct investment.
“Many emerging markets are rolling out the red carpet for capital, and they are giving us a run for our money … Interest is shifting from South Africa to East Africa because of the deteriorating trading environment, while we sit and quibble about Eskom. Capital is like water; it always follows the path of least resistance. We are going to make it difficult for capital to land here. Capital has many addresses and unfortunately the South African address does not look very attractive.”
The World Economic Forum (WEF) in January identified South Africa as one of 31 countries, including Argentina, France, Germany and Mexico, with a high risk of “erosion of social cohesion”.
The WEF said prolonged economic stagnation, state collapse, employment and livelihood crises, the failure of public infrastructure and the growth of illicit economic activity were the top five threats South Africa faced.
Former Eskom CEO Jacob Maroga, also speaking at the Sunday Times event, urged the government not to abandon the power utility despite increasing load-shedding due to breakdowns in its ageing fleet of coal-fired power stations.
He said calls for the setting up of a parallel energy system in the next 15 to 20 years were misdirected.
“We have almost the 10th-largest power system in the world, and it is centred on Eskom. There is no way, and we don’t have the money to say: ‘Let us abandon it and start something else,’” Maroga said.
The government declared a state of disaster in February to deal with the energy crisis, though this was ended in April. President Cyril Ramaphosa appointed Kgosientsho Ramokgopa minister of electricity with the responsibility of ending load-shedding.
Maroga said the crisis was caused by coal being neglected in favour of renewables.
“South Africa has more than enough capacity. When I was at Eskom, our highest demand was 34,000MW. We have not reached 34,000MW since 2010; our demand is maybe 32,000MW or 33,000MW, but we have added 10,000MW at Kusile, we have added 6,000MW of renewables, so there is enough capacity in the system.
The problem is the performance of the coal capacity. For the past three years, I think the reason the coal capacity deteriorated is because important people believed there was an instant solution in renewables, and they neglected the coal capacity.”
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