Eskom reality check: it will NOT get better any time soon, regardless of SA’s WEF sales pitch/PR

18 Jan 2023

Against widespread public criticism, pending litigation and social restiveness, 22 years of ANC energy (mis)governance have caught up with the governing party. It’s now a crossroads moment for South Africa – more dickering, pretty platitudes about resilience or, finally, concerted action.

Reality check: it will not get better any time soon, regardless of South Africa’s World Economic Forum sales pitch of ending rotational power cuts in 12 to 18 months, or domestic claims that all can be fixed within six to 12 months.

Eskom’s own likely risk outlook to 31 December 2023 is almost solidly red (Weekly System Status Report 2023 w1.pdf) – that’s at least Stage 2 rotational power cuts, but more likely higher stages, given past trends.

It is understood the consensus emerging in this week’s series of meetings on the energy crisis, also with the National Energy Crisis Committee, known as Neccom, was to expect at least another 24 months of persistent significant rotational power cuts.

It’s a dim prospect and difficult optics to control for the Ramaphosa administration’s determinedly glass-half-full view, while hammering home South Africans’ resilience.

That’s even if Neccom remains upbeat, claiming “important progress” in a briefing note sent to Daily Maverick from the Presidency outlining steps to secure additional megawatts through new embedded generation projects – the first totalling 9,000MW is expected “to connect to the grid” by year-end to ease power outage schedules from 2024 – and maintenance to return key power generating units, also at Koeberg nuclear power station, and more.

Previous upbeat talk of remedying rotational power cuts through “additional actions” announced in President Ramaphosa’s televised national speech on 25 July 2022 (President Cyril Ramaphosa: Address to the nation on energy crisis | South African Government) blew up just four months later when Eskom ran out of diesel, and money to buy more.

While 50,000 litres of diesel were eventually found for the open-cycle gas turbines that buffer against higher stages of rotational power cuts, the promised stable supply lines to ensure a flow of diesel weren’t (Found: Fifty million litres of diesel for fifteen days of relief – but source of funding future supplies remains uncertain).

Fifteen days later, as was predicted, diesel ran out and rotational power cuts ramped up – and there was silence from those in power. As again now, after a week of Stage 6 cuts. That another 50,000 litres of diesel were procured on 6 January only emerged 10 days later, in this Monday’s Eskom Power Alert.

“This fuel will be utilised sparingly to manage the pumped storage dam levels and to limit the amount of load shedding during the day…”

The diesel disaster signals a governance paralysis deeper than internal ANC power-wrangling and not rocking the governance boat ahead of a critical ANC national elective conference in December 2022.

Read more in Daily Maverick: “Legal challenges mount for Eskom and Department of Public Enterprises over rolling blackouts”

If the public enterprises, finance and energy ministers can’t sort this out between the three of them, the chances of seven ministers of Neccom agreeing and implementing anything is even more unlikely.

It’s a tight two-step for Ramaphosa who, given the centralisation of power in the Presidency, is pointman.

Various government meetings, also of Neccom, must wrap into presumably a(nother) plan ahead of the ANC National Executive Committee from 27 January, and ANC lekgotla from 29 to 30 January, its first such meetings since the party’s December 2022 Nasrec conference declaration that “the ANC-led government must move decisively to implement conference resolutions to end load-shedding and stabilise electricity supply”.

A two-day Cabinet lekgotla is scheduled from 1 February.

At this stage, it seems all eyes are on Ramaphosa’s 9 February State of the Nation Address. If an announcement is earlier, as the Presidency told Daily Maverick, “there will be some communication”.

But the debacle for the governing ANC is this: meddling in Eskom dates back to 1996, and the rotational power cuts some 15 years, all during the time it was in power and in control.

In 1996, then public enterprises minister Stella Sigcau moved legislative amendments to bring the power utility under state control. “Eskom is not vested within the government. Therefore legislation is necessary to place the entity under government control…” she is quoted as saying in the Mail & Guardian (Eskom equity fears – The Mail & Guardian).

An Eskom Amendment Act was enacted from 1998, followed by the Eskom Conversion Act of 2001 that made the power utility a public entity, with the public enterprises minister entering a shareholder compact with Eskom Holdings Limited.

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Power cuts hit in 2008 after the Thabo Mbeki presidency basically ignored Eskom’s submissions for investment in more power capacity.

When construction at Kusile and Medupi power stations got underway in 2007 – they were meant to be completed by 2014, but are not quite yet done – it was in the shadow of dodgy preferred procurement dealings with ANC investment arm, Chancellor House, according to the Mail & Guardian in late 2006 (Other Chancellor House investments – The Mail & Guardian).

Read more in Daily Maverick: “Load shedding updates – Legal action against Eskom mounts as ‘gatvol’ citizens demand end to blackouts”

Two years later, the ANC’s Chancellor House, established in 2003, had a 25% stake in a domestic Hitachi subsidiary that won significant contracts. For this, the Japanese parent company Hitachi, in September 2015, paid $19-million to “settle” charges by the US Securities and Exchange Commission.

Brought under the Foreign Corrupt Practices Act, these related to some $5-million in dividends to Chancellor House “when it inaccurately recorded improper payments to South Africa’s ruling political party in connection with contracts to build two multi-billion dollar power plants”.

That arrangement, the commission said in its statement at the time (SEC Charges Hitachi With FCPA Violations), “gave the front company and the ANC the ability to share in the profits from any power station contracts that Hitachi secured...”

During the Jacob Zuma presidency, Eskom, like other state-owned entities, was looted through a series of deals, middle-men and facilitation fees mainly, but not solely, by the Gupta brothers and their business partners.

The “keeping the lights on” mantra of one-time Eskom CEO Brian Molefe meant that many of the then already ageing power plants were run hard, with maintenance skipped.

It led to the current situation of unplanned breakdowns; the need to take offline around 5,000MW for planned maintenance. And while substandard coal – rocks, essentially – was long ago identified as a problem, incidents of intentional workplace disruption such as cutting pipes and opening values to stall operations, alongside threats against plant managers, emerged more recently.

All that is documented – publicly.

But in the traditional ANC tactics of deflection, claims of sabotage are getting increasingly louder since December when Mineral Resources and Energy Minister Gwede Mantashe – also governing party national chairperson – accused Eskom and its CEO André de Ruyter of “agitating for the overthrow of the state”, as 2022 recorded over 200 days of rolling power outages.

At a pre-Davos WEF event, International Relations Minister Naledi Pandor talked of rotational power cuts as “an oppositional act against South Africa”.

And, most recently, Monday’s ANC parliamentary caucus meeting on the energy crisis is understood to have linked rotational power outages to sabotaging the ANC’s 2024 electoral chances. Requests for comments on this were not responded to.

Read more in Daily Maverick: “Government plans to focus on six ailing power stations to resolve the electricity crisis”

Ironically, such sabotage and oppositional attack rhetoric recalls the Zuma presidency’s regime change and opposition coup d’état talk that came at a time when it was increasingly under pressure in the wake of the #GuptaLeaks, the emails that lifted the lid on the extent of State Capture.

Eskom’s close on R400-billion debt that it can’t service without government bailouts, according to the latest available annual report, is a factor. But so is the lack of spending stretch as South Africa’s economic growth remains in the doldrums, and corruption and malfeasance still gobble up much that could be available.

Crucially, saying something – no matter how pretty the optics and the words – isn’t doing it. And it is time to stop dickering about, and do. DM

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