Global firm to validate Eskom stats as rolling blackouts remain reality for next 24 months, Scopa hears

24 Jan 2023

Eskom is getting what’s effectively a third inspector. A deal with a global service provider to validate the power utility’s system reports is being concluded, Eskom board chairperson Mpho Makwana on Tuesday told Parliament’s spending watchdog, the Standing Committee on Public Accounts (Scopa). MPs failed to interrogate the identity of the company, how it was chosen or any details including the contract value.

Questions arise. This would be the third set of eyes monitoring Eskom, coming amid unfolding political contestation over the power utility – both for control and as a 2024 electioneering issue – and South Africa’s energy sector.

It seems to suggest a lack of trust between board and executives, and possibly also others, over the quality, extent and veracity of Eskom’s system reports data.

The National Energy Crisis Committee (Neccom) – the driver of South Africa’s energy action plan – already has an inspecting team in place for Eskom as the power utility battles with persistent daily rotational power cuts amid unplanned breakdowns.

National Treasury also has inspection oversight on Eskom.

While using consultants is commonplace internationally, further questions arise as to why no domestic experts are engaged, particularly given the role of global consultancies in State Capture, and the prevailing circumstances that facilitated such moves, which also emerged before the Zondo commission of inquiry — be that McKinseys, Bains or T-Systems.

Read more in Daily Maverick: "No dodging the State Capture hangover for McKinsey and Trillian"

Read more in Daily Maverick: "T-Systems: German IT giant and State Capture profiteer"

On Tuesday, Eskom board chairperson Mpho Makwana styled this global service provider validation deal as one to “give comfort” and provide “a fresh set of eyes” and confidence.

“We are pretty soon finalising a contract with an independent service provider, (so) if and when we see a system update from our executives, the board can leverage a second opinion.

“So you will not be hearing internal voices from Eskom; there will be an external validator...” the Eskom board chairperson told MPs.

MPs failed to interrogate the identity of the company, how it was chosen or any details including the contract value.

This was “a new initiative from the board”, discussed with management “to relieve each other” from the challenge of energy experts poking holes into the power utility’s system reports.

Scopa chairperson Mkhuleko Hlengwa was sceptical:

“What we need to establish is the centrality of Eskom in Eskom decision-making... Or is Eskom now inheriting decisions taken elsewhere? If that’s the case, what’s the point of having Eskom?”

And ANC MP Bheki Hadebe asked why the Eskom board was outsourcing its fiduciary responsibilities.

Makwana fell back on an analogy of Eskom as the branded truck on the Neccom highway, explaining Neccom was a platform that afforded all roleplayers to sit in the same room.

“We can’t shy away… there are internal matters Eskom has control over; there’s a host of other matters Eskom doesn’t control.”

Regarding the global service provider deal: “In strict terms, it’s not outsourcing; it’s adding new skills,” he said, adding that it had nothing to do with the board’s fiduciary responsibilities.

Skills transfer and localisation would be embedded in this agreement.

“You will have this independent voice, ‘we verify (what Eskom says)’,” Makwana described this deal to MPs.

On the sidelines of Tuesday’s Scopa meeting, Makwana dismissed Daily Maverick’s questions on whether another inspector was needed for Eskom, alongside Neccom and National Treasury – questions including, “Do they have technical expertise?”

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And when asked whether engaging a global consultancy was not a risk of reopening the door to State Capture, given international firms’ role in this, Makwana said: “You (this reporter) are overstretching. This is simply a technical decision.”

Much of Tuesday’s Scopa discussions with Eskom focused on the rotational power cuts that leave South Africans without electricity for up to 12 hours a day.

Small businesses, already battling with higher prices, have been brought to their knees as the entire food production chain is affected, alongside water and sewage treatment systems.

It emerged that Eskom’s board chairperson has heard President Cyril Ramaphosa’s request to suspend the 18.65% tariff increase granted by the National Energy Regulator of South Africa (Nersa), which emerged at the ANC Free State provincial conference at the weekend.

Read more in Daily Maverick: "Power crisis: Ramaphosa plans to switch off Eskom’s tariff hike"

“What I understood the call to action from the leader of our county to mean, is for Eskom to look... to ease the burden on society. We have committees to look at what can be done to cushion where we can.

“As soon as we have found the mechanism of easing the pain, we will go back to our shareholder (Public Enterprises) and Neccom...” said Makwana.

But the MPs pushed to get a date for the end of these scheduled power cuts. Neither Makwana nor outgoing Eskom CEO André de Ruyter were straightforward on a date.

Referencing the planned 9,200MW coming online, De Ruyter said, “The risk of load shedding will substantially diminish in the next 18 months.”

Makwana, who at one stage seemed annoyed at this repeated question, insisted Eskom had already answered – March 2025 was when rotational power cuts could be expected to ease on the current plans, institutional turnaround and national energy ones.

“We are going to work incrementally to improve the situation and it will end when we hit an energy availability factor upwards from 70%, and we have given indications that March 2025 is when that happens,” he told MPs.

“It is not entirely up to Eskom to add new megawatts... As citizens, we have a duty. As I look at the lights here (in the parliamentary committee room), these down lights are not energy saving ones. It starts right here in this House, in our homes...”

However, much of such improvement would depend on thousands of megawatts coming on stream as planned. And while Neccom’s national energy plan seems sound, the megawatt numbers game is a little like counting chickens before they hatch.

For example, it depends on a successful appeal against Nersa rejecting Eskom’s 3,000MW of a gas power facility because the application should have been brought under another section of the electricity regulation legislation.

Or the planned 9,000MW of some 100 private embedded power projects being finalised, and being able to wheel onto the grid.

And for Eskom to successfully return power plants after maintenance that, in many areas, remains embroiled in criminality, like mixing rocks and metal among the coal.

Crucially, the review of the Integrated Resource Plan – or South Africa’s electricity demand planning – must be finalised speedily. The current version, released in 2019 after several years’ delay, is widely regarded as outdated.

De Ruyter told Scopa that South Africa’s energy needs had changed from the 1970s, when it was geared towards a manufacturing and industrial sector operating 24/7 with cheap base load supply, and only a small residential peak.

The apartheid government did not supply electricity to all South Africans. The integration of the bantustan grids unfolded only after the 1994 democratic transition, alongside the much required expansion of electrification of the historically unconnected across South Africa.

Today, De Ruyter pointed out, power consumption in the manufacturing and mining sectors has declined in line with their contraction.

Instead, it’s household electricity consumption that drives peaks.

For example, when rotational power cuts end, electricity consumption spikes as inverters and batteries are charged again.

“Instead of focusing on base load, we should be focusing on peaks. That’s not catered for in the current, largely unresponsive, coal power fleet,” De Ruyter told MPs.

“Our coal power plants are not flexible enough to cater for the demands of the market...”

The political contestation over Eskom remains far from settled – from a Cabinet reshuffle, splitting mineral resources and energy, coal and other vested interests, to the 2024 elections and more.

Until those prickly political and ideological points are resolved, and government acts simultaneously at different levels, the energy crisis will persist. DM

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