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What a tangled web has been woven around Eskom, much of it having little to do with electricity

MJ (Thinus) Booysen
By MJ (Thinus) Booysen
14 Dec 2022
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The technical and economic challenges in South Africa’s energy crisis are inextricably and uncomfortably linked to the country’s political and social contexts, challenges and their manifestation in legislation. Progress will require cognisance and sensitivity to these issues and working with disparate stakeholders.

Due to the complexities around our energy crisis, technically minded people or foreign observers could struggle to fully comprehend the intricacies and tend to confidently make simple binary statements that may appear logical if read in a textbook, but are patently wrong in the greater scheme of things.

We are currently in the throes of a potentially destabilising energy crisis — the like of which we have not seen. Our grid is running at substantially less than 50% of installed capacity, resulting in a debilitating eight to 10 electricity-free hours per day. 

The crisis has led to utterances from a multitude of “experts”, ranging from engineers, economists, union leaders, politicians, commentators, and Joes Soap affected by the crisis. One example is the call made by the Free Market Foundation, requesting that all and sundry be given access to generate electricity to the grid willy-nilly. This open-market economically minded idea could be disastrous, technically and otherwise.

Let’s consider some of the complexities that are not technical and not economic.

Ministers, ministries, and unions


A good place to start is our minister responsible for Energy, Gwede Mantashe. In fact, the title on his office door is Minister of Mineral Resources and Energy (DMRE). Although historically sensible, this coupling of energy to mineral resources presents an inherent conflict of interest in an era where natural and renewable resources (sun, wind, and wave) are more appropriately coupled to energy than mined and processed coal and gas. The ministry used to be called Mineral Resources, and later swallowed Energy as an afterthought.

In the wake of apartheid’s abusive labour conditions, the said minister rose through the ranks of a mining labour federation. In fact, he founded the National Union of Mineworkers (NUM) in erstwhile Witbank (eMalahleni), the epicentre of coal mining in South Africa, surrounded by our coal-dependent power stations.

It is therefore not surprising when he claimed as late as 2022 that coal can “reinvent itself”, and that the coal stakeholders must play a role in the energy transition. To further understand his commitments in a broader sense, it may be important to note that he was the chairperson of the South African Communist Party.

Eskom falls under the Ministry of Public Enterprises with Minister Pravin Gordhan, who also has communist roots. Although this ministry is supposed to manage the delivery of (electric) energy to the country, its remit is more managerial, and is bound by the policies set by DMRE Even our electricity regulator, Nersa, reports to the DMRE. This means that André de Ruyter, Eskom’s just-resigned boss, was reporting to the Eskom board and Pravin Gordhan, and as will be his successor, was hamstrung by another ministry — one that has an inherent vested interest in coal mining.

The various worker unions have a very strong lobby within the governing party. Analogous to unions in the energy sector, the teachers’ unions have clearly demonstrated for the last 30 years how they can restrict the progress of a common good and a nation’s progress by only looking after their members’ interests.

The difference is that poor education affected poor schools and the poor, and only indirectly affected affluent private and self-governing schools, thereby keeping the powerful happy. National electricity supply, on the other hand, affects us all directly.

Corruption


This brings us to another important contextual aspect: corruption, as most recently demonstrated by State Capture. State-owned enterprises (under SoE Minister Lynne Brown at the time) were main targets of the pilfering. As a huge infrastructure and commodity consumer, Eskom was not spared.

Medupi and Kusile were supposed to be our saving grace, but these two power stations have been riddled with corruption and incompetence. These two projects’ budgets have exceeded R300-billion, and they are not nearly operational, with electricity-generating units exploding and claims of flawed designs.



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It is imperative at this point to know that the ruling ANC’s commercial arm, Chancellor House was intimately involved in the process, scoring from a deal with Hitachi, which was fingered by the US Securities and Exchange Commission — Hitachi settled the fine after paying a “success fee” to Chancellor House for winning the contract. Said Gwede Mantashe in 2010: “Yes, we own a stake in Hitachi through Chancellor House, but we don’t think it’s a big deal.” 

Read in this light, Mantashe’s statement that Andre de Ruyter was “a policeman” who won’t “fix Eskom’s problems” is quite ominous.

The long shadow of apartheid: Racialised poverty, unemployment, the brain-drain, and affirmative action gone wrong


In line with the political considerations, it is important to note that South Africa has substantial inequality and grapples with apartheid’s society-devouring track record. Our official unemployment is at 33% (excluding the many who have given up looking), and our 20,000 annual homicides evidences a country at war with itself (compared with 6,500 civilians killed in Ukraine in 2022).

The vast majority of unemployed are black (African) and young: two-thirds of the youth are unemployed, and 37% of black South Africans are unemployed (vs 8% of whites). This is clearly an extremely unfair disposition that needs urgent attention and retribution.

It also leads to severe sensitivities around appointments of white people to positions of power. It is therefore completely understandable that one would be concerned about jobs and social unrest when thinking about coal and Eskom jobs, especially in the foreseeable short term.

Our policies of Black Economic Empowerment (affirmative action), however well-intentioned, have mixed with a strong dose of corrupt nepotism and cadre deployment, and resulted in a toxic cocktail of self-enrichment and entitlement in which engineers and public servants are not seen dead in sub-R250,000 sedans, and walk around in non-worker-friendly suits, despite claiming to present blue-collar workers.

To add to our sorrows, many leading experts have emigrated and are helping Australia, New Zealand, Canada, Uganda and other countries to keep their grids stay online. In fact, when you hear from so-called local experts, we need to consider that they (we, me included) are often the ones who were left behind.

Given our background of poverty and attempted upliftment, we also suffer from non-payment of bills and electricity theft. Due to many factors, such as corruption, incompetence, and political expediency, many municipalities (who act as sellers of electricity to end users) just do not pay their electricity bills to Eskom.

In November 2022 Eskom was owed R52-billion by municipalities.  Additionally, there is the issue of illegal electricity connections. According to some reports, more than 50% of electricity that is distributed by municipalities is non-revenue, ostensibly due to electricity theft. Not only do we have electricity theft, but we have a serious copper theft crisis — R46.5-billion by the end of April according to our Trade and Industry Minister Ebrahim Patel.

So, when André de Ruyter, the former Eskom boss, says we should buy electric vehicles to stimulate demand for electricity in the midst of excessive demand and severe rolling blackouts, I believe he means to say we need more “bankable” and high-tariff-paying demand (as opposed to non-paying municipalities), so as to stimulate and pay for more generation. 

So what?


Shouting myopic opinions from the sides that make sense when looking at our challenges through a small lens will not serve our purpose. We need solutions that are fit for purpose and that tick a multitude of boxes to the satisfaction of a multitude of stakeholders.

A technical-only solution that does not do justice to our fragile socio-political situation is bound to be rejected. An economic-only solution that proposes an extreme version of the free market when the government has a communist slant is not going to work and will not be accepted.

Moreover, a pure variety of the principle of “supply and demand” is not likely to work without the nuances that differentiate the types of financial demand, electrical demand, financial supply, and electrical supply. Capital comes in human form too. Beyond only electrical power, political power weighs as much, if not more.

In these challenging times, we need to take hands and grapple with problems beyond siloed expertise. DM

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