The view below is from an Eskom engineer. (1977 – 2004) (Forced to take Early Pension due to Affirmative Action). Eskom (when it was the Electricity Supply Commission) was one of the best companies in the world. It was owned by all South Africans, and was a non-profit making organization. Money was always set aside, by selling electricity for more than it cost to produce, making profit for replacement and expansion. No World Bank or Government loans.
In 1994 it was turned into a business with the government as sole shareholder. This was done to collect further tax from those who actually pay for electricity, and to provide a vehicle for the implementation of government policies in the form of job creation and black empowerment.
Profits, and the money set aside for replacement and expansion and maintenance, was paid to the government as dividends. The sole ‘shareholder’ directly appointed most of the executive, and non-executive directors. These appointments came out of the ranks of the ANC, and were people with no managerial or Power Plant experience. The people started getting appointed and promoted based on potential. They couldn’t perform the work, but, the people who could do the work, but were retrenched based on skin colour, were re-employed as contractors.
Although no additional work was getting done, (due to lack of funds because of the increased workforce of roughly 23%) this was fine because the government wanted to reduce unemployment. In order to bring relief to poverty stricken townships, Eskom directors were instructed to produce the cheapest electricity in the world. This plan did not work, because of all the extra wages, contractors, a management team that did not have a clue how to run a Power plant, resulted in ESCOM running into huge losses for the first time in history.
To compensate for this, the non-competent management team cut the maintenance budget by 55%.
This were the first “crack” in the once stable, profit making Power giant’s foundation. The sole shareholder in the Mbeki era, wouldn’t allow Eskom to build any further power stations, saying that this would be done by private investors.
The private investors didn’t come to the party because electricity was too cheap (remember the reduced fee for the poverty stricken masses) to provide adequate return on investment. Five years too late Eskom was allowed to expand and build 2 huge, new power stations, but it didn’t have any money… This had to be borrowed.
The reason for this was that the ANC government instructed ESCOM NOT to cut the power to non-paying black townships, resulting in HUGE losses. (In the 2014-2015 book year, Soweto was R670 million in arrears, with more the than 5.2 million illegal aliens)
The “New” black uneducated, with no experience, signed a contract with the Richards Bay Hillside Smelter to deliver 120 MW of power, for 25 years (Who in his right mind sign a contract for such a long period?) At a reduced cost of 27% of the real cost of electricity. (120 MW is enough power to run a city the size of Vereeniging)
The ANC, the sole shareholder, wanted a piece of the cake (the two new Power plants) and ‘got’ a big piece of Hitachi – the company who ‘won’ the contract to supply the boilers for these power stations. Because of this Eskom wasn’t allowed to take Hitachi to court when poor, sub grade materials were supplied.
Then Eskom, with its reduced standards, attempted to project manage the construction of these new power stations by itself. What a calamity!!!!! The money was borrowed from the World Bank, however because they are coal stations a requirement was the installation of flue gas de-sulpherisation.
This hasn’t happened (yet) because of insufficient water. So Eskom (they don’t mention the ANC Government) is in the s..t with the World Bank. In short, because of taxation, affirmative action, transformation, employment, equity, BBBEE, lots and lots of corruption, a bloated and bureaucratic workforce etc., Eskom has run out of money and generation capacity, standards have dropped dramatically, corporate memory is being lost at an alarming rate due to “forced” retrenchments of skilled, qualified white persons with years of experience.
Today Eskom is attempting to borrow the money for the steam generator replacement at Koeberg from a French bank. One of the questions that this bank is asking is about post Fukushima safety improvement progress. Guess what!!!!! Because there is no money………. As is always the case, SOMEONE must pay. So Eskom wanted to dramatically increase its price. The government (who is also the sole shareholder) wouldn’t allow an increase large enough to cover the cost of its mismanagement. So Eskom is bankrupt, and, there is no money for maintenance, so the situation will carry on until total breakdown is the last resort.
The South African Institute of Race Relations (IRR) has just added to the wealth of knowledge available with a policy paper titled, ‘The rise and fall of Eskom, and how to fix it now’. In the detailed paper, engineer Andrew Kenny outlines with much dexterity the very rational solution to Eskom’s woes.
According to Kenny, there are no quick solutions to the crisis but there are a “clear ways out of it” by following five vital steps:
- Eskom must be depoliticised and must resume its earlier function of providing sufficient, reliable electricity at a price that covers costs
- Eskom’s transmission system must be taken from it and given to an ‘independent system and market operator’ (ISMO)
- Anyone who wants must be able to generate and sell electricity into the grid on a strictly commercial basis
- Electricity distribution should be taken away from municipalities and given to private electrical engineering companies that would compete with one another on efficiency and cost
- Energy sources for future electricity supply must be chosen on scientific and commercial grounds, in the best interests of mankind and the environment
Above all, Eskom must return to being what it was before, an independent engineering company whose sole duty is to provide reliable electricity and that appoints its managers, engineers, and technicians purely on qualifications and experience, not skin colour or political affiliations.
South Africa Today – South Africa News
