Disentangling the mess that is Eskom will take political will, expertise and bold, innovative strategising, writes Tshilidzi Marwala.
While driving home during a stormy evening last weekend, I found myself doing a rendition of one of my old-time favourite songs. This was after the latest round of load shedding, which followed a brief respite from power cuts, thanks to President Cyril Ramaphosa’s having placed a moratorium on outages during the festive season.
The lyrics, from Simon and Garfunkel’s epic song, read in part:
“Hello darkness, my old friend/ I’ve come to talk with you again …/ I turned my collar to the cold and damp/ When my eyes were stabbed by the flash of a neon light/ That split the night …”
We are barely a week into the year and, once again, we are facing rolling blackouts. The spectre of Stage 6, as announced last month, still haunts the country. This is a bad omen for the already fragile economy when you consider the severe knock that businesses took last year, particularly in the mining and manufacturing sectors.
Small businesses are ill-equipped to deal with the impact and have recorded losses. Somehow, the economy managed to escape a technical recession in the first half of the year, albeit narrowly.
the proposed restructuring of Eskom in terms of breaking it into three components – generation, transmission and distribution – has to be better planned because it will ultimately make electricity supply more complex.
Our economy cannot afford to repeat this if we are to see the required growth happen, or if we are to make a dent in the unemployment rate, which is threatening to exceed the 30% mark.
THE POWER PROBLEM
While fingers have been pointed everywhere, the problem with our electricity supply is a confluence of factors. The evolution of the problem, and its resurgence, has been attributed to a lack of adequate planning, resourcing and scheduled maintenance. There appears to be an absence of in-depth knowledge about the energy sector, as well as an absence of any innovative solutions to the crisis.
The rising costs of energy have resulted in increased tariffs and living costs, making electricity and power very expensive.
Consider, for example, that the Medupi and Kusile coal-fired power stations are the largest supercritical power stations in the world. Supercritical power stations involve a complicated design and had not been constructed to this scale before. Unlike conventional coal power stations, they require a specific temperature and pressure, and superfluid – which is neither liquid nor gas – is required in place of steam to move the conductor.
In essence, then, we have two brand-new power stations that do not work to full capacity. This is a classic definition of inefficiency and wastefulness. Why has this happened, and why did we pursue untested technology on this scale?
The designs were done mainly by international engineers, who had to co-opt local engineers to rubber-stamp their designs for compliance. We did not have sufficient engineers, engineering technologists, project managers and financial specialists with the expertise to negotiate this deal, or to be deployed to manage the projects efficiently and effectively.
Consequently, the construction of these two power stations, which was expected to cost about R150 billion, escalated to R450 billion. The technical problem became a financial problem that was allegedly plagued with vested interests.
NO ENERGY MIX
Simultaneously, in a self-betraying move, we have a less than adequate energy mix strategy. Take the Pebble Bed Modular Reactor (PBMR), for instance – it was touted as a safe and small set of nuclear reactors for power generation using high-temperature technology. But it was abandoned in 2010, after almost R10 billion had been invested in the project.
The engineers working on the PBMR are now scattered all over the world. leading to the brain drain afflicting South Africa.
In the midst of these woes, Eskom is unable to collect its revenue. Last year, Parliament’s standing committee on public accounts heard that municipal debt to Eskom had ballooned to R19.9 billion in October last year from R9.8 billion in February 2017 – and that, in total, municipalities and individual users owed Eskom more than R36.5 billion.
In addition, the power utility’s long-term debt has jumped to R441 billion from R255 billion in 2014.
This, of course, has been compounded by a fraught political space. Frankly, there is no political will to make the necessary tough decisions to eliminate load shedding. Nothing short of a Marshall Plan is needed.
the construction of these two power stations, which was expected to cost about R150 billion, escalated to R450 billion
The surprise expressed with each crisis is usually chequered with probable and improbable explanations. This is not surprising when you consider that Cabinet has a technical skills deficit. Since 1994, no member of Cabinet has had an undergraduate degree in engineering.
Ramaphosa’s apology to the nation in December was not the first. Three presidents before him have also had to apologise, indicating the depth and complexity of Eskom’s problems, which will require time, and perhaps internal as well as external expertise, to disentangle. So, we all have to be patient.
There has not been enough political or social capital to tackle Eskom’s bloated workforce. A 2016 World Bank policy research paper, which looked at the financial viability of electricity sectors in sub-Saharan Africa, found that Eskom needed a workforce of only 14 244, but was sitting with a staff count of 41 787 – indicating that it was 66% overstaffed.
Despite these numbers, there is still a lack of technical skills at the power utility, and most of these employees work in support roles on the margins of the energy sector.
This interface between politics and the energy sector has been so toxic that, over the past 10 years, Eskom has had 10 chief executive officers (CEOs) – a staggering number when you consider that CEOs in the energy sector tend to stay on longer than their counterparts in other sectors.
Given that Eskom has been riddled with state capture shenanigans, it is difficult to sift fact from fiction. What is undoubtedly true is that our energy infrastructure is old and, in the main, poorly maintained.
THE WAY FORWARD
So, what needs to be done?
Firstly, Eskom needs to be rationed so that the mix of technical and nontechnical employees is properly balanced – and this should occur from board level to the lowest levels.
Secondly, the proposed restructuring of Eskom in terms of breaking it into three components – generation, transmission and distribution – has to be better planned because it will ultimately make electricity supply more complex.
This is not a new idea. Former president Thabo Mbeki considered a similar proposal when Electricity Distribution Industry Holdings was established to consolidate all electricity distribution into one company. However, the political shifts that saw his successor, Jacob Zuma, take office resulted in the idea being shelved.
Eskom will need to adopt imaginative planning strategies if we are to find our way out of the dark.
Thirdly, tough decisions need to be made without political interference. I would posit that Eskom needs a strategic partner, for example, who can turn around the power utility’s misfortunes and help it regain its solvency and better standing – and do this away from the political noise. However, said partner would do this on clearly defined terms.
Fourthly, we need to look at Eskom’s maintenance strategies. In engineering, three maintenance strategies are deployed: run-to-failure, scheduled maintenance and predictive maintenance.
Run-to-failure is where assets are deliberately used until the point of failure, leading to unplanned blackouts.
Scheduled maintenance is where assets are replaced once they reach the end of their life cycle, and still-working assets are replaced to prevent unexpected load shedding.
The maintenance strategy of the fourth industrial revolution (4IR) is predictive maintenance. We need to use 4IR technologies – such as big data analytics, artificial intelligence and blockchain – to manage electricity systems and finances. This, I would argue, is the route we need to take to explore structures that are efficient from financial, technological and operational perspectives.
Ultimately, we need to adopt a combination of these maintenance strategies and stick with it. Eskom will need to adopt imaginative planning strategies if we are to find our way out of the dark.
- Marwala is a professor and the vice-chancellor of the University of Johannesburg. He deputises President Cyril Ramaphosa on the SA Presidential Commission on the Fourth Industrial Revolution