Truth about the end of Eskom sabotage

Sabotage at Eskom came to a quick end after former Eskom CEO Andre de Ruyter left the utility, with some assuming that criminal syndicates deliberately undermined the utility during his tenure due to his push for private renewable energy. 

However, De Ruyter himself has pointed to the work done by the South African Police Service (SAPS) in tackling organised crime at the utility as the main reason for it coming to an end. 

This was coupled with changes to how the utility conducts maintenance, with it shifting towards partnering with original equipment manufacturers (OEMs) rather than contractors. 

Apart from this, there were key global developments, such as the Russia-Ukraine war that made sabotage extremely profitable, particularly theft of coal. 

De Ruyter praised SAPS’ efforts to end crime and corruption at Eskom during a Q&A at the second BizNews Investment Conference. 

“What is less well known is that SAPS instituted a specialised unit, a 24/7 unit, looking at crime and corruption at Eskom,” De Ruyter said. 

“They obviously did not make a big meal of it because that would have vindicated what I was saying, but they did.” 

“The word had clearly gone out that sabotage and corruption had gone too far and that it should stop.”

That unit has recently been deprived of funding and has been scaled back significantly, according to De Ruyter. He said this is a concerning development. 

During his tenure, De Ruyter repeatedly bemoaned the scale of sabotage and corruption at Eskom, describing it as a “sustained campaign of sabotage”.

He claimed that this was one of the main reasons behind load-shedding in South Africa during his tenure, with the campaign lasting for years and crippling Eskom’s operations. 

“Eskom’s various power stations have experienced widespread sabotage, criminality, and destructive and unlawful industrial action,” De Ruyter said in an affidavit during a court case. 

He explained that sabotage was not the only factor in the utility’s dismal performance last year but that “it is clear that damage to Eskom property and operations has been deliberate”.

De Ruyter suggested the sheer number of incidents of damage to Eskom’s equipment “overwhelmingly confirms” that the utility experienced a sustained sabotage campaign. 

Eskom’s former CEO estimated that sabotage alone was responsible for around two stages of load-shedding.

De Ruyter’s claims were corroborated, to a limited extent, by Electricity Minister Kgosientsho Ramokgopa, who said sabotage was a major reason behind Eskom’s deteriorating performance during the former CEO’s tenure. 

Ramokgopa warned that sabotage would offset any progress made in improving Eskom’s reliability and efforts to reduce load-shedding. 

“We are placing significant amounts of effort in ensuring that we protect these assets and defend the gains we have made,” he said. 

The minister said he was “more than confident that we will get to the bottom of this” because “if we do not solve this, all of our efforts are going to be undermined”.

Russia, Ukraine, and coal 

Another factor in the rise of sabotage during De Ruyter’s tenure was how profitable and attractive it became to steal coal and sell it for export. 

This was driven by the Russia-Ukraine war, which resulted in coal prices surging as European demand skyrocketed, as its gas supplies were cut off. 

“I also figured out, maybe after the fact, that part of my tenure coincided with the Russian invasion of Ukraine,” De Ruyter said. 

“Immediately after the invasion, the Russian supply of gas into Western Europe stopped and they had to buy coal from South Africa.” 

As a result of this, coal prices soared to record highs, resulting in immense profits being raked in by miners and exporters. Criminal syndicates were not going to miss out on this. 

“That spike in coal prices created a huge arbitrage between Eskom contract prices and export prices for exactly the same quality of coal,” De Ruyter said. 

“That coal could then be stolen from Eskom and exported from South Africa to Western Europe, and that is exactly what happened.” 

“That is why a lot of our operational issues can indirectly be attributed to Mr Putin in Russia, which is kind of weird when you think of it, but that is the butterfly effect.” 

It follows from De Ruyter’s reasoning that he thinks sabotage and criminality declined at Eskom after his tenure due the stabilisation and decline in coal prices. 

As European countries sought other, cheaper sources of energy, such as gas from other parts of the world, coal prices began to steadily decline. 

This, in turn, made it less economically viable and attractive to steal coal from Eskom to export to Europe as the arbitrage gap narrowed. 

As a result, sabotage at the utility declined alongside falling coal prices and Eskom’s operational issues were gradually resolved. 

Eskom’s operational performance has also greatly improved as a result of better equipment maintenance, which has reduced the number of breakdowns and prevented units from tripping shortly after returning to service.

Professor Hartmut Winkler from the University of Johannesburg explained that this shift has also greatly reduced sabotage at Eskom’s power stations. 

Using OEMs for maintenance enables Eskom to enter into service-level agreements for maintenance, making it easier for the utility to hold service-providers to account. 

In this case, if maintenance is inadequate and the unit trips shortly after returning to service, the OEM fixes it at their own cost. This incentivises them to conduct high-quality maintenance. 

Previously, most maintenance was conducted by contractors. This created an incentive for power stations to experience frequent breakdowns, creating more work for contractors. 

This resulted in many of them conducting poor maintenance and, in some cases, engaging in sabotage to prolong contracts or get new business.