Vodacom’s meeting with Andre de Ruyter changed the game

Vodacom CEO Shameel Joosub revealed that a meeting with former Eskom CEO Andre de Ruyter and former COO Jan Oberholzer prompted them to work on a virtual wheeling agreement to fight load-shedding.

Joosub told Biznews-founder Alec Hogg that they met with De Ruyter and Oberholzer last year to understand the power crisis better.

The meeting aimed to clarify the expected load-shedding in the future and how long it will take to resolve the problems.

During this meeting, the concept of a virtual wheeling agreement was brought up, which put a process in motion that could radically change the local electricity landscape.

Virtual wheeling connects buyers with multiple off-take sites, including those behind municipal boundaries, to independent power producers (IPPs) via the Eskom and municipal grids.

Simply put, a company can buy electricity from an IPP and deliver it over the Eskom grid. It then gets a wheeled energy refund for the IPP (non-Eskom) consumption.

Joosub said over the last year, they worked through all the details and built a virtual wheeling platform to do the reconciliations for the refunds.

Vodacom and Eskom joined forces to create the virtual wheeling model, culminating in the two parties signing a virtual wheeling agreement on 30 August 2023.

Joosub said the agreement will help them reach their green energy goals and add capacity to the nation’s power grid.

It can also save Vodacom billions should it help to limit or resolve load-shedding when more companies get involved.

The lack of reliable power is a significant issue for Vodacom and other South African telecommunications companies.

It costs network operators billions in backup batteries, diesel generators, and crime, which escalates during power cuts.

Joosub said Vodacom has spent more than R4 billion on backup power solutions for its South African operations over the last four years.

In addition, the mobile operator is using around R800 million worth of diesel to run generators to ensure the network remains available during prolonged power cuts.

“Around 26% of our electricity consumption currently comes from diesel – an increase of 80% from last year,” Joosub said.

The high diesel consumption and related problems make life difficult for Vodacom, which is why it has invested in the virtual wheeling agreement with Eskom.

Joosub said there is a pricing benefit for Vodacom to buy power from IPPs, but that is not their primary motivation.

The aim is to work towards resolving South Africa’s energy crisis and create a more productive business environment.

The Vodacom CEO hopes that this agreement laid the foundation for other large companies to follow suit and encourage a boom in power generation from IPPs.

Vodacom agreement provides an easy-to-follow roadmap for others in the private sector to also buy power from IPPs.

This, in turn, can add significantly more power to the grid and reduce or even eliminate load-shedding in future.