Eskom vs De Ruyter on why the lights are on

Eskom chair Mteto Nyati said Andre de Ruyter cannot claim credit for the utility’s improved performance over the past few weeks and denied his claims that this improvement is due to the utility’s higher diesel budget.

Nyati’s comments come after former Eskom CEO De Ruyter made these claims during a question-and-answer session at the PSG Financial Services’ Annual Conference on 8 May 2024.

At the event, De Ruyter was asked about his tenure at Eskom, during which time the utility suffered massive losses, and load-shedding reached its highest level yet at the time.

During his tenure, former Eskom COO Jan Oberholzer was De Ruyter’s right-hand man.

De Ruyter said many people do not understand the utility’s size and complexity, and maintaining an Eskom generation unit requires around 18 months of planning, including budgeting and contractor identification.

“When you do an outage of one unit at a power station, there is a lead time of 18 months of planning,” he said.

“Jan and I put in place most of the outages that are currently being delivered and contributing to somewhat improved results from the coal fleet.”

De Ruyter added that during their tenure, the utility only had a diesel budget of R6 billion to run open-cycle gas turbines (OCGTs) – “peaking” power stations intended for emergencies.

“We were very aware of how we had to scrimp and save to use diesel very frugally and carefully,” he explained.

However, the current administration has a diesel budget of around R24 billion – four times what De Ruyter’s team had.

“So, if the lights are on, well done, but they are on because we are pouring money into diesel at the rate of knots,” the former CEO said.

De Ruyter cannot claim credit

However, in an interview with The Money Show on 9 May, Nyati said De Ruyter cannot claim credit for the load-shedding relief South Africa has experienced over the past 43 days.

“It has been part of a plan that we put together, and that plan was developed jointly with management and it was presented to the board and approved by the board in March last year,” Nyati said.

“That plan is really about accelerating and executing planned maintenance and that planned maintenance that we did, unlike in the past, what has changed was that we made sure that we are partnering with the original equipment manufacturers.”

He explained that now when Eskom now takes a plant down, it works with the people who have deep expertise around that plant, and who can transfer some of the skills and knowledge that may have been lost.

In the past, he said this was done by people who had limited or even no understanding of the equipment.

He acknowledged that Eskom spent a lot of money on diesel in the past financial year to keep its OCGTs running to compensate for the equipment that they had to remove.

“We spent a lot of this budget in the last 12 months, and rightly so because we needed to minimise the impact of load-shedding on South Africa. We had to make choices, and those choices were difficult – remove the equipment, go and fix it,” he said.

“But the beauty of what we did was that it was a pain in the short term, and as we were bringing the equipment back, we were bringing equipment that was much more reliable, and this is what we are seeing now.”

He further explained that the new board that came in October 2022 worked with Eskom management to put together a plan to execute this planned maintenance, which was approved in March last year.

This plan was also funded by the new management team, as De Ruyter’s team did not have the resources to fund this maintenance.

“We organised via Treasury to have this funding that was approved to execute this plan,” Nyeti said. 

“[De Ruyter] was actually not there when this was executed, so he cannot claim the credit.”

Nyeti identified Eskom’s current group executive for generation, Bheki Nxumalo, and Public Enterprises Minister Pravin Gordhan as the key people responsible for this turnaround.