Eskom spent more money and increased employees – but now produces less power

An analysis by Daily Investor revealed that the more money Eskom spent to build and maintain power stations, and the more people it employed, the less power it produced.

For this analysis, Daily Investor looked at Eskom’s capital expenditure and the number of employees and compared it to its power production.

Between 2007 and 2021, Eskom spent R680 billion to increase its generation capacity. A large part of the money went to two new power stations – Medupi and Kusile.

Construction on Medupi and Kusile started in 2007, and the completion dates were set to be 2012 and 2014.

However, poor planning, strikes, corruption, mismanagement, delays, and budget overruns crippled these two projects.

Fifteen years after construction started, neither Medupi nor Kusile are fully operational, and they experience frequent breakdowns.

Their energy availability factor (EAF) is so low that their performance resembles ageing power stations instead of new power stations.

Medupi and Kusile’s initial budgets of R79 billion and R81 billion became R145 billion and R161.4 billion, respectively.

It is not the end. President Cyril Ramaphosa said Eskom would need an additional R33 billion to complete Medupi and Kusile.

What is particularly painful is that most of the money was wasted. The two power stations, touted as the solution to South Africa’s load-shedding woes, did not help Eskom much.

Despite spending over R50 billion per year between 2010 and 2017, Eskom’s electricity production decreased.

The chart below shows Eskom’s capital expenditure versus its power production since 1990, which shows the more money Eskom spent on increasing its power generation, the less power it produced.

Eskom has a similar problem with its number of employees and employee costs.

Daily Investor tracked Eskom’s employee numbers and electricity production between 1990 and 2021, which revealed a concerning trend.

It showed that Eskom’s power generation increased between 1990 and 2005, when the company’s employee numbers decreased.

However, between 2005 and 2018, when Eskom’s workforce dramatically increased to a peak of 48,700 employees, Eskom’s power generation decreased.

By 2018, generation declined to 201,400 GWh (Gigawatt hour) – the same level as in 2003.

The charts below show Eskom employee numbers and the power produced over the last three decades.