South Africa

Eskom in deep trouble

Andre de Ruyter

Eskom generation executive Rhulani Mathebula revealed that fraud, corruption, funding constraints, poor planning, and shoddy work is crushing the power utility.

Mathebula made these comments during Nersa’s electricity price determination methodology webinar last week.

During the webinar, he discussed Eskom’s reliability maintenance program, which Eskom CEO Andre de Ruyter introduced in 2020.

Reliability maintenance is an established international framework to extend the life span of equipment and increase reliability.

It is designed to provide a roadmap to analyse and act upon the root causes of equipment failures to ensure reliability.

De Ruyter was so confident that the reliability maintenance program would succeed that he promised South Africans that load-shedding would be significantly reduced by September 2021.

However, load-shedding increased after September 2021, which showed that this program failed spectacularly.

Mathebula confirmed that South Africa had not reaped any benefits from Eskom’s reliability maintenance program.

It raises the question of why it did not work and what undermined the efforts to improve Eskom’s performance.

Mathebula provided insight into the challenges related to the program, painting a picture of deep routed problems at Eskom.

He highlighted nine areas which prevented them from executing the reliability maintenance program effectively and limiting load-shedding.

  1. Generation capacity constraints
  2. Funding constraints
  3. Inflated costs on services and materials
  4. Poor planning of maintenance programs
  5. Poor quality execution of maintenance
  6. A lack of proper outage postmortems
  7. Bad operating practices
  8. The poor quality management process
  9. Skills challenges

However, the biggest problem Eskom faces and which influences most challenges listed above is fraud and corruption.

Mathebula said the impact of fraud and corruption is felt throughout the company and undermines any effort by the great engineers and other staff at Eskom.

The problems include people stealing coal and diesel, damaging plants to get maintenance contracts, and delivering the wrong spares and equipment.

Because of corruption and fraud, there are significant delays in awarding contracts and “shady service providers” who do very poor work are employed.

“Fraud and corruption are the biggest enemies of progress at Eskom. It is the most important issue to fix Eskom to get the maintenance program back on track,” Mathebula said.

He also provided more details on each area of concern, outside of fraud and corruption, which showed the deep-rooted problems at Eskom.

Generation capacity constraints

Eskom does not have additional generation capacity to meet electricity demand, which means it cannot take generating units offline for maintenance.

Mathebula highlighted that around 75% of the unavailable generating units are offline because of unplanned maintenance and breakdowns.

Underperforming generation units can also not be taken offline for maintenance because of the severe power shortage.

The newly built Ingula, Medupi, and Kusile power plants were supposed to give enough capacity to the grid to allow for widescale maintenance.

However, their performance was so poor that it did not provide significant breathing room.

The quickest way to address the capacity shortage is to fix the existing generation units. However, it is easier said than done because of Eskom’s mounting challenges.

Funding constraints

There is a growing gap between the money needed to perform proper maintenance and the money which is made available for maintenance.

The result is that important projects and maintenance programs are postponed because of a lack of funds.

The lack of maintenance results in higher breakdowns and a lower energy availability factor (EAF), which in turn causes more capacity constraints.

It is a downward spiral which can only be solved by making more funds available for maintenance and other important projects.

However, Eskom’s high debt burden and struggle to source additional funds hamper its ability to invest in refurbishing its assets and improving reliability.

“The challenge has not subsided. The challenge to fund maintenance remains, and we have reached a point where Eskom could not even buy diesel to have reserves,” he said.

Inflated costs on services and materials

Mathebula said poor procurement policies, fraud, and corruption resulted in Eskom suffering from inflated costs of services and materials.

“We have a situation where Eskom is paying three, four, or even ten times the price it is supposed to pay,” he said.

The inflated cost puts additional pressure on Eskom’s finances, limiting its ability to fund important maintenance and refurbishment projects.

Poor planning of maintenance programs

Eskom’s reliability maintenance program requires staff to start planning for a generator outage 24 months in advance.

“Three months before the maintenance is set to start, you should be over 80% ready to perform the maintenance,” he said.

However, Eskom is often not ready to start performing maintenance when the time comes.

“It leads to poor execution and missing vital maintenance tasks. In turn, the generating unit does not perform as intended when it is returned to service,” he said.

When a generating unit which performs at 60% and 70% is taken out for maintenance for up to 120 days, it should perform at over 90% when it is returned to service.

“In the recent past, Eskom has not been able to achieve that. One of the contributing factors is that the planning of the maintenance programme has not been executed properly,” he said.

Poor quality execution of maintenance

A lack of planning and using bad service providers have resulted in poor-quality maintenance and unplanned breakdowns.

“Some service providers have found their way into the maintenance programs without the necessary skills to perform the work,” Mathebula said.

Fraud and corruption also result in delays in getting spares and suppliers delivering the wrong spares for maintenance.

A lack of proper outage postmortems

There is a lack of accurate record-keeping to analyse outages and ensure maintenance is performed well.

“When a pump is replaced, or a boiler is repaired, and you put it back into service, the quality management process should guarantee the machine must keep running as planned,” he said.

Because it is not done, it is challenging to weed out poor contractors and hold employees accountable.

Bad operating practices

There has been a huge exodus of operators because they have reached retirement age or left in search of better opportunities. “It is one skill Eskom cannot afford to lose,” Mathebula said.

Eskom is responsible for training its own operators. “Eskom has to take students from universities and colleges, train them, and license them to be operators of our generators,” he said.

“If they are not well trained, there are problems.”

Another problem is fraud and corruption, where plants are poorly operated or even sabotaged to give work to contract providers.

The poor quality management process

Eskom is suffering from poor-quality coal being delivered to power stations via trucks, which can damage power plants and cause sub-standard performances.

Mathebula said a study showed that power stations that get their coal via conveyer belts perform much better than those that rely on coal delivered by trucks.

The reason is that the consistency of the coal via conveyer belts is much better than truck-delivered coal.

Eskom is putting measures in place to ensure the coal quality purchased from mines is the same as what they get.

Skills challenges

There is a skills shortage which undermines Eskom’s maintenance and recovery program.

Although it is a challenge, Mathebula said it is not as pressing as some of the other challenges at the power utility.

“There are great and knowledgeable people in Eskom, but corruption and fraud prevent them from doing their work,” he said.

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