South Africa

Government plans to fix Eskom in a year – but it has no strategy

Enoch Godongwana

Finance Minister Enoch Godongwana said the country plans to improve energy provisioning and end load-shedding within 12 to 18 months.

He told Reuters, “in the next twelve to eighteen months, we will be able to say load-shedding is a thing of the past.”

He reiterated his view in an interview with Bronwyn Nielsen, saying the Eskom crisis can be solved within 12 to 18 months if stakeholders do what needs to be done.

Godongwana said there are four critical things that need to be done to resolve the problems.

  1. Improving Eskom’s current coal-fired power plants’ performance.
  2. Aggressively adding new capacity to the grid.
  3. Dealing with crime, corruption, and vandalism at Eskom.
  4. Better demand management.

The Finance Minister’s comments echo mineral resources and energy minister Gwede Mantashe’s claim that South Africa’s energy crisis could be solved within six to 12 months.

“Eskom, as a state-owned entity, must do introspection to establish if it has the technical capacity to deal with the crisis. If not, can we go out and look for that capacity,” he said.

Energy minister Gwede Mantashe

However, we have heard these promises before, and they have never materialised. In fact, matters got worse.

In 2015, then deputy president Cyril Ramaphosa said, “in another 18 months to two years, you will forget the challenges that we had with relation to power or energy and Eskom ever existed.”

Load-shedding remained, and in 2019, Ramaphosa told the nation “a clear strategy to place Eskom on a sustainable path of recovery” was being finalised.

Eskom CEO Andre de Ruyter’s promise that load-shedding would be significantly reduced from September 2021 also did not materialise.

It raises the question of why the government and Eskom constantly fail to resolve problems at the power utility.

African Rainbow Energy and Power head and former Eskom CEO Brian Dames blamed poor execution for the deteriorating situation.

“Plans are not the problem. We have the people and the capacity, and just have to work together to get it done,” he said.

“South Africans are good at planning, but we are not very good at implementation. We need to bring together our best people to implement.”

He added that the implementation process should not involve making all stakeholders happy as it is not possible.

Eskom board member Mteto Nyati

One of the problems is that the government has a plan – basically “stop load-shedding” – but no coherent strategy to achieve this goal.

Another problem is that the interventions needed to improve Eskom’s financial and operational problems are politically unpalatable.

Solving Eskom’s problems involves large-scale job cuts, doing away with affirmative action and black economic empowerment (BEE), and removing procurement restrictions.

However, the mere mention of these issues is met with fierce resistance from the government, unions, and political parties.

For example, Eskom board member Mteto Nyati said empowerment rules hamper Eskom’s performance.

He highlighted that empowerment policies drive internal corruption and that affirmative action is hampering Eskom’s ability to employ skilled people who can fix the company.

His comments were met with a severe backlash, which resulted in Eskom saying it embraces all government policies to transform the economy to deal with inequality and socioeconomic imbalances.

Eskom added that it embraced the preferential procurement policy framework act (PPPFA) as a state-owned enterprise.

The unwillingness to address the root causes of Eskom’s problems means it is unlikely that the current plan will produce different results than its predecessors.

The Presidency’s feedback

Cyril Ramaphosa
President Cyril Ramaphosa

On 21 January, The Presidency released a six-month progress update on the implementation of the Energy Action Plan. The full statement is provided below.

The National Energy Crisis Committee (NECOM) has today, 21 January 2023, released a six-month progress update on the implementation of the Energy Action Plan.

This update follows a period of load shedding, which was escalated to stage 6 due to a high number of breakdowns across Eskom’s generation fleet.

The declining Energy Availability Factor of Eskom’s fleet reflects the cumulative impact of historical underinvestment in maintenance and assets, exacerbated by flaws in the design of new power stations in the last decade.

To respond to the severe impact of load shedding on households, small businesses and the economy as a whole, President Cyril Ramaphosa announced a range of measures in July 2022 to improve the performance of existing power stations and add new generation capacity as quickly as possible.

The Energy Action Plan was developed through extensive consultation and endorsed by energy experts as providing the best and fastest path towards energy security.

The NECOM has since been established to coordinate the government’s response and ensure swift implementation of the plan.

During the past week, the President has convened the NECOM in order to accelerate the government’s efforts to reduce load shedding. He has also engaged with a wide range of stakeholders, including political parties, labour unions, business associations, community groups, interfaith leaders, traditional leaders, premiers and mayors, to ensure a collective response to this national challenge.

The progress update released today outlines important steps that have been taken to follow through on the commitments announced by the President.

These include:

  • Schedule 2 of the Electricity Regulation Act has been amended to remove the licensing requirement for generation projects, which will significantly accelerate private investment.
  • Since the licensing threshold was first raised to 100 MW, the pipeline of private sector projects has grown to more than 100 projects with over 9000 MW of capacity. The first of these large-scale projects are expected to connect to the grid by the end of this year.
  • The NECOM has instructed departments to cut red tape and streamline regulatory processes for energy projects, including reducing the timeframe for environmental authorisations to 57 days from over 100 days previously; reducing the registration process from four months to three weeks; and ensuring that grid connection approvals are provided within six months.
  • Project agreements for 19 projects from Bid Window 5 and six projects from Bid Window 6 of the renewable energy programme, representing 2800 MW of new capacity. These projects will soon proceed to construction.
  • A new Ministerial determination has been published for 14771 MW of new generation capacity from wind, solar and battery storage to accelerate further bid windows.
  • An additional 300 MW has been imported through the Southern African Power Pool, and negotiations are underway to secure a potential 1000 MW from neighbouring countries starting this year.
  • Eskom has developed and launched a programme to purchase power from companies with available generation capacity through a standard offer. The first contracts are expected to be signed in the coming weeks.
  • A team of independent experts has been established to work closely with Eskom to diagnose the problems at poorly performing power stations and take action to improve plant performance.

Six power stations have been identified for particular focus over the coming months through a comprehensive Generation Recovery Plan, with oversight from the new Eskom board.

While the power system remains constrained in the short term, these measures will reduce the frequency and severity of load shedding as new capacity is brought online.

President Ramaphosa said: “South Africans are right to demand immediate action to address the devastating impact of load shedding on our lives and on the economy.

“The Energy Action Plan provides a clear way out of this crisis. We do not need any new plans – we are focusing on implementing this plan fully and effectively to achieve energy security for all South Africans.”

The President has further instructed law enforcement agencies to ramp up efforts to protect electricity infrastructure.

A special meeting of the National Security Council will be convened in the next week to receive a report on operations underway to disrupt criminal syndicates and address theft and sabotage at several power stations.

Addressing the ongoing shortfall in electricity remains the government’s single most important priority.

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