Load shedding over 10 years: Eskom, the economy and fiscal crisis

Statistics South Africa released data in early December last year indicating that farms and factories dragged South Africa out of its first recession in almost a decade … as the economy grew by more than expected in the third quarter of 2018.

The data would have given South Africans reason to celebrate under any other circumstances, but a few days before its release, Eskom Holdings, the electricity utility, had released its own salvo of data about Stage 2 load shedding. In this author’s view, “load shedding” is a euphemism used by Eskom to force the public to keep the lights off and for the public and private sectors to refrain from using Eskom’s only product – electricity.

Eskom would like the public to believe that it “normally takes a sequence of steps to keep the system stable and to avoid load shedding, the steps include first asking large customers to reduce load voluntarily” (www.loadshedding.eskom.co.za). However, since 29 November 2018 the experience of the South African public, including the large users of electricity, businesses and individual households has been that Eskom tends to skip those steps and goes straight to load shedding.

On the fifth consecutive day of Stage 2 load shedding during December 2018, Business Unity South Africa issued a warning that Eskom’s decision to reinstate load shedding would have a negative knock-on effect on the industry.

December 2018 was littered with sentiments along a similar vein as the country battled to understand the new spectre of load shedding, reminiscent of over a decade ago when South Africans were first introduced to rolling blackouts. During the period of load shedding in December 2007 and January 2008, South Africans came to understand that the rolling blackouts were as a result of a lack of capacity of the then aging power stations infrastructure. Over a decade later, it is load shedding déjà vu. This time around, however, it is Eskom’s failure and/or neglect of the upkeep of the aging power stations which plunged us into darkness.

Crucial maintenance repeatedly put off

At the end of November 2018 and every day at the beginning of December 2018, Eskom’s public announcements were that there would be continued power outages due to inadequate energy availability, arising from an ageing fleet of coal fired power stations with limited maintenance. It would appear that at this time, every single one of South Africa’s 12 largest and most important power stations broke down. This resulted in 17,371MW or 38% of Eskom’s total generating capacity being offline.

Throughout the rolling blackouts in the latter part of 2018, the pronouncements by Eskom to the effect that the Utility expected to launch its turnaround strategy in 2019, were intended to assuage the South African public. These platitudes, however, were and are of no solace at all to the public – the daily rolling blackouts are predicted to persist unabated for several months given the continued use of and reliance on decrepit coal-fired power stations. The ultimate effect of these utterances was to dim the nascent optimism brought about by the announcement that the South African economy had exited the recession in the third quarter of 2018.

Eskom’s new build programme

The South African public was lulled into a false sense of security – believing that the aging infrastructure and limited capacity would be ameliorated by Eskom’s new build programme, in particular, the 4,764MW Medupi and 4,800MW Kusile coal-fired power stations. But, over a decade later, South Africans are informed by the Minister of Public Enterprises, Pravin Gordhan, that original equipment manufacturers …, had done shoddy work on both the Kusile and Medupi power stations.

The “shoddy workmanship” at Kusile and Medupi power stations is said to have contributed to the sudden onset of load shedding in December 2018. As a consequence, senior engineers at Eskom have advised the media that Eskom was in the process of instituting a major court battle against the original equipment manufacturers arising from design flaws that affected the full capacity output of the newly built Medupi and Kusile.

It has since transpired that at the onset of load shedding in December 2018, and contrary to expectations that the newly built power stations would bridge the gap of the ailing old power stations, Medupi’s three operational units either shut down entirely or lost part of their output. And, far from the Medupi and Kusile new build coal -fired power stations being a panacea for all load shedding ills, Eskom has accepted that both Medupi and Kusile have fundamental problems that will not give the country the full benefit of their anticipated capacity of approximately 4,800MW each when completed.

While Eskom lays the blame at the door of its original equipment manufacturers, the South African public simply wants to know whether and if the lights will be kept on for the foreseeable future.

Happy Masondo is director at Werksmans Attorneys.