‘Core problem cannot be solved’ by moving Eskom to any other department

Against a background of an imminent Cabinet reshuffle, with intermittent load shedding continuing to take its toll on the economy, business think-tank African Development Forum (ADF) has implored President Cyril Ramaphosa to shift energy utility Eskom’s line of government reporting from the department of public enterprises to the energy department.

While ministers Pravin Gordhan (public enterprises) and Gwede Mantashe (energy) have both taken flak over the handling of the energy crisis, which has had an adverse socioeconomic impact, ADF chair Dr Eugenia Kula said Mantashe’s pronouncements on Eskom and the energy availability factor were “well informed, cogent and in line with South Africa’s national interests”.

‘Well-considered view’

“The ADF shares the consensus endorsing the transfer of Eskom from public enterprises to energy, under the stewardship of Minister Mantashe, whose views are widely accepted.

“ADF believes the placement of Eskom in its policy ministry is a well-considered view as it minimises the challenges of coordination, governance and implementations posed by a go-between ministry whose value might be less clear.

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“We also share the view that in the future of electricity generation, SA will have in its mix, renewables and nuclear, among others. However, there can be no denying the country’s electricity grid will be largely powered by coal-fired power stations in the short to medium term,” said Kula.

In its diagnostics of the energy crisis, the ADF has found that:

• The current load shedding emanates from the poor performance of Eskom’s base-load coal fleet;
• The deployment of renewable energy alone will not solve the current energy crisis;
• Maintenance executed at Eskom is not effective due to a reliance on external service providers, not Eskom staff;
• Power station managers operate without appropriate delegated authority;
• SA should remain open to deploying a mix of energy sources such as nuclear, hydro and gas;
• Eskom’s funding model, while blamed on the power utility, is essentially as a consequence of a poorly designed national economic development model; and
• Eskom’s reliance on foreign sources is not only costly but compromises the utility’s capacity to perform its developmental mandate, contributing to national competitiveness, industrialisation and employment.

Eskom run by ‘criminal syndicates’

Presenting a different view on the electricity crunch, independent political analyst Sandile Swana said Eskom’s problem was due to “wrong cadre deployment, which brought incompetence, corruption and nonperformance”.

“Eskom is run by … criminal syndicates among suppliers, the staff at all levels and by ANC comrades. Big and small business are all looting Eskom.

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“That core problem cannot be changed, or solved, by moving Eskom to any other department. The incompetence and poor performance of [Gordhan] needs a Cabinet reshuffle, not a relocation of Eskom.

“The problems of Eskom are neither caused by lack of privatisation nor lack of unbundling. Eskom was once ranked No 1 in the world without privatisation and without unbundling.

“It can lead the introduction of renewals over the next three decades. We know the technologies behind coal and have plenty of cheap coal. We need to expand our coal fleet and also refurbish it. Renewables – nuclear, coal and gas – are all relevant and nice to have, taking into account the [national development plan] wants to achieve a 5.4% [gross domestic product] growth rate. But the upper class is keeping us on a low growth and low ambition path.

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“Just energy transition is unwise. SA must embrace high economic development at five to 15% with comprehensive environmental management programmes,” he said.

– brians@citizen.co.za