Eskom’s 100th birthday: Utility celebrating its own slow death

Eskom is turning 100 years old on 1 March this year.

The troubled power utility Eskom is already running a countdown to its centenary on its website, in which it asks South Africans to journey with them through their glory years.

With its history dating back to 1923, the parastatal has for the last few years been plagued by an array of challenges ranging from corruption, theft, maladministration, to a lack of maintenance on aged infrastructure.

South Africa has since 2007 been buckling under load shedding due to a failure to build new power stations in a bid to replace ageing generation plants, despite being warned of a power shortage in the 1990s.

So, where did it all go wrong for the utility which was honoured at the Global Energy Awards ceremony as the Power Company of the Year in 2001?

The death of Eskom

With Eskom’s centenary fast approaching, energy expert Tshepo Kgadima says instead of celebrating a centenary, March 1 will mark the burial of Eskom.

According to Kgadima, Eskom’s list of great milestones ended in the 1990s with the publishing of the so called ‘White Paper’ on the country’s energy policy, when government took a decision that no new power stations were needed.

“Eskom has been in a moribund state since 2008 and this after they (Eskom) had been warned. The year in question also marked the beginning of the end of Eskom.

“At some point back in the days, Eskom’s generation output was at 42 000 megawatts but in 2008 when the blackouts first manifested, we started seeing disinvestment in the economy as a whole, mine shafts were closing down, shrinking mining output and that resulted in a decline in demand for electricity,” said Kgadima.

What the 1995 White Paper on South Africa’s energy entailed:

Energy expert Hilton Trollip, who was central in the coordination of the White Paper on the country’s energy in 1998 for both government and the governing African National Congress (ANC), said there was no immediate need for new power stations the time.

“However, the White Paper in question said we would need start building from 2001, because they take seven years to build, and it also said by 2007/08 we would start running out.

“Still in 1998, government decided as its policy that Eskom would not build any new power stations, and that it would sell 30% of its power stations to Black Economic Empowerment (BEE) interests, and that new power stations would be built by Independent Power Producers (IPPs),” recalled Trollip.

Government authorised Eskom to start building new power stations in 2005

He said no new power stations had been built by 2005 and no IPP contracts signed, and only when government realised that the country would run out of power by 2007, they authorised Eskom to build two big new power stations in Medupi and Kusile.

However, at the time, Eskom had closed down most of its new power station building division and by the time they started building Medupi in 2006, they were in trouble according to Trollip.

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“South Africa had to borrow from the World Bank and was lent R4.3 billion to build Medupi and one of the conditions was that Eskom would build a wind farm.

“Grand corruption also started at this stage when the Chancellor House company which was the investment arm of the ANC, owned 25% of Hitachi Africa, which was a division of Hitachi Europe, specially set up for the project and Hitachi Africa was given the boiler project for Medupi. This would subsequently never work properly and they are still not working properly,” said Trollip.

First major load shedding hit South Africa in 2008

Many South Africans experienced the first big load shedding in January of 2008, mainly owing to the lack of reserve capacity.

“However, over the holidays the new coal contracts given to small coal suppliers went on holiday and there was no coal in January of that year. And because of a coal shortage, there was national load shedding, which was going to be a pattern which would continue until now.

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“It’s a shortage of power stations, corruption in coal contracts and corruption in power station contracts,” said Trollip.

Construction problems at Medupi and Kusile power stations

The original budget for the building of Medupi according to Trollip, grew from around R70 billion to R90 billion and was meant to be finished in 2014.

“No units were working by 2014, out of the six units and the budget had blown up and there were also huge construction problems with the building of Kusile power station. Even though Medupi is only half finished, a lot of it doesn’t work a lot of the time.

“If I remember well, Medupi’s last unit was brought into service in 2021. It started in 2006 and was meant to be completed by 2014, but it took until 2021 and the final budget was R140 billion at least,” said Trollip.

Chaotic leadership and the role of cadre deployment

“Things had become so bad between 2014 and 2019 because there was more than one Chief Executive Officer (CEO) at Eskom per year on average, and often the board was half empty.

“Regarding the upper management, government appoints the board, which then appoints the CEO, while the minister is the sole representative of the 100% shareholder which is us the public. The Public Enterprises minister is only meant to be involved in as far as appointing the board is concerned.

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However, what happened was that the ministers, government and the ANC, through its cadre deployment policy and its deployment committee, started getting involved in the deployment of cadres right through government and state-owned entities (SOEs), which completely undermined the executive government of not just Eskom but of all SOEs, said Trollip.

This is a result of the increasingly blurred lines between the ANC and government.

No significant electricity supply has come online in recent years

Trollip says no significant electricity supply came online since 2007 while the capacity has decreased, despite Medupi and Kusile power stations having been brought online.

“This shortage of electricity has been named by our own Treasury over the years as one of the major constraints in South African economic growth, which had been below population growth in many years since the national power crisis in 2008.

“We are actually having a decrease in per capita income in South Africa, GDP per income, hence an increase in poverty levels and decrease in real income, especially for poor people from 2010 till now,” he said.

Less than 30% households had electricity pre 1980s

“It was only towards the end of the ’70s that we saw a massive electrification campaign in Soweto and they started electrifying per households.

“They also started transforming the company because beforehand it was just like a ‘whites only’ place for all the senior management positions, and they started training people because they saw the future that was coming and decided to be part of the progressive future,” Trollip said.

80% of households had electricity by the year 2000

“In South Africa, we also invented mass pre-payment meters, which is a very important breakthrough to get electrification because it was impossible to have the so-called credit meters where everybody is connected to the municipality, especially for poor households.

“As a result of this successful campaign, by around 2001, when they looked at brands internationally, Eskom was one of the top brands in the world.

“Because of apartheid Eskom had a massive over-build programme of power stations because they wanted to be sanctions-proof,” Trollip added.

What role did political interference play in the demise of Eskom?

Kgadima did not mince his words, saying political interference has been lethal, stressing that some politicians were hellbent on looting the parastatal at all costs.

“There has never been any valid cause to build new power stations such as Kusile and Medupi, because they were designed for corruption and rampant looting,” said Kgadima.

The latest round of stage 6 load shedding which lasted for five consecutive days drew a lot of criticism and anger from South Africans, with some threatening marches and legal action against government.

Will protest and legal action yield any positive results?

“South Africans by and large regardless of social standing, have all lost that militant spirit to rise up against any forms of oppression.

“We recently heard the president, when talking to different political parties, saying it is not the role of government alone to fix the electricity crisis… There’s no appetite to resolve this crisis,” said Kgadima.

Asked how long load shedding is likely to last, Kgadima warned that in the next century, the country’s electricity users are likely going to be completely off power grid.

“Eskom no longer has a place under the sun and yet they want to celebrating at a time when they are also sitting with the highest debt,” he said.

“The country has been looted and plundered in the last 24 years.”

Stage 8 load shedding a very close possibility

“It could be this week due to capacity constraints, and all that’s required is for four units to trip. If 200 more megawatts are lost, then stage 8 will be implemented and that’s when the grid will collapse, because they will then have to switch off transmission lines.

“There is no such thing as an old power station, but we need to simply ensure that we have knowledgeable and experienced people to run Eskom. People with the requisite expertise to run an integrated power utility that sources and owns coal reserves,” Kgadima said.

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