Eskom a total disaster — and the ANC is rearranging deck chairs on the Titanic

ANC secretary-general Fikile Mbalula recently released a statement following back-to-back National Executive Committee (NEC) meetings that included the ruling party’s plan to tackle South Africa’s energy crisis.

However, rather than focusing on what really needs to be done, the ANC has rehashed the same plan that’s yielded nothing but failure for the past 15 years.

Conspicuously missing from the NEC Lekgotla’s treatise is any direct mention of tackling corruption and organised crime within Eskom.

Fortunately, the ANC solicited feedback together with its calls for a national state of disaster:

“In solving the energy crisis, the NEC Lekgotla encouraged the President of the Republic to declare a national state of disaster, which will also require that the ANC reconnects with our communities and society, as the ANC does not have the monopoly of ideas,” the ruling party stated.

“We therefore call on all of society to work with us in progressively solving the challenge since it affects all of us, in particular the poor and the working class.”

Among talk of rerouting unspent budget, the ANC proposes the following:

  1. Prioritisation of maintenance, management, and security of Eskom power plants.
  2. Management of load-shedding such that it minimises the impact on the economy and the provision of basic services, including water.
  3. Mitigation of the decision by the National Energy Regulator of South Africa (Nersa) regarding Eskom tariffs on people and the economy.
  4. Implementation of measures to manage electricity demand, including the installation of solar heaters and panels and other energy efficient systems, which should be incentivised.
  5. Expediting of the procurement of emergency power.
  6. Relief and support to poor households, as well as, small and medium sized enterprises.
  7. Curb the outward migration of technical and management skills and capabilities at Eskom, whilst mobilising further skills in areas such as engineering.
  8. Support of the Just Energy transition as a long-term programme.

This immediately raises the question: how is this plan any different from all the previous ones?

Fixing Eskom, managing electricity demand with alternative energy, procuring emergency power, relief for the needy, support for job-creators like SMEs, skills retention, and the “just energy transition” was always the plan.

It has been the plan since President Cyril Ramaphosa took office.

It was the plan during the state capture years under former president Jacob Zuma when Ramaphosa was deputy president and tasked with fixing Eskom.

Isn’t this just the same plan with more panic?

A national state of disaster isn’t a magic spell that will make the previously failed plan work.

That’s not even considering the committee of vultures that will inevitably descend on the budget that gets reallocated to the state of disaster.

Rooftop solar

In the spirit of steelmanning, the ANC has endorsed one proposal that could help — incentivising and subsidising rooftop solar for households and businesses across the country.

The ANC NEC noted that finance minister Enoch Godongwana warned that South Africa’s finances are stretched thin, and there is little room to manoeuvre, even if a disaster was declared.

However, the ANC said there is money in underutilised departmental, provincial, municipal, and other budgets that could be used.

“[The] Lekgotla noted that there are billions which are projected to be underspent and called for the reprioritisation of the funds to address the crisis,” the ANC stated.

“This can be complemented by the redesign of existing grants to optimise and aggregate infrastructure financing and capacities.”

President Ramaphosa has also said that 100 embedded generation projects promising 9,000MW of capacity are waiting in the wings for the necessary paperwork.

Assuming these don’t need slots on Eskom’s transmission grid that connect the West and East of the country, which is full, a state of disaster could help fast-track regulatory changes these projects might still need.

In other words, so long as these projects are built close to where their power is needed, they could make a big difference.

Pravin Gordhan, Gwede Mantashe, and Cyril Ramaphosa on Eskom Tutuka power station tour

What could, but won’t be done

There are many things the ANC could do to save Eskom that it simply won’t.

These things are hard. They conflict with the failed ideology the ANC clings to. But mostly, they will cost the ANC votes in the short term.

First, you have to choose whether to appease the criminal elements within Eskom in hopes of stabilising the grid or whether to get them out.

If the choice is removal, the corruption and entrenched criminal syndicates must be eradicated root and stem.

The surgical approach employed under outgoing CEO André de Ruyter has failed. Perhaps it is just too slow.

Regardless, like a cancer that had too much time to spread, the problem now requires chemotherapy.

It won’t be pretty, but it could be combined with a much-needed reduction in Eskom’s workforce.

Eskom needs to fire almost 67% of its staff, reducing its 42,749 headcount to under 14,500.

The hard part is figuring out which 67% to retrench.

The number is based on a recommendation in a 2016 World Bank research paper that looked into the hidden costs in Sub-Saharan Africa’s electricity sector, including overstaffing.

The paper, Financial Viability of Electricity Sectors in Sub-Saharan Africa: Quasi-Fiscal Deficits and Hidden Costs, found that Eskom’s optimum staffing would be 4,648 in generation and 9,596 in transmission and distribution.

While the paper is from 2016, it drew its conclusions using Eskom’s full 47GW installed capacity.

Perhaps a state of disaster would help here, as the ANC government might need to suspend specific provisions in our overbearing labour laws to do this quickly.

Obviously, staff must receive severance, but unions cannot be allowed to stonewall it.

Yes, it’s unfair to those who will be fired who are not corrupt and who have for years done good, honest work for Eskom.

It would be hard to look those people in the eye and tell them they no longer have a job because of your failure.

Which is why the ANC would never do it. Much easier to just let Eskom nearly die like SAA, institute a “process”, and have the “process” cause people to lose their jobs.

Going through with a mass-retrenchment campaign could also trigger a violent response from the syndicates, and South Africa’s security cluster would need to be prepared.

Of course, this assumes there isn’t a relationship between factions in the ANC and the criminal syndicates eating away at Eskom.

Fixing Eskom
What needs to happen Why it won’t happen
Cut Eskom workforce by 67% ANC fears losing votes
Eradicate corruption and organised crime in Eskom Can’t implement mass lay-offs, prosecutions too slow
Fix Medupi and Kusile (and Tutuka, and…) Risk to ANC interests, entrenched criminal syndicates, incompetence
Stop regulating Eskom tariffs — have Nersa focus on registering IPPs, approving a feed-in regime Contrary to ANC’s ideology of a planned economy
Split Eskom into generation, transmission, and distribution entities as previously planned Dependent on Eskom getting new tariff structure approved (could happen, but not quickly)
Hire / hire back senior skills Potentially contrary to ANC ideology of equality of outcome

Once the criminals are culled, Eskom needs to ensure it has the right skills at the company to navigate through this crisis.

Public enterprises minister Pravin Gordhan took the unprecedented step last year of accepting an offer from trade union Solidarity of a list of skilled individuals, many of them former Eskom employees, willing and able to step in at Eskom.

However, this only seemed to create headaches for the Eskom leadership and human resources department, which wants to reduce the number of white males at the power utility to meet transformation targets.

To counteract the political quandary Solidarity’s list created, Eskom launched an online “crowdsourcing” platform to provide equal opportunity for qualified individuals to offer to help rescue the sinking power utility.

Talk of a skills shortage at Eskom also appears to be as contentious within the company as outside it.

The Sunday Times reported this week that it spoke to a power plant general manager on condition of anonymity.

He said there is no skill shortage. The problem is corruption abundance.

“We have the right people. If we use our plant, people and business processes optimally, it will work,” he said.

“We also don’t even need the so-called old men to be called back. Our current workforce is more than capable of doing the job. We just need the criminality to be put to a stop.”

Extreme pragmatism

Unless there is a radical shift in ideology in the ANC, Eskom is doomed. Hoping for a magical turnaround to solve South Africa’s power crisis is folly.

It’s time for extreme pragmatism. Otherwise, all of South Africa goes down with Eskom.

Pushing rooftop solar and battery backups is a good start for short-term relief.

However, the whole industry will ultimately have to be opened up for South Africa to solve its energy crisis once and for all.

The government has a role to play here yet, for better or worse.

For instance, Afriforum wants to generate electricity using small modular nuclear reactors from US-based X-Energy.

It’s a solid idea to help ensure South Africa has clean baseload electricity generation available.

This is a long-term plan, as X-Energy’s first reactors are only set to come online in Washington state by 2027.

Private nuclear generation will require regulators with the capacity to ensure the safety of the plants and their nuclear waste disposal — a government function.

With these structures in place, the ANC would be free to procure nuclear power plants from Russia with its own funding at whatever price it wants.

The market can then decide where to buy its electricity from.

Just like in telecommunications, South Africans will have to look to the private sector for solutions.

It was upstart Vumatel that eventually catalysed South Africa’s fibre broadband boom, not former state-sanctioned monopoly Telkom.

In fact, myopic decision-making within government and Telkom probably set South African broadband back ten years.

Thanks to market liberalisation and private sector participation, South African fibre networks now hold their own in terms of pricing and service against some of the world’s best.

This is an opinion piece.

Now read: Eskom announces stage 6 load-shedding — here is the timetable

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Eskom a total disaster — and the ANC is rearranging deck chairs on the Titanic