The question Eskom and André de Ruyter refuse to answer

Eskom and its CEO André de Ruyter avoid one topic like the plague: What happened to the promise of limiting load-shedding from September 2021?

In February 2020, shortly after he was appointed, IOL reported that De Ruyter had set himself a target of 18 months to end the country’s persistent load shedding.

De Ruyter said the Eskom board greenlit a comprehensive maintenance plan, which included general overhauls and midlife overhauls.

While experiencing the worst load-shedding the country has ever seen over the last two years, Eskom told South Africans that it was short-term pain for long-term gain.

Eskom spokesperson Sikonathi Mantshantsha repeatedly said their maintenance plan would start bearing fruit during the third quarter of 2021, when much of the reliability maintenance has been completed.

The self-imposed September 2021 deadline for increased power station reliability and less load-shedding arrived, but Eskom was found wanting.

The country experienced the worst bouts of load-shedding ever over the October/November period, with a high number of breakdowns and a low energy availability factor (EAF).

It is now clear that Eskom’s “comprehensive maintenance plan” promised in February 2020 did little to improve power station reliability and performance.

Energy analyst Mike Rossouw said 2021 had been the worst year ever regarding Eskom’s power plant availability. “This year, Eskom’s EAF is around 50%. It has never been this low,” he said.

He added that Eskom’s planning has collapsed, it is suffering from a lack of skills, and the execution of work is way below what it should be.

“Eskom has failed to restore their fleet, and it’s getting worse,” said Rossouw.

Many organisations, including the Black Business Council (BBC), the National Union of Mineworkers (NUM), and the South African Federation of Trade Unions (Saftu), have called for De Ruyter’s head.

NUM highlighted that De Ruyter and the Eskom board failed to meet their target to resolve load-shedding in eighteen months.

Black Business Council CEO Kganki Matabane, in turn, bemoaned the fact that De Ruyter blames everyone but himself for the continued problems at Eskom.

“If you are a CEO, you cannot behave like you are powerless,” he said.

Enoch Godongwana
Finance Minister Enoch Godongwana

The latest high-profile person to criticise De Ruyter is finance minister Enoch Godongwana.

Godongwana told the Sunday Times that, unlike previous Eskom CEOs, De Ruyter was “given the luxury of taking out generating units for planned maintenance”.

“He was allowed to do planned maintenance the other guys were not allowed to do. We don’t see the results of that planned maintenance,” Godongwana said.

“He has cut us out of electricity doing planned maintenance. The indication is that there are more blackouts under him than ever, in the midst of a lockdown.”

De Ruyter and his team had a tremendous opportunity to perform maintenance without load-shedding after the lockdown was announced in March 2020.

Demand for electricity plummeted as industries and mines were shut, making it possible to take generation units offline without an impact on economic productivity.

De Ruyter told the nation in May 2020 that the extended lockdown period has enabled the power utility to carry out much-needed maintenance.

This maintenance, he said, significantly reduced the likelihood of load shedding during the coming winter months.

This statement turned out to be wholly misguided as South Africa was hit by some of the worst load-shedding ever that winter.

MyBroadband asked Eskom about Godongwana’s comments and what went wrong, which prevented Eskom from limiting load-shedding after September 2021, but the company did not respond.

The image below shows load-shedding under Eskom CEOs from 2007 — when load-shedding started — to 2021.

Many people highlighted that Nampak’s share price — and hence its market value — plummeted during De Ruyter’s reign as CEO.

When De Ruyter was appointed as Nampak CEO in March 2014, the share price traded at R37 a share and had a market cap of R29 billion.

When he left the company at the end of 2019, the share price had plummeted to well below R7 a share with a market cap of R5 billion.

De Ruyter was blamed by many commentators for this tremendous wealth destruction.

James Styan, financial journalist and media liaison officer for the Western Cape Minister of Local Government and Environmental Affairs, disagreed.

Styan highlighted that Nampak already had a net debt ratio of 73% when De Ruyter was appointed because of the company’s African expansion.

He said a collapse in the oil price led to Nampak incurring multimillions of US dollars in debt.

“Some believe if it wasn’t for De Ruyter, Nampak would have gone under years ago,” Styan said.

The chart below shows the Nampak share price during De Ruyter’s tenure as CEO.

Now read: André de Ruyter’s day of reckoning has arrived

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The question Eskom and André de Ruyter refuse to answer