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Eskom moves turnaround strategy to 2019 as power cuts begin

A new board and leadership at Eskom is intended to turn the business around.

South Africa’s state-owned power utility expects to launch its turnaround strategy in 2019 after at least two delays of its much-anticipated recovery plan, as power cuts blanket the nation.

The power company’s long-term strategy has been approved by the board, it said in an emailed response to questions Saturday. The plan is seen being implemented “in the new year,” it added.

Eskom announced a third day of scheduled power outages on Saturday due to inadequate energy availability. Financial constraints limited maintenance amid unplanned outages from an ageing fleet of power stations. The controlled blackouts threaten South Africa’s economy as President Cyril Ramaphosa attempts to draw investment to help boost growth.

A new board and leadership at Eskom was intended to turn the business around. The utility took steps to root out corruption and encourage whistle-blowers to come forward.

Eskom’s debt has soared to R419 billion while sales volumes have dropped. Its finances and that of some other state-owned companies have deteriorated to the extent that they now pose a significant risk to the country’s financial system, South Africa’s auditor-general said on November 21.

The utility announced stage one rotational power cuts on Saturday and later said it was going to the next stage of the blackouts, which will cut off 2 000 megawatts nationally between 16:00 and 22:00 hours.

“This is due to a further shortage of generation as a result of units that have not returned to service as expected and a loss of an additional unit,” Eskom said in an emailed statement. The power cuts are are happening “as a measure of last resort to protect the power system from a total collapse or blackout.”

© 2018 Bloomberg L.P

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Well there is definitely a turnaround. From no load shedding to load shedding. These past 11 months have been fruitful. Well done.

Behind these blackouts is a wholly dysfunctional utility, one that pre-1994 was acknowledged to be up with the best in the world, producing and distributing some of the cheapest electricity anywhere. Behind this dysfunctional utility is a sordid mess of corruption and incompetence, and skulking behind that are the real stars of the show – BEE and cadre deployment.

Eskom (and the other broken SOEs) cannot return to a state of efficiency and profitability until the right people are employed for the job at each and every level – people chosen on merit irrespective of their political leanings or (heaven help us) their skin colour.

Pre-1994 was not all bliss as you would like to suggest: the BHP-Billiton contract was entered into by the Nats who ran the country then and it later back-fired when Eskom couldn’t get out of it. Providing power at cost of production or less than cost of production to Billiton. Then Alec Erwin, the 1st Trade Minister responsible for Eskom after 1994, ignored the need to put money aside for maintenance because the ANC government preferred to use taxes to fund the weapons transaction….and so it goes on. Now, at this late stage, what is the poor new CEO, Mr Hadebe, supposed to do after years of mismanagement?

If Hadebe doesn’t know what to do the obvious thing is for himself and his acolytes to hand over to people who do know what to do. Pretty obvious, I’d say – but probably out of the question in the New SA.

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