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Eskom crisis deepens, load shedding narrowly averted

Govender resigns, money for salaries questioned.
Eskom chief operating officer Jan Oberholzer has challenged staff to consider whether the utility has the money to pay them come next payday. Picture: Bloomberg

Eskom on Monday night narrowly averted load shedding despite a decline in peak energy demand compared to 2007 and the addition of more than 7 500MW of Eskom installed generation capacity over the last decade.

These numbers are contained in energy regulator Nersa’s System Adequacy Report, published in August.

According to the report Eskom should have a reserve margin of 23.1% if energy imports, renewable energy and other power purchases are excluded. When these are taken into account, the margin should be 37.53%, according to Nersa.

The regulator also indicated that the availability factor of Eskom’s generation fleet has deteriorated to an average of 72.8% for the first eight months of the year, the lowest since 2015.

This comes after one worker died and another was seriously injured in an explosion at Eskom’s Lethabo Power Station last week. The utility announced that the relevant unit would be out of service for at least three months.

The reason for the explosion is not yet clear.

Eskom also earlier admitted that several of its power stations are suffering coal shortages.

And Eskom spokesperson Khulu Phasiwe announced on Twitter last night that one of the utility’s most experienced executives – group executive of generation, Thava Govender – has resigned and will leave Eskom at the end of the month.

Govender, who is also acting group executive of risk and sustainability, has worked for Eskom for 27 years.

He held various positions at the utility, including: member of the Eskom executive committee and various sub-committees; director of Eskom Enterprises; member of the board of the Rotek and Roshcon Group (an Eskom Enterprises subsidiary); chair of the Council of the Eskom Academy of Learning; and exco sponsor for the Eskom Expo for Young Scientists.

In addition, Eskom is a member of the GO15, an organisation that represents the largest grid operators around the world – and last October, Govender was appointed president of the GO15 steering board for 2017/2018.

Govender’s resignation follows that of the CEO of Eskom Rotek Industries Johnny Dladla last week “to pursue private business interests”. Dladla, who has been with Eskom for 23 years, will leave the company at the end of this month.

Sources within Eskom say the pressure on management to turn around the ailing utility is huge.

In another development, energy expert Professor Anton Eberhardt on Monday night tweeted an extract from a message sent to Eskom staff by chief operating officer Jan Oberholzer.

Under the heading “Let’s change the Game”, Oberholzer addresses Eskom’s “financial crisis” and “The 26th of the month”.

He states that Eskom’s interest bill alone amounts to R45 billion per annum.

In 2017/18, it was R25 billion at a group level.

Eberhardt commented: “Already that’s higher than the sums foreseen in their tariff application to the electricity regulator. Over next three years interest plus principal payments on debt will exceed R260 billion. Whew … ”

Oberholzer further tells Eskom staff that the R2.3 billion loss in 2017/18 is expected to be “much bigger” in the current financial year. He points to municipal debt to Eskom, which amounts to R16 billion, and says the bargaining unit wage increases and bonuses will cost Eskom “a few billion in the next three years.”

He adds that there has been “severe overspending” on overtime since April this year.

Moneyweb earlier reported that Eskom also dramatically increased its use of open-cycle gas turbines during the strike around June, which is also expected to drive its costs up.

Oberholzer then challenges Eskom staff to ask themselves three questions around the 26th of the month, which is presumably Eskom’s payday.

“Does Eskom have the money to pay me on the 26th?

“Have I earned my salary on the 26th  … ” and

“Am I taking the 26th for granted?”

Oberholzer says he has observed that Eskom staff do not appreciate the financial crisis the utility is in and seem to feel entitled to their salaries and bonuses whether they come to work and do what is expected of them or not.

He says staff believe they are all entitled to salary increases and bonuses and that Eskom will find the money somewhere.

“Let me tell you the truth: we do not have the money,” Oberholzer states.

“Dear colleagues, the reality is that if Eskom had been in the private sector, we would probably have had to either decrease our staff or close our doors permanently if we look at the state of our finances.”

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From world class generator to continual crisis control. 24 years of affirmative action comes at a cost,

Do not forget Zuptafication …

No it is AA.

The Zupta thing is becoming a strawman excuse.

Obviously it has had an effect but this secondary to AA and BBB-EEE, the real underlying cause.

Was told that Eskom has 10 TIMES the senior managers they had in 2007, AND they are generating LESS electricity now!??
They had 40 senior managers/executives pre 2007 and now they have 400!???

The way to reduce costs is to lay off workers to become efficient again? And stop this cadre-deployment!?? This is economics 101 – irrespective of socialistic policies!!?

Dear ANC, even though ESCOM is not in the private sector, the reality is that you will have to reduce staff numbers and overtime. International financial institutions do not care about your socialist ‘political’ agenda. They want loans to be repaid.

The alternative is ZIMBABWE..!

Unfortunately that will not happen anytime soon. 2019 is an election year and Ramaphosa has already made a commitment that the government will “do its part” for the economy by not cutting jobs in the government sphere, that would include the SOE’s.

Reminds me of a quote from Monty Python to the effect of “we have been so blessed we can’t afford to keep you anymore”.

This situation is far from ideal by anyone’s assessment and I believe that the decision makers know exactly what is required from them, but politicking and lack of political will has overtaken common sense and financial prudence to ensure the continuance of the status quo.

Guess they will want even more money again…

A higher upfront bonus scheme for employees would have prevented this completely .. sigh

Eskom is the flagship of the anc(another new corruption) . What has it produced …. a disaster!! It s plain for all to see and even they themselves say so. So if the policies do not work then change it into something that does work!! Rather obvious huh!! Or is it that the anc simply cannot see it?? If so they will disappear into nothing nessover time. The writing is already on the wall. Actually good riddance!!

The opposite of a centrally planned, or socialist economic system, is a system of law and order. Independence of thought and the truth, are the first things to be expropriated without compensation by a collectivist government. People who are intellectually handicapped, and unable to form an independent opinion, form the support base of the ANC.

The implosion of what was once described as the most efficient utility in the world, is the result of a collectivist culture in the ruling party. “The accountability lies with the collective” implies that the president, the minister of energy, or a board member at Eskom share their responsibility with all the ANC supporters. The individuals in management carry only 1/25 000 of the responsibility. That is as close to zero as you can get.

In the same way the Mining Charter destroyed mining and enabled the zamma-zamma industry, the destruction of Eskom will cause a boom in the informal economy as “zamma-zammas” take down the pylons and cables to sell as scrap-metal. These are the unavoidable consequences of collectivist rule. It is merely an extension of the BEE project.

Either Luthuli House implodes, or Eskom will implode, the choice lies with the voters.

Would Eishkom be a contender for the best contributor to the Radical Economic Transformation prize … pushing us back to the dark ages?

And if the IPPP had been signed into effect two years ago, like it was supposed to, this wouldn’t even be an issue. We need an alternative to Eskom and we need it yesterday! The country clearly cannot rely on this compromised entity a day longer than necessary.

I went to a smallish talk about AA in 1996 by an ESKOM executive, as lawyers we were all trying to get to grips with this. The executive told us that it was time to “get rid of the grey beards” i.e. the old and bold who ran the place. It was time for the new blood of the new South Africa to have a turn. When I asked her what of all that valuable experience going down the drain, she looked at me in a condescending fashion and very aggressively told me about learning on the job and the fresh energy of the new employees. I wonder where she is now … probably a senior member of the ANC feces-producing machine

So true.

They purged all of the organisational knowledge in the SOE’s with their rapid seizing of control in mid 90’s.

Anyone who has ever read a management textbook, would shudder at the thought of losing all the best technocrats in government in less than 5 years.

ANC set the bar back to zero and had to learn from doing, which can work at a blue collar level, but in infinitely complex organisations (infinitely complex to any one individual, thus we need boards of multi disciplinary professionals to run them, not one smart ol chap) this cannot and clearly did not work.

Those who held the reigns initially had the benefit of a small/limited handover, but then had to manage a bunch of newly em-placed incompetents which burnt them out and they left, you then had new hands everywhere without the requisite experience. I personally feel the organisational decline and incompetent organisational culture is now so firmly entrenched, that when they believe they are delivering on an exceptional basis, its still an absolute fail against what the benchmark should be… Roll on idiocracy…

Excellent summary yeboBru

This problem is fundamental to Socialism. A basic assumption of Socialism is that everyone has roughly the same talent and ability. Another is that individual experience counts for nothing as all decisions are made by the all-knowing State apparatus.

Because everyone is the same, anyone can be appointed (by the State) to be a manager or a senior manager or even a CEO. As talent and ability don’t count as a reason to choose someone, Socialist governments send politically-connected or -reliable people.

Thus the Socialist state succeeds in its aim to hold all the levers of power.

But then is a complete surprise when the enterprise starts to fail. Ideology does not let them see that incompetence and corruption could be a source…as by definition, these are aspects of an individual and therefore could not be the source of the failure.

So then they start looking for “class-traitors”, “3rd columnists” and “saboteurs” etc.

gtech, what an excellent description of the situation! The ANC blames the “counter-revolutionary forces” for their own lack of integrity and understanding. The implosion of service-delivery (and the economy) in South Africa is the result of a certain economic and social system. Wherever socialism was implemented, the results were similar. The next phase is the suppression of personal liberties. This is the road to slavery.

(This article has the potential to reach the highest commentator posts for the day….let’s see).

Don’t worry Eskom, Govt will bail you out as usual from taxpayer’s money (as I said before, for starters…if Govt can phase out all the old age & child grant payments, it should help carry Eskom’s cost). The folks will understand.

Please BEIJING, maybe a good time to grant another loan to Eskom?…no wait, consider it as a donation to SA! (after all, The Chinese were sympathetic to the ANC cause in the struggle period…well, well…time to HELP your comrade buddies in need, don’t you think??)

非洲人国民大会仍然是恐怖分子和暴徒 (try to decypher this secret message!)

Google translate works well.

The ANC is a criminal cartel?

Absolutely No Competency.

This is what happens when the third world attempts to run a large first world engineering concern.

It is crystal clear why eskom originally did not want any competition / help from the private sector in the form of alternative power sources like wind and sun generated electricity – none of it is labour intensive and the private sector does not believe in jobs for pals. Eskom is an at least 23000 overstaffed organisation without “repairs and maintenance” in its vocabulary. If one power station is down or for that matter, just a part of it, and that leads an announcement from eskom that it can lead to load shedding it means only one thing whilst the electricity demand is lower than 2007 – eskom is farming backwards and is actually imploding.(Where does the exporting of electricity to zim, namibia, botswana etc fit in if one power station down can lead to load shedding – after all: does eskom get paid for this rare product they are exporting). Will be very interesting to see if they still use standby-oil-burning-units to generate electricity on a continuing basis iso just using it only for genuine standby situations. See what Elon Musk did in australia (www.theverge.com/2017/12/1/16723186/elon-musk-battery-launched-south-australia) – surely it can be done in south africa while labour-intensive-eskom is struggling to survive.

Eskom will go from crisis to crisis while it is overstaffed, the need for electricity spiral downwards iso upwards, municipalities invest cash in useless banks iso paying their eskom bills and maintenance does not form a core part of eskom’s management policy. Eskom’s staff increased whilst the demand for its product has decreased over the years (how do you work that one out??) – that means the staff are doing less but earns more and demands more – in the private sector that would have lead to a decrease in the workforce – just the opposite happened in eskom because the so inexhaustible taxpayer has to cough up for huge unpardonable government / eskom management and policy mistakes.

If eskom really wants to survive in the long run and be an entity not relying on the government and the taxpayer, it is now time to start the severe winter pruning it’s unnecessary staff – the effect of unnecesary salaries for just one year runs into billions – let alone the long term effect over years with salary increases (13th cheques and bonusses) for people actually doing nothing to deserve it. The exact same thing should happen to SAL and all other SOE’s and municipalities where people have jobs just because of who they know and not because of their ability to do the work that they were appointed for.

Nobody in the anc actually understands how the economy in the free world operates – they want to sit on several chairs at the same time to try and please everybody, the communists, the capitalists, the socialists and anything in between – with only 2 buttocks nature allows us maximum 2 seats at a time and that is already risky – if one chair goes, the 2nd chair is out of balance and will also collapse.

If there was an alternative Eskom would be history.

What do you mean IF?
There are literally hundreds of alternatives for power.

Only the most naive and ignorant observers will expect a government that cannot solve the problems at sewerage plants, to solve the problems at electricity plants. “Fake it until you make it” may work in the fashion industry, but if you live by that creed in the electricity industry things will begin to explode and implode around you.

I honestly just read all this drivel for your comments!

Eskom is beyond saving.. anyway.

Some see load shedding as a nightmare, I see it as a opportunity to feel better about the sunken cost of my solar system and have my BMV sync again 😛

Rather surprised that neither the journalist nor the audience have used “root cause analysis” on why this “Businesses ” which it is, regardless of its staffing/ management numbers etc, is failing .
Like any business entity,its cash flow is paramount to its survival , yes getting staff buy-in and commitment is part of a fix , as is reducing overheads however what no-one has touched on is this company produces a product ( electricity) which it sells to consumers …if the consumers don’t pay but use …its akin to a store suffering theft and ultimately if not addressed,you will go out of business.
The sooner they plug the hole of supplying and not getting paid, the sooner they will save the business.
The other issue is unlike water and sanitation “Electricity is a luxury” that you dont have to have to live, 50 years ago people grew up -raised a family on farms without electricity and life was good!
The Day the management of this company says-pay up or do not get ..Then finally the company will turn around and grow be able to supply their consumers who do pay for the privilege and also business stability and sustainability will return , which in turn will help South Africa to grow

End of comments.

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