Eskom’s plan: Structured and deliberate

New CEO is focused on ensuring that the utility runs in a stable manner.
Eskom CEO Andre de Ruyter has a plan but is asking South Africa to be patient for the next 18 months. Image: Moneyweb

Eskom’s new CEO Andre de Ruyter hopes to regain South Africa’s trust by addressing operational stability at the power utility. This involves an 18-month maintenance plan that is aimed at restoring the utility’s ability to ensure reliable and consistent energy supply. 

Hot on the heels of Eskom announcing renewed load shedding the night before, De Ruyter informed the media on Friday about the ethos of the plan, which involves returning to “philosophy maintenance”. This means Eskom will be conducting strict maintenance on its power generation fleet in line with the manufacturer guidelines as opposed to the piecemeal approach it had adopted, which only focused on emergency maintenance. 

This new plan will be implemented within the next three months, said De Ruyter, and will ensure that Eskom gets a handle on unpredictable plant breakdowns which leads to the expensive use of diesel to produce electricity as well as load shedding that is often not communicated speedily to the public.

Necessary evil

“If we don’t implement this maintenance plan there is a very real risk that the deterioration in our system performance will continue … we therefore need an intervention, and we need it as soon as possible,” he said. 

Eskom has a threshold of 9 500 megawatts (MW) for unplanned plant breakdowns, but over the past three months has had between 10 000MW and 13 500MW in lost capacity, leaving the system under severe strain.

Giving an update on the state of Eskom’s system, chief operating officer Jan Oberholzer said Eskom has had to institute 21 days of load shedding since September when its Summer Plan was announced. For the year to date, Eskom’s unplanned outages have been higher than anticipated, recording 471 trips from a target of 420 while its energy availability factor – that is the proportion of available generating capacity – was lower than the 71.5% target, at merely 68%. 

“We will, unfortunately, have to expect some increase in load shedding [during the 18-month period],” said De Ruyter. “We are going to do this in a structured, careful and managed way as we will have to give ourselves the space to fix what we need to fix.”

Already started

Eskom’s board has given its full support to the maintenance philosophy plan. 

Oberholzer said the utility had approached a number of the original equipment manufacturers in order to enter into long-term contracts with them to assist Eskom in operating and maintaining the plants. 

Read: Eskom warns SA to brace for more frequent power cuts

The utility started this philosophy maintenance in the past two weeks by taking 3 200MW off the grid for long-term maintenance, not by the original manufacturers but by using the current resources within Eskom. The affected units are at the Kendal, Medupi, Hendrina, Kriel, Lethabo and Majuba power stations.

At the same time, Eskom will be prioritising the fixing of defects at its new-build stations Medupi and Kusile, with these two over-budget power stations expected to be in full operation by 2023.

Careful and deliberate

De Ruyter emphasised that Eskom’s “divisionalisation” – as opposed to a legal “unbundling” – would be done in a careful and structured way in order to minimise the risks that could ensue with regards to tax, covenants with lenders, and employment relations.

“I would rather first go through all divisionalisation process and ensure that we are able to address these risks and put in place structures that will enable us to operate independently of each other, and then we can migrate,” said De Ruyter. 

Read: Eskom CEO appoints board for planned division into three units

He however clarified that this was not a deviation from the roadmap presented by the Public Enterprises Minister and Eskom shareholder Pravin Gordhan last year, saying “the end state has not changed at all, it is the way of arriving that we want to do properly and prudently”.

In the coming week, Eskom hopes to finalise appointments for the boards of the three entities – Transmission, Generation and Distribution. Once that is completed, said De Ruyter, the divisions will begin running like businesses with full operational and bottom-line accountability. 

“Rather than hitting the breaks,” De Ruyter countered, referring to news headlines about his plans, “… we are hitting the accelerator in a structured and deliberate manner to ensure that we manage the risks appropriately.”

 

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I would have liked to hear about cost cutting and things like that.
Dividing Eskom in three divisions? Dividing a rotten apple in three gives you three parts of a rotten apple. The rot is still there.

I have not heard anything from Mr.De Ruyter about managing the debt. Maintenance is good and fine but what about the rest?

Agreed and nothing about the 4000 Eskom employees doing business with their employer either. They all add their 30% markup and bleed the company dry.

Chris: correct! So far all we hear is steps taken to spend more money while having less availability. Can’t they at least announce that a team is studying excess headcount with a view to retrenchments? Plus a second team working through contracts that should be cancelled.

Same plan ANC has for SAA. Looting. All clear as mud.While nothing changes.

@chris. He did address the 3 divisions issue .See Sunday Time for are more comprehensive report.

I like Ruyter. At least he is not scared to stick to a plan. He is dishing out unpalatable medicine; which previous heads were scared to do.

Will the Absolute No Competence, sorry that should be Absolute No Current, allow him to stick to a plan?

Mr de Ruyter can only do so much housecleaning. If he moves the furniture too much to get to the dirty areas of Eskom he’ll get swept out the door himself. He’s clearly just there to pick up the cheque because nobody in their right mind would take the job thinking they could fix or change the rot and problems in Eskom

All good and well re the maintenance planning. I can live with load shedding while they catch up.
Unfortunately this is exactly what Eskom/ANC said about 10 to 15 years ago when the problem came up the first time.
Nothing happened then, will it now?????

Nope. Looking at how things are being handled at SAA at the moment it tells me nothing is changing for the better, the slide downhill continues…the only question you should be asking is when will South Africa get to the bottom.

My guess, way too long for me to watch it happen and be exposed to it.
5, 10, 20, 30 years? Flip a coin or throw a dice.
I’m not going to gamble on all the ANC (& EFF) policies and with them getting 68.3% of the votes, they’re here to stay for the long haul…

#I’mdefinitelynotstaying

SAB is spending a billion on solar energy so that we may continue to drink beer. Maybe we should take their example, so that our fridges can keep the beer cold.
Bye Eskom.

Presumably we’ll see an end to the (laughable) term “unplanned breakdowns” then?
Much more to it than that however – & we are not hearing about it!

It is now called ‘sustained power cuts’.

You expect every utility in the world to be ‘Structured and deliberate’. That is not new. What we need to hear is how the situation will be turned around.

The poor oke has a mammoth task in trying to turn this around given all that has gone before. Perhaps we need to cut him some slack and see if he can as I don’t believe we have another option and heaven forbid “they” put another baboon in there simply because load shedding has not gone away. He’s given his reasons, has a plan now needs space. I’m behind him.

@gt

I don’t know how anyone has any sympathy for de Ruyter. He took the job, he chose to sign on the dotted line knowing full well what was going on in Eskom. There’s no way you could tell me he didn’t know.

There is absolutely no way that he’s going to retrench people, COSATU and Cyril will never let that happen, they both already said so.
So my question is, how do fix something so broken, if you are not willing to tackle the biggest issues?

If you try and find out how much de Ruyter is getting paid you just get the following story.
“Interestingly, former Eskom CEO Phakamani Hadebe was on a yearly wage of R8.6 million. De Ruyter is likely to take a pay cut for this role.”

So he’s getting R8.5 million? I mean that’s a pay cut.

Taxpayers are going to pay him a huge salary for him to do absolutely nothing. So I see why he would take the job, get paid for doing nothing, sounds great.

“But he’ll be trying to fix Eskom”, I hear people say. Really? Do you think anything he proposes is going to get any serious consideration?

He might just as well go sit on the beach for the rest of the year and just send them a generic suggestion every week that he can copy from “Running Eskom for dummies”.

I for one am not happy that my tax money is going towards a CEO that’s doing nothing except for cashing his cheques.

Wow gt you managed to slip one past the headmaster there.

I think he will soldier on with his hands tied as they are till it gets too much then he will exit. Health or if he is honest too much interference.

Exactly, so in short, de Ruyter getting paid while he full well knew his hands were going to be tied behind his back. Getting paid by Eskom do to nothing so the ones involved can keep on looting the taxpayers while country goes down without electricity.

Good night & goodbye economy & investment

Ja well no fine but very, very light on detail. Let us get to the big facts, not another coat of paint on an old turbine.

How will Eskom repay its debt?

How will Kusile and Medupi be brought to some sort of output close to nameplate?

What is electricity going to cost going forward?

Will Eskom ever meet air emission standards?

Be honest (ha ha) so we can plan accordingly.

Kusile and Medupi will never perform according to the name plate.

These geniuses bought paid V8 price for a flat 4 Volksie engine.

Agreed @Paul Kearney
I just wish de Ruyter would get all the clowns at Eskom, Tshwane Metro, EskomSePush and the other LoadShedding Apps to get their acts together so that their warnings/notifications and the actual throwing of switches coincide and help me plan when to cook, eat, travel, and do all the other sh&t I need to do to get my arse in gear. I am sure that all the owners of small and medium businesses, the average taxpayer, commuters and some others living here would appreciate it.

Besides increased tariffs and additional bailouts…How does Eskom intend to fund this extensive maintenance programme?
Then there’s the matter of emission regulations that needs to be addressed, to mitigate the impact of ‘repaired’ coal plants.
Eskom’s on life support and it’s only hope of survival would be through a feasibility study.

Stage 2 seems to be SA’s new default setting, yet it’s completely preventable through the stroke of a pen on a revised policy.

stage 2 is also a good excuse for a lot of SA to sit on their bums.

Ha ha!
So true. But then again, I’d rather have them sit on their bums than further destroy. Only this time the damage had already been set in motion beforehand!

The VW flat four is a superb engine, I think you mean a Trabant, the evil, smelly, seriously polluting (like Escom) two stroke made in East Germany before the union of the two Germanies.

Spot on, apologies to VW. 🙂

Surely a top priority is to conduct a skills audit, and redeploy personnel that are redundant? He has to get on top of the salary bill because that has to be one of the biggest expenses.

Absolute priority No.1 must be to get Eskom out of the power generation business. This is where most of the inefficient and corrupt things are happening.

End of comments.

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