Eskom (when it was the Electricity Supply Commission) was one of the best companies in the world.. It was owned by all South Africans, and was a non-profit making organization. Money was always set aside, by selling electricity for more than it cost to produce, for replacement and expansion.
THEN (1) Then, when the ANC took over, it was turned into a business with the government as sole shareholder. This was done to collect further tax from those who actually pay for electricity, and to provide a vehicle for the implementation of government policies. Profits, and the money set aside for replacement and expansion was paid to the government as “dividends”.
Then (2) the sole ‘shareholder’ directly appointed most of the executive, and non-executive directors – called “appointments” !!!!
Then (3), People started getting appointed & promoted based on so-called “potential” – NOT on capability!! They couldn’t actually perform the work, so the people who were capable and could, were asked to stay around – in the background – and were termed “contractors“. Although no additional work was getting done, the workforce was increased by 23%, but this was also fine because the government wanted to reduce unemployment.
Then (4), in an attempt to reduce unemployment, by boosting exports (by making them cheaper) Eskom was instructed to produce the cheapest electricity in the world. This didn’t work – instead of expanding and creating jobs – business just made bigger profits. All investment was stopped due to this!
Then (5) the sole shareholder in the Mbeki era, wouldn’t allow Eskom to build any further power stations, saying that this could be done by “private investors”. But, “private investors” didn’t come to the party because electricity was too cheap to provide an adequate return on their investment.
Five years too late Eskom was “allowed” to expand and build two huge, new power stations, but since the Organisation didn’t have any money – this had to be borrowed.
Then (6) the ANC (in control as the sole shareholder) wanted a piece of the cake and ‘got’ a big piece of Hitachi – the company who “won” the contract to supply boilers for these power stations. Because of this, Eskom wasn’t allowed to take Hitachi to court when …..! was supplied. Then Eskom, with its now reduced standards – attempted to project manage the construction of these new power stations by itself.
What a calamity !!!!!
Money now had to be borrowed from the world bank! However because they are coal stations – a requirement was the installation of flue gas desulphurisation. This hasn’t happened (yet) because of an insufficient water supply! So Eskom is now in the …..! with the World Bank..
So, because of taxation, “affirmative action“, “transformation“, “employment equity”, “BBBEE” – (all euphemisms for “Whites out, Blacks in) – lots and lots of corruption, a bloated and bureaucratic workforce and so forth ad nauseum.. Eskom has now run out of money and generation capacity – standards have dropped dramatically – and corporate memory is being lost at an alarming rate …………………………
Today Eskom is attempting to borrow the money for the steam generator replacement at Koeberg from a French bank.
One of the questions this bank is asking is about post-Fukushima safety improvement progress. Guess what ?!!!!! Because there is no money ……….
As is always the case, SOMEONE has to pay. So Eskom wanted therefore to dramatically increase its price to the consumer. The government (who is also the sole shareholder) wouldn’t allow an increase large enough to cover the cost of its mismanagement. So Eskom is now effectively bankrupt – and its shares and bonds have become “junk status”.
The ‘old’ engineers – bless them – are still doing their best !
