EDINBURGH — South Africans have become accustomed to power cuts, sitting in the dark for hours without electricity for cooking, watching TV and powering up Internet facilities. Aside from the annoying waste of time, there is the question of many hours lost as people, and machines, are unable to work to their full capacity – or work at all. The world has been paying close attention to the electricity problems, with Eskom identified as a significant risk for the country’s growth prospects. The Financial Times, a respected financial publication headquartered in London, has Eskom in its sights. It discusses what the problems are and warns that Eskom is far more than a financial drag on South Africa; it is behind a major environmental and health crisis. – Jackie Cameron
By Thulasizwe Sithole
Mmusi Maimane, leader of the main opposition Democratic Alliance, has said that the ANC has turned Eskom into a “national power utility that is on its knees, threatening to take the entire country down with it… the single biggest threat to our nation’s future.”
“The increasingly frequent blackouts are throttling Africa’s industrial powerhouse,” the FT tells its global audience.
“President Cyril Ramaphosa is committed to breaking up Eskom’s nearly century-old monopoly. But he has caused anger in ANC-linked trade unions who see the split into state-owned generation, transmission and distribution units as potentially a threat to Eskom’s 48,000 jobs.
“For Mr Ramaphosa, it is about recognising Eskom as both ‘too big to fail’ and ‘too difficult to lead’ – and unable ultimately to wean South Africa, one of the world’s top 20 carbon emitters, away from its reliance on coal. “The consequences may be painful, but they will be even more devastating if we delay,’ he told the country last month.”
Eskom told South Africa’s energy regulator last year that it “operates an ageing generation fleet that has been run at high utilisation factors [or close to maximum output] for a number of years under severe financial constraints”, says the FT.
“As a result, the government has tapped its already stretched public finances to provide a R69bn ($4.9bn) bailout to cover most of Eskom’s payments on its debt, which is largely state guaranteed, for the next three years. February’s bailout will free up funds to keep the lights on.”
The biggest drain on Eskom’s finances, it says, are giant new plants that have proven better at burning cash than coal.
It describes how, rising from the Highveld like ancient megaliths, each taller than the Statue of Liberty, the towers of Kusile station are an impressive sight, appropriate for what should be the world’s fourth-biggest coal plant – and Africa’s largest.
“Begun over a decade ago, Kusile – meaning ‘the dawn has come’ in the local Ndebele language – should by now have been providing the extra capacity necessary to relieve blackouts and lighten the load on ageing stations, Pravin Gordhan, the minister of public enterprises, said last month.
“Yet, after falling half a decade behind schedule, Kusile and a twin station, Medupi, are commercially operating only a fraction of the 9,600MW they promised. Even that is subject to equipment faults, design flaws and frequent tripping out of power units in what might be Eskom’s greatest failing of all.
“The root cause of the blackouts this year has been the unreliability with which Eskom’s stations generate power, which has dropped from an average of four-fifths of its available energy in 2017 to less than two-thirds in 2019. And far from cushioning the grid, Medupi and Kusile have become so fault-ridden they have brought the average down. Originally estimated at an already hefty R150bn ($10.4bn), the cost of building Medupi and Kusile has since at least doubled, driving the increase in debt. Yet there is little to show for it. Much of the cost may simply have been stolen.”
State investigators are examining R139bn of supply contracts for alleged pilfering, the FT tells its august audience of investors and business leaders.
This theft is being investigated separately to Eskom’s alleged role in the “state capture” scandal that helped bring down the presidency of Jacob Zuma 12 months ago over claims he helped the Guptas, a business family, abuse regulatory machinery to wrest control of assets such as coal supplies for the utility.
The Eskom woes aren’t only financial; environmental groups argue the real toll is in the thousands, cautions the FT. “Right now we’re talking about the energy crisis,” it quotes Thomas Mnguni, a community activist in Middelburg, a Mpumalanga coal town.
“But this will become a public health crisis. It has become normal for people around here to have bronchitis, asthma and sinus problems,” adds the FT.