Eskom is applying for performance bonuses in 2021: energy expert

Eskom’s plan to pay out performance bonuses to staff members is out of order as there is no indication that the embattled power utility is improving, says energy expert Adil Nchabeleng.

City Press reported that Eskom wants to pay out over R1.8 billion in performance bonuses, citing court papers filed by the National Energy Regulator of South Africa.

Speaking in an interview with 702, Nchabeleng said that the application includes future bonuses for 2020 and 2021.

“Why would you apply a blanket bonus policy while you haven’t yet even seen the performance?” he said.

“Bonuses are paid out of good performances in the aspect where there has been an improvement in the system and we haven’t seen that yet.”

Eskom resumed load shedding in November, with the state utility implementing Stage 6 load shedding in December.

The company was able to avert power cuts for much of the festive period as many businesses closed during the holiday, however, it was forced to implement stage 2 load shedding again on Saturday.

Businesses are expected to return by mid-January, which will increase the demand for electricity. “The system remains constrained and vulnerable, and as such load-shedding stage 2 will, unfortunately, have to continue,” Eskom said.

New chief executive officer, Andre de Ruyter officially takes over as head of the company on Monday.

De Ruyter is tasked with turning around the debt-laden power utility, which has been described by Goldman Sachs as the biggest threat to South Africa’s economy.

Eskom’s debt has ballooned to R450 billion, while the group is overstaffed, and under-skilled to deal with the power crisis at it’s failing power stations.

“His (De Ruyter) appointment, I don’t think, will add to – in terms of the ailing crisis within Eskom on the power generation side,” Nchabeleng said. “He comes from a very poor performance background,” he said of the chief executive’s performance at Nampak. The analyst said that the new chief executive faces a difficult time with unions, among numerous other things.

Impact of load shedding

Activity in South Africa’s private sector shrank for the eighth consecutive month in December 2019 as the impact of Eskom’s load shedding continues to be felt across the country.

IHS Markit’s Purchasing Managers’ Index (PMI) fell to 47.6 from 48.6 in November, its lowest since October 2018 and further below the 50 level that separates expansion from contraction, Reuters reports.

All five subindexes in the survey were in contraction territory, signalling that weak activity that saw gross domestic product contract in the third quarter would likely continue into the fourth quarter.

“With the country’s electricity supplier Eskom implementing Stage 6 load shedding in December, many South African businesses saw activity and trade brought to a standstill,” said David Owen, an economist at IHS Markit.

Read: Eskom wants to pay workers R1.8 billion in performance bonuses: report