How to fix Eskom’s massive power mess
The biggest obstacle casting a shadow over South Africa’s ability to grow its economy, to start and sustain businesses, to attract investment and ultimately to create job opportunities, is the unstable electricity supply.
This is according to Helen Zille, leader of the Democratic Alliance, who said: “Never before has the notion of restoring power to the people seemed more pertinent.”
The Western Cape premier said she was concerned by reports revealing that Cabinet had been briefed by Eskom on the risk of a nationwide blackout, when load-shedding wasn’t enough to protect the grid from collapse.
“To avoid this catastophe, it is inevitable that we will face heavy load-shedding for the foreseeable future,” Zille said.
Additional reports indicated the ANC had decided, at its annual lekgotla, to abandon the Independent System Market Operator (ISMO) bill.
This is legislation that would have taken the management of the national power grid away from Eskom, allowing far greater involvement of Independent Power Producers (IPPs).
“There is only one conclusion to be drawn here: keeping Eskom’s monopoly and control is more important to the ANC than solving this crisis,” Zille said.
“Now, more than ever, we need courageous, selfless leadership. Instead, we have President Jacob Zuma.”
“Between his attempts at laying the blame for the infrastructure neglect on apartheid and Gwede Mantashe’s preposterous assertion that our grid is strained because of ‘growth and development’, it’s hard to know whether to laugh or cry,” the DA lead said.
According to the DA, the damage to the local economy, since load-shedding began in 2008, is estimated to be around R300 billion.
How to solve a problem like Eskom
Zille said that while there is no quick fix to the Eskom crisis, president Zuma could implement immediate changes.
“The first step is to recognise that the biggest threat to a stable and steady supply of electricity in South Africa is Eskom. And by Eskom, I mean the stifling monopoly they enjoy (95% of our electricity supply comes from them), as well as the revolving door of unqualified cadres deployed to run this vital organisation,” Zille said.
She said that opening the grid to independent power producers is key to solving electricity generation shortfall.
The DA said that many co-generation projects can come online within 18 months to two years. “This is exactly what we need – not the gargantuan coal and nuclear projects that take decades and hundreds of billions of Rands to bring into service.”
“It is equally important that we take the management of the grid – the buying of electricity from producers and selling to distributors such as municipalities – out of the hands of Eskom. This is precisely what the canned ISMO bill would have done,” Zille said.
Renewable energy
The DA said that the country needs far greater allocation to renewable energy sources.
In 2011, an Integrated Resource Plan (IRP) was drawn up, providing a long-term (20 year) framework setting out goals in terms of capacity as well as the ideal mix of electricity types.
The DA noted that it took three years for the first revision (2014), and this revision has subsequently been rejected.
“The result is that we’re now working off a plan that is completely outdated, in an energy landscape that has changed significantly in recent years,” Zille said.
When the original IRP was drawn up, renewable energy was still relatively expensive compared to coal and nuclear power.
“But since the start of the process to procure private investment in renewable energy projects (64 projects to date totaling R120 billion), the price of wind power has dropped by 42%, and solar power by an incredible 68%. And the latest developments in bio-gas look even more promising,” the DA lead said.
In addition, the energy from the first wind and solar projects is estimated to have saved diesel and coal to the value of R3.7 billion, she added.
Demand has also dropped significantly from what was projected in the 2011 IRP, and the country is currently using less power than it did in 2007.
“And yet we’re still working off a plan that says renewables are too costly and we need massive nuclear builds to cope with projected demand,” Zille said.
“This has to change. There are currently private sector bids for 6,000MW of wind and solar power plants. This is almost a quarter more than the huge Medupi’s 4,800MW capacity, but government is expected to authorise no more than a fifth of this. We’re talking energy that is entirely funded by the private sector and uses free fuel.”
No to nuclear
By way of a third step, the DA called for the abandonment of the R1 trillion nuclear deal.
“Given our immediate need for power, the falling cost of renewables and the revised projection of our demand, it is sheer madness to persist with the nuclear procurement programme.
“The only reason there could be for pursuing this project is the obvious opportunities for bribery and corruption on a mega ‘Arms Deal’ scale so far unprecedented in South Africa,” Zille said.
Eskom bonuses
A fourth step would be for the Eskom executive to return the performance bonuses paid out to them.
Zille said that since load-shedding began in 2008, Eskom’s top brass has received as much as R63 million in performance bonuses. In 2012 and 2013 alone, the nine members of the Eskom Board received R31 million in vested “performance shares”.
The salaries of the directors and group executives in 2014 amounted to R60 million (up from R57 million the previous year), of which R24.4 million went to its top three executives.
Former CEO, Brian Dames, received R22.8 million when he left, of which R5 million was simply for terminating his contract – all of this as the blackouts returned.
“Everybody who hears about these huge amounts has the same question: Bonuses for doing what exactly?”
“If ever anyone failed to perform their duty, it is the Eskom executive. Their salaries and bonuses are an insult to every South African who has to cope daily with the effects of Eskom’s mismanagement,” Zille said.
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