Briquettes could be bouquets for Mboweni
Time is running out. It is inconceivable that finance minister Tito Mboweni stands up in parliament in October to deliver his mediumterm budget without it including a detailed exposition of how Eskom will be rescued.
There is a desperate search for a permanent CEO —I understand former Telkom and FirstRand CEO Sizwe Nxasana has been approached — and only a half-hearted version of the much-touted chief restructuring officer (an Mboweni invention designed to create someone who reports to government on how its funds are being spent by miscreant state-owned entities) is in place.
Instead of appointing a CRO, public enterprises minister Pravin Gordhan underwhelmed just about everyone a few weeks ago by downgrading the position to an “office of the CRO” and not a person, and then appointing a career bureaucrat to run it. Someone of Nxasana’s experience and stature would simply not be prepared to put up with any political interference.
But with Eskom’s debt approaching R500bn, the unions blind to the threat it poses and government officials arguing among themselves about which route to follow, when Mboweni stands up to speak he has to finally take a stand and say precisely how Eskom will be fixed, and then precisely how the government plans to encourage the economy to grow.
Nothing less will do. The government must be clear and firm by late October. More delay will begin to hobble Ramaphosa. After the debate that follows, Eskom chair Jabu Mabuza should swiftly be able to announce who the board intends to appoint as CEO.
“The most difficult thing,” the first woman to fly solo across the Atlantic, Amelia Earhart, once said, “is the decision to act. The rest is merely tenacity.”
And apparently an Eskom route is already pencilled in. Chris Yelland, the go-to expert in these matters, says a plan by the Boston Consulting Group was presented to about 600 Eskom senior managers on August 22. It starts with carving the transmission business out of Eskom into a new state-owned entity that would, independently of Eskom, decide from whom to buy power.
That would be a five-year process, after which Eskom’s remaining operations — generation and distribution — would separate into new companies. Hmmm ... generation, we know, is a mess, and Yelland has been busy these past few days highlighting the extent to which Eskom underreports the costs of completing its Medupi and Kusile power stations to parliament. Generation is where the debt is. And distribution (into your home and mine) is also extremely untidy.
If Eskom could collect on its distribution bills from broken municipalities, many of its problems would go away.
Maybe inside the Boston Consulting Group plan is a spark that will dazzle the ratings agencies, but I can’t see it. If the costs of generating electricity from coal-fired power stations is the problem, surely that’s what you have to attack? And you can dramatically cut those costs without losing a single job. I don’t understand why the government and the unions are not banging on the door demanding the answer. It is, as readers of this column will know, in the slurry, the coal left to foul our environment in huge ponds after it has been washed.
There is 2-billion tons of slurry in SA. If you pelletised it and made briquettes you would not have to dig one more piece of coal out of the ground for Eskom for 20 years, with its entire current fleet operating flat out. And Eskom knows the pelletised coal works. Its chief fuels adviser, Dr Chris van Alphen, has tested briquettes and confirmed that they work and that Eskom would buy them and burn them.
A tender is out right now as a feeler. It closes on September 12 and reads, “For Phase 1 — Potential supplier to provide the following: Test samples of original fine coal and pellet/ briquette: 3-5kg of pelletised fine coal and 1kg of the original fine coal to be delivered to Eskom Research Testing and Development. Information requested above and the laboratory assessment to be undertaken by RT&D will be utilised to identify potential suppliers.”
The “potential suppliers” are queuing round the block. The people I’ve spoken to are already building their first R15m plant and could build up to 36 plants a year if Eskom gave them the nod. Scale is not a problem, even though a single unit at, say, Kendal burns almost 100kg of coal a second, or, for the entire “six pack”, more than 50-million kilograms a day.
Not an issue for the slurry rackers. They’re not trying to corner a market. They’re trying to save the country and, yes, make a buck. But the technology is routine. Anyone can do it. Imagine a solution that cleans up the slurry ponds, smashes the coal cost Eskom carries on its balance sheet and provides work for the “just transition” the unions demand as the price of their cooperation in the restructuring.
That cautious trial tender is late in the day. This is an emergency. Eskom burns 125million tons of coal a year. They should order 20% of that in pellets the moment Van Alphen proves, as he already has, that the briquettes work just fine.