Report: cut red tape to free Eskom
• ‘Overly complex’ management the reason for poor performance
Eskom’s “dysfunctional and overly complex” management system is the primary reason behind the poor performance of its coal-fired power stations, a report prepared for the National Treasury by the German vgbe consortium says.
The report on the assessment of the utility’s operational environment says cutting the red tape that power station managers have to deal with would improve their ability to manage maintenance challenges promptly and efficiently.
A copy of the 600-page report seen by Business Day suggests that to prevent the “collapse” of some of its plants, Eskom must be allowed to do proper maintenance work “even if this means a higher level of load-shedding for a limited period of time”.
The report highlights that the main focus of the Eskom coal fleet “has been to quickly fix the actual bottlenecks in generation capacities rather than prioritising the restoration of the plants to their original condition following an outage.
“The plants have been forced to continue operating at the expense of their technical condition. The consequences are reflected in the high number of incidents, trips and partial load losses. This cycle has now gained so much momentum that it could lead to the collapse of plants or to further capacity losses.”
The report states that Eskom’s maintenance budget for its coal fleet from 2013 to 2027 was either above or within the range provided for by international benchmarks, taking into account the technology, size and age of the coal fleet.
“Hence, the money spent by Eskom should have been sufficient to execute proper maintenance and to keep the power plants in a good condition,” the report says.
It also makes several suggestions for urgent work that needs to be carried out at some power stations, including the newest stations in the fleet, Kusile and Medupi, to prevent “catastrophic failure”.
One of the immediate interventions identified in the report is urgent maintenance of the raw water treatment plant shared by Medupi and Matimba power stations. Should the plant fail, 12 generation units with a combined capacity of 9,800MW would be lost to the grid.
Similarly, the water treatment plant at Kendal power station is in a very poor condition and needs urgent maintenance and refurbishment.
If the plant failed it would take 3,840MW off grid.
The report warns that the incomplete coal handling system, restrictions in water supply and the ash discharge situation at Kusile place the plant at a high risk of not being able to operate at more than half of its 4,800MW capacity.
The energy availability factor (EAF) — a measure of power station output compared with total installed capacity — of Eskom’s generation fleet has remained below 60% for the last 18 months, against an international benchmark of 78%.
In recent months, as Eskom has ramped up planned maintenance outages, the EAF has been below 55%.
The vgbe report states that most of the issues relating to low EAF were due to a “dysfunctional” management system with “too many organisational layers and opaque decision-making processes that generate a tremendous amount of red tape, with lengthy procedures and a lack of accountability”.
The coal fleet is managed centrally, which means limited authority is given to plant management.
Eskom generation has been trapped within this complex management system for so long that it is no longer able to maintain or improve the technical performance of the coal-fired power plants, the report states.
It recommends that power station managers be given full budget responsibility and accountability and that for at least the next two years power plants should be allowed to apply fast-track procurement processes under the supervision of the Treasury.
The report also recommends decoupling the coal fleet from the rest of the generation business to implement the necessary changes in governance.
Besides empowering the power plant management, the vgbe team recommends engaging an interim external expert team at each power station for the next two years which reports directly to the Treasury.
In a brief discussion on Eskom and government’s plan to extend the lifetime of plants such as Arnot, Camden, Grootvlei and Hendrina, the report says a clear decision needs to be made soon for strategic planning purposes.
It warns, however, that if a proper maintenance approach is not followed over the plant service life, as has been the case in the Eskom fleet, a lot of the equipment and components of the power plant will need to be changed to extend the life of the plants. This could mean that large investments may be necessary for the life extension.