Ineptitude leaving us in darkness
DON’T want to brag, but it’s really cool to be writing this column in one of the world’s best whisky bars in Bergen, Norway, in a room bathed in sharp light emanating from rather fancy chandeliers hanging above my shiny chiskop, and smaller traditional Christmas lights enveloping me as I sit deep into this antique couch that must have seated countless Scandinavian butts over the years.
I don’t care much for the whisky on offer, a selection of over “one thousand single malts and blends” (whatever that means). I am too old to pretend I love whisky. I think the stuff is vile, and so I’ll settle for a pint of ice-cold draught beer, thank you very much. While I love South African beer, I must say it has been delicious getting to quench my thirst on white European beer, some of it a touch sweet (in a very good way), justifying the licking of one’s lips. Or so I hope.
Now if only my damn right ear would finally “pop” after being blocked while on the transcontinental flight from Africa to here, it would really have been the perfect trip.
But I do feel guilty. Sort of. And that’s why I didn’t want to brag too much. My guilt stems from knowing that many of you reading this have been royally pissed off the whole weekend with Eishkom back home in South Africa. No chance you could have been bathed in such glorious light, because your lights might have been switched off.
I’ve been scanning social media platforms while here, just to make sure I don’t miss any drama back home, and all I noticed was collective swearing at the incompetent state-owned enterprise that is Eskom. All I can say is “Askies!” Hope you successfully pretended you chose to light the candles, and reimagined the darkness as romantic ambiance. No?
I’m also terribly indebted to Eskom for turning off the lights while I’m travelling, saving me money and ensuring there’s electricity again when I’m back in a few days. But don’t quote me if the blackouts continue, of course.
Seriously, though, I share the national sentiment of the past weekend: “WTF Eskom, and minister of public enterprises?!”
It’s worth trying to make sense, I guess, of the genesis of this blackout embarrassment. I remember working on a project a few years ago helping Transnet and Eskom help each other. That was back in my brief life as an employee at a strategy consulting firm.
Transnet had promised to rail just over
I20 million megatons (mt) of coal annually for Eskom from mines to power stations fired by coal. Useless Transnet never kept up its end of the bargain, consistently managing to rail only about 15mt annually, falling way short of the agreed amount with Eskom. Then taxpayers’ money was wasted on the consulting firm I worked for to figure out the problem and offer a solution.
Millions of rand later, the problem was solved. It turned out, to cut a long story short, that Transnet was useless at drawing up a timetable for rotating drivers on trains in shifts that would allow the trains never to stop in the middle of nowhere waiting for a driver to be dispatched there on a bakkie.
So, literally, what would happen is that a guy would be in charge of a train for, say, eight hours and then refuse to continue driving it. The train stands still, and it then takes a while for a fresh driver to come and relieve the one done with his shift. This inefficiency resulted in a turnaround time of the train’s journey from a mine to a power station and back to a mine of some 35 hours.
But if you didn’t waste time with the train driver changeovers, the journey could be 28 hours maximum. And there was the problem! You couldn’t rail over 20mt of coal annually because your trains take too long on their journey because Transnet can’t manage the drivers properly.
It doesn’t take rocket science to know that the solution was simply to draw up a better roster so that the trains never stopped in the middle of nowhere without a driver. This simple problem meant an insecure supply of coal for Eskom, and in turn an insecure supply of electricity to industry and households. Worse still is the macroeconomic impact: the cost of business escalates and then inflation gets out of hand. Just because you couldn’t manage the train drivers schedule.
There’s also an incalculable opportunity cost in this scenario: direct foreign investment is scared off as a result of savvy investors not wanting to risk operating in an environment in which the price evolution of electricity is near impossible to predict, and the security of supply isn’t guaranteed. If energy is a big input cost in your business, as with smelter plants, then you start looking at other destinations.
I wish Eskom and government leaders would get these multiple consequences of blackouts into their self-serving heads. If they did, they’d show better leadership and focus on getting the fundamentals right. As my example illustrates, it’s sometimes simple operational inefficiencies or poor organisational design in a state-owned enterprise that explains sub-optimal performance. That doesn’t require privatisation in the first instance. It really just requires running SOEs better with a view to implementing best practices operationally and organisationally.
What happens in practice is that the wrong incentives are set up for leaders of SOEs. You find chief executives and group chief executives getting fat bonuses even when they switch off the lights or fail to deliver coal by rail.
The man above alone knows why the boards of SOEs don’t link bonuses and extensions of contracts to the business imperative of a particular SOE. You want a performance bonus? Keep the lights on and reduce the cost of energy. Want your contract taken away? Then increase energy costs and give us blackouts. That’s how basic the employment conditions of an Eskom chief should be. But if you can’t set up the right contract for them, then it isn’t surprising that in turn they don’t care about the organisational and operational inefficiencies inside Eskom.
But this may all be ignored, of course, by Eskom and the state. So, in anticipation of another blackout, let me Google the words of an old Simon and Garfunkel classic, Hello darkness my old friend…