Eskom is a catastrophe

R100 BILLION IN THE SHORT TERM Problems include union action, municipal debt and a lack of skills and fuel.

Eskom’s situation is potentially catastrophic. Its 45 500MW power plants can only supply about 25 000MW. And it is technically bankrupt, with R420 billion in debt and a R20 billion annual projected loss.

President Cyril Ramaphosa has no choice but to draw a line until the national budget is announced. If he doesn’t, there aren’t enough generators in the world to save us.

Bailout: From April 1 Eskom will be insolvent if government doesn’t give a bailout of about R100 billion. So, short term that must happen.

The risk is that within 18 months, Eskom could be back in the same hole.

Therefore, this bailout needs strong action by the president.

Take on unions: Ramaphosa must be prepared to take decisive action against the unions threatening to disrupt Eskom.

From 2007 to 2018, Eskom staff numbers grew from 32 000 to 48 000. Staff costs went from R9.5 billion to R29.5 billion per year.

Despite that, Eskom is struggling to keep the lights on due to the poor quality of maintenance and workmanship. Action must be taken around staff. The Medupi Power Station build has been delayed by at least one year due to labour unrest. Now, again, unions threaten to strike.

If Ramaphosa doesn’t come down hard on illegal protest action we can kiss the economy goodbye.

Debt: The president must deal with rampant debt at municipal level and in Soweto. Soweto owes Eskom R17 billion and has never been cut off. People who can afford to pay for electricity must do so.

Middlemen: Running diesel turbines over the short term is critical for power stability. Yet it appears Eskom has no direct contract with wholesale diesel suppliers. Instead, hundreds of middlemen own these contracts.

This is a real risk to security of supply since Eskom has run out of diesel in the past week due to supply problems.

The same goes for coal. One major reason the new power plants are struggling to provide power is the rubbish coal they’re sold. These procurement matters need an urgent look.

Speed up audits and skills: New Eskom chief executive Phakamani Hadebe has decided it’s time for an in-depth audit to establish the condition of its power generation units. He says it’ll take another three months before it knows the state of these units. This must happen faster.

Not one member of the board and executive committee has any electricity generation experience. How many engineers and experienced people does Eskom have left? Eskom’s building zero new power stations beyond Medupi and Kusile and, over the next 11 years, it is expected to decommission 14 500MW of existing power plants.

SA desperately needs economic growth, which requires electricity... where will it come from?

James-Brent Styan wrote Blackout, The Eskom Crisis (2015) – a book on the energy crisis. He writes in his personal capacity.