Eskom JET

A new, greener, socially owned Eskom is possible – but the unions need to back off

A new, greener, socially owned Eskom is possible – but the unions need to back off

While Cape Town Mayor Dan Plato is champing at the bit to sign more independent power producer deals and make load shedding a thing of the past, the National Union of Mineworkers is placing all its chips on Eskom in the belief that this is the best way to save jobs. In its view, #IPPsMustFall.

Last week I wrote an opinion piece in Daily Maverick following another round of load shedding, the central thrust of which was a call to trade unions – and indeed other civil society formations – to go beyond simply demanding salary increments and start envisioning a new power production and ownership model for South Africa.

I argued that as Eskom prepares to split into three entities (generation, transmission and distribution), unions, which played a pivotal role in bringing the apartheid regime to its knees and ushering in a new era of democracy, and which still wield a lot of power and influence today, have to advocate for more democratic ownership of electricity production as well as more green power, given today’s climate imperatives. They have to lead the clarion call for greater inclusion of as many willing and able South Africans as possible in future independent power producer (IPP) deals that materialise as unbundling becomes a reality.

I further made the point that we live in a country that needs to continue growing while reducing our carbon footprint. In 2016, South Africa emitted about 531 metric tonnes of CO2 equivalent (MtCO2e). That is a big problem for a region warming at twice the global average. Heating is causing water scarcity, crop failures, expansion of the malaria belt and food vulnerability in many parts of southern Africa, including South Africa. Clearly, we must transition to a low-carbon economy as quickly as possible.

My piece was motivated by the complete absence of any clear and forceful voice in the media space advocating for these changes as well as a noticeable trend towards what I consider demands for very immediate, short-term wins whenever power outages occur.

The day after my piece came out, Cape Town Mayor Dan Plato made the following statement concerning load shedding:

“In October 2020, amendments to the electricity regulations were finally gazetted which could pave the way for municipalities to source power independently from Independent Power Producers (IPPs),” he said.

“The city calls on national government to expedite the processes that will enable the procurement from independent producers to become a reality so that municipalities such as Cape Town can go forth and start breaking the sole reliance on Eskom for power provision… Time is of the essence. We cannot continue to go on like this.”

Dan Plato, like many South Africans, has seen a future without Eskom, and it does not scare him. Quite the opposite – he welcomes it! By the way, he was being nice and polite when he made those statements. I have heard many people say that the Western Cape or Gauteng should just get rid of Eskom and build their own power plants. That, however, could lead to a country where some provinces have uninterrupted electricity supply while some others only get it intermittently. It would take the country back to the apartheid days. We have to explore a different option, one that generates more electricity for everybody.

Less than 24 hours after Plato was quoted in the media, the National Union of Mineworkers’ Eskom Energy Sector Coordinator Khangela Baloyi said the following in a press statement:

“Under this leadership, load shedding is expected to be with us for the next two to three years. There is no proper plan in place to prevent load shedding. This is happening besides the fact that the country is on lockdown. It is happening besides the reality that the economy is not performing well…

“The NUM is calling on our government as the Eskom shareholder to address this issue of poor leadership… The current leadership of Eskom is pro-IPPs. As we have said before the IPPs are acting as parasites that are milking Eskom. With the current PPAs with IPPs Eskom will not survive. The NUM calls on the government to review the current IPPs setup. These IPPs are not even assisting the country in dealing with load shedding.”

All this means that there is no alternative. IPPs are here to stay and we are heading for a world with more IPPs, not fewer. In preparation for this eventuality, and while acknowledging that it is important to improve workers’ lives now, we should be calling for solar panel subsidies, wind farms, more green electricity, socially owned IPP licences, preferential share deals in the new utilities, etc.

The two visions could not be more different. While Plato is champing at the bit to sign more IPP deals and make load shedding a thing of the past, NUM is placing all its chips on Eskom with the belief that this is the best way to save jobs. In their view, #IPPsMustFall. This view, I’m afraid, could lead most South Africans to oppose something that has the potential to generate a lot of wealth, jobs and opportunity for the country.

Here’s the thing: Eskom is knee-deep in debt – it owes just under half a trillion rand. Its plants are running on old, inefficient equipment that should be replaced, but which cannot be replaced due to a lack of liquidity. Economic and demographic growth also outstrip Eskom’s capacity to satisfy the country’s needs going forward. The government made commitments within the framework of the Paris Climate Agreement to reduce CO2 emissions. Right now, it simply does not have the human and material resources to transform Eskom into a behemoth capable of providing uninterrupted power to every home and business in the country.

All this means that there is no alternative. IPPs are here to stay and we are heading for a world with more IPPs, not fewer. In preparation for this eventuality, and while acknowledging that it is important to improve workers’ lives now, we should be calling for solar panel subsidies, wind farms, more green electricity, socially owned IPP licences, preferential share deals in the new utilities, etc.

We should be pushing hard to get more details about present and future IPP markets. We should be calling on the government to publish details on how much electricity will be purchased in auctions/contract periods and at what price. This information can then be used to sign offtake agreements which in turn can be used to establish IPPs – IPPs that belong to individuals, unions, farms, stokvels, community trusts, provincial governments, women’s groups, etc.

If a large percentage of South Africans can be convinced to invest anything from R100 to R100,000 in power production, then democratising Eskom’s ownership can also play a major role in boosting the post Covid-19 economy. That would put more cash in pockets and unlock economic potential in all sectors of the economy – agriculture, auto manufacturing, education, housing, entertainment, tourism, etc.  

If it is so much cheaper and faster to create more IPPs around the country, why cling obstinately to a model that has become a millstone around the country’s neck? In Europe, workers’ groups have scored big wins in the fight for socially owned IPPs, green power, electric cars, lower energy bills and green jobs. Drive around the countryside and you will notice that many individuals and companies have already made the call to start producing electricity, you know, the kind of production model that Plato wants to expand.

This should not be seen as state surrender. It is counterproductive to force the state to play a monopoly role that it is simply incapable of assuming at the moment.

To put it another way, who would you want to own the future generation capacity in the country – South African workers and families or just private venture capital? We need to answer wisely. DM


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All Comments 6

  • Popetrevorjohn@Gmail.Com

    If I may, I would like to take issue with the statement: “Eskom is knee deep in debt”. In fact they are over their heads, and frantically treading water, trying to keep their heads above the water. And NUM is a dead weight pulling them down… Good article.

  • Brucedanckwerts

    I have said it before, and I will keep saying it, that dividing ESKOM into three – Generation, Transmission, Distribution, WILL be a disaster. Three fact cat boards, all needing fat cat consultants to help them blame the other two for the woes of the grid. I have sent (an admittedly long) article to Daily Maverick about how we totally need to change our thinking about the Grid and other Common Pool Resources. We need to start by electing the Board of ESKOM from the different stake holders – one each from Mining, Agriculture, Commerce, Industry, Civil Society, ESKOM White collar and ESKOM Blue collar workers, with only the Board Secretary appointed by Government. Such a Board would be a great deal more transparent as every member would be answerable to their constituency.
    The NUM is right to be critical of the IPPs. In their current form most contracts to buy power from IPPs, force ESKOM to buy power whenever the IPPs have it available – leaving ESKOM with the task of balancing supply and demand. In order to actually FUNCTION the grid MUST have the right to adjust the price according to the current level of supply and demand. There is technology out there that can do this in real time . . . . . see my article, which is languishing somewhere in the DM inbox. Bruce Danckwerts, CHOMA, Zambia

  • Peter Oosthuizen

    “To put it another way, who would you want to own the future generation capacity in the country – South African workers and families or just private venture capital? ” Right now as an SOE , Eskom is supposedly owned by the South African people whose elected representatives have stuffed it up beyond recovery. The primary need is for enough electricity to meet the country’s needs but as always the unions put their own interests ahead of South Africa’s. IPP’s are a solution and a good source of indirect investment of workers funds would be the PIC – but wait it’s also on the way to bankruptcy! Based on past experience of co-investment with the State, international investors would have to require extraordinary returns to balance the risks and to cover the “fees” to be paid to connected “facilitators”. Frankly the best solution is to privatise Eskom, encourage IPP’s with tax breaks, and to incentivise independent power generation by those industries that are capable of doing so. How much potential electricity could be produced by PetroSA’s gas flares or by the sugar industry which used to power entire small towns from their power stations? As far as State Surrender is concerned, that is history. The State was captured a long time ago and the gaolers are still occupying the top spots in the ANC “government”.

    • Mike Barker

      Business continuity is top of the boardroom agenda ( and dinner table too ? ) So #RooftopPV & #MicroGrids must be discussed, feasibility studies done, and South Africa’s policy revamped. — But we MUST be #GoodGridCitizens & we must seek beneficial coexistence with the #Munics & #Eskom

  • Mike Barker

    Wow, we need to hear more from Dr Roland Ngam !! The real & just South Africa #EnergyTransition MUST empower ALL ~60 million of us, right ? – Can we “start envisioning a new power production and ownership model for South Africa” – please guys, we know roof top PV and microgrids are the foundation of the future grid ( even the CSIR now understand this, bless them ) #IEEE1547 will rule soon

  • Alex Lenferna

    Fortunately, some unions and civil society have already been pushing for a Green New Eskom: GreenNewEskom.org

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