Eskom

Eskom’s turnaround strategy to bear first fruit in April 2021

Eskom’s turnaround strategy to bear first fruit in April 2021

24TH NOVEMBER 2020

BY: DONNA SLATER
CREAMER MEDIA STAFF WRITER AND PHOTOGRAPHER

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Eskom CEO André de Ruyter says progress is being made in the unbundling of the utility and that “by April [2021], we should see a change”.

He noted that the negative impact of load-shedding on the economy was well known and it was something that Eskom wished to put behind it as quickly as possible.

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“By April of next year, we should see a change in the reliability of our generation system. And then by September 2021, we should see the risk of load-shedding substantially reduced.”

The utility is currently being divided into three separate business divisions of generation, transmission and distribution in an effort to address spiralling debt and to attract private investment.

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De Ruyter spoke during the opening session of Digital Africa Utility Week and Powergen Africa conference on November 24, in which he also highlighted five key focus areas in his turnaround strategy.

In terms of the turnaround strategy, he anticipated that, if all regulatory approvals were obtained, legal separation of the transmission division of the business can be obtained by December 2021. 

“And that, I think, will be a very important milestone to attracting additional private investment into generation.”

However, having come from years of leading companies in the private sector, De Ruyter highlighted challenges in the State sphere. “The pace of decision-making and the number of permissions that you have to obtain to do anything is quite extraordinary.”

This, he noted, slowed down the turnaround of Eskom significantly.

“We have, I think, persevered; we have badgered and pestered people in decision-making positions to make those decisions sooner. But something as simple as registering a subsidiary, which from the private sector would take maybe a week, takes much longer in the State-owned sector.”

Further, he said that to take the business forward another focus is on good governance, which, given Eskom’s history, was well warranted. “But one has got to keep the focus on turning the business around, and I think sometimes the focus is not quite there.”

MILESTONES

April and September 2021 were both flagged as goal dates in terms of other key focus areas of turning around Eskom, including addressing the utility’s R450-billion debt burden and obtaining operational stability.

To control costs, the utility has cut its workforce. “We have already, over the past ten months, said goodbye to 2 000 employees. So we are making some progress. There is more to come. And that is of course without resorting to forced retrenchments,” he stated.

Another cost-cutting measure undertaken by Eskom is the withholding of Eskom management’s increases and bonuses this year.

However, De Ruyter also pointed out that, what was important, was to address the legacy of capture and corruption and turn around the morale of Eskom employees. “You can imagine that morale is low, people are feeling quite despondent.”

Meanwhile, in terms of a global shift from fossil-fuel energy generation to the use of renewable energy or less carbon-intensive forms of generation, he said Eskom’s just energy transition project office would navigate the utility’s move away from coal in a way that did not “jeopardise” livelihoods.

“I think moving away from a model that has been around for 97 years, which is how long Eskom has been in existence, to something that is different, is always regarded as potentially threatening by a variety of stakeholders.”

However, he added that, as Eskom makes the transition, increasingly moving to renewable energy, it can be expected that such a move would provoke alarm amongst the ranks of communities and workers who have invested generations in coal as a commodity, whether it's mining or whether working in a coal fired power station. “We therefore have to address those very legitimate concerns as we make the transition.” 

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