On the cusp of a brighter tomorrow 

by Roger Lilley, Now Media –  

Although Eskom has been subject to the destructive forces associated with State Capture in recent years, the power utility is now on the threshold of recovery.

Andre de Ruyter

In a recent keynote address to the South African National Editors’ Forum, Andre de Ruyter, the power utility’s chief executive, said that although malfeasance had characterized Eskom in the past, the utility had subsequently taken decisive, proactive steps to recover as much of the money as possible.

De Ruyter said that R1,1-billion had been recovered from McKinsey; R770-million from Deloitte; and R700-million from Trillion and PWC. The utility is also pursuing individuals – both inside and outside the organization – who have been involved in corrupt dealings.

The utility is applying stricter controls to delinquent municipalities – i.e. municipalities which together owe Eskom R34-billion.

He acknowledged that Eskom’s gross debt, which is now approaching R500-billion, presents a major risk to the country’s economic stability. “If Eskom defaults,” he said, “South Africa defaults”. This is because three-quarters of Eskom’s gross debt is underwritten by National Treasury.

He said that the utility is aware that the promised financial support of R121-billion to 2026 will be funds diverted from other important projects, that that the utility is, therefore, keen to become self-supporting as soon as possible.

To achieve this, however, electricity tariffs must be truly cost-reflective. But these costs, de Ruyter said, must be realistic production costs, not inflated by inefficiencies or corruption.

An example of improved operational efficiency is the fact that Eskom has not used its diesel-fired gas turbine peakers over the last 40 days. This, without load shedding and despite eleven units being out of service for maintenance. The saving is significant since diesel for the gas turbines costs Eskom R10-million per hour, he said.

He confirmed that work at Medupi and Kusile – Eskom’s new-build power stations – is progressing well. Modifications are being implemented to overcome the problems which delayed the completion of these power stations.

However, over the next decade, Eskom will retire between 10 and 12 GW of coal-fired generating capacity and migrate to low-emission generating technologies.

De Ruyter said that he envisages a just energy transition with a new manufacturing sector which builds equipment for a major rollout of renewable energy generating solutions. Such a manufacturing sector could offer employment to people who would be impacted by the decrease in demand for coal as a result of the closure or repurposing of coal-fired power stations.

De Ruyter acknowledges that there’s a lot of work to be done, but is positive about the utility’s ability to become, once again, a world-class, efficient and cost-effective power utility. It certainly seems that Eskom is finally on the cusp of a brighter tomorrow.

Click here to watch the video of de Ruyter’s address.