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It’s been the central theme during a series of crisis meetings held by the Cabinet, officials from the department of public enterprises and the Eskom board over the last ten days: the platform is burning and something needs to be done.

The phrase – an MBA favourite denoting urgent, forced and fundamantal change – gained traction during the finalisation of the plans to unbundle Eskom.

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And it became the rallying call in the days that followed as the power utility was crippled by outages and disruptions. Last Thursday there was outrage in some circles as the decision to break up Eskom into three separate parts was announced.

On Sunday stage four loadshedding was announced. On Tuesday the lights wents out.

On Wednesday Eskom could only produce 27 000 MW of electricity against the national demand of more than 30 000 MW. And on Thursday President Cryil Ramaphosa told the National Assembly that government is moving with speed to manage the situation.

In crisis meetings and special Cabinet sessions, the message was the same: Eskom is on the verge of collapse, there is no more money available to prop it up and delay urgent intervention – the platform is burning.

Pravin Gordhan, minister of public enterprises, has used all his powers of persuasion to force the power utility’s board to act with urgency. He has brought all the resources of his department – limited and in many instances, inexperienced – to bear in an attempt to coordinate a coherent response to the escalating political and operational crisis.

Although his powers to intervene in the affairs of state-owned enterprises are limited (it did not deter his predecessors Lynne Brown and Malusi Gigaba), the minister has pushed the boundaries, repeatedly reminding the board of their obligations and what the situation demands: effective, strategic and timeous action.

Among bureaucrats Gordhan, who has had a torrid four years in the eye of the state capture storm, is widely admired for his managerial skills and political acumen. Nothing, however, compares to the scale and breadth of what he’s dealing with now.

The president, Cabinet, the board, and senior government officials all know: Eskom is bankrupt, its systems are misfiring and there’s no turning back. The platform is burning, something drastic must be done.

Cheap Electricity was Eskom's Mission

Things didn’t used to be like this. In 2007 the company was humming along, with manageable and low debt levels, ample revenue to cover its expenses, its bonds were more sought-after than the government’s and it was an internationally respected and admired company. Eskom was established in 1922 through an act of the then-Parliament of the Union of South Africa. The Electricity Act established the Electricity Supply Commission, or Escom, a statutory body established to merge the various disparate private generation companies that mainly coalesced around the mining houses on the rand.

The

These mining houses realised the need for cheap electricity in order to keep the mines going and formed private generation companies. These companies not only provided the mines with enough electricity, but also sold it onwards to local authorities.

By the time the Second World War started, Escom had managed to organise power producers under its umbrella, and the country produced just under 1 000 MW. Its mission, since the 1920’s and right up until the mid-2000s, was to produce cheap electricity in order to help grow the economy and industrialisation.

This it managed to do in the 1950s and the 1960s, when Escom’s electrification efforts blanketed all of South Africa’s main cities and enabled the industrial boom of the time. It helped propel apartheid South Africa’s economic growth to such levels that Time Magazine lauded premier Hendrik Verwoerd as “one of Africa’s ablest leaders” and caused the Rand Daily Mail to say that “South Africa suffers from a surfeit of prosperity”.

The 1970’s saw Escom expand its generation capacity with the construction of a number of new power stations, and the approval of the construction of Africa’s first nuclear power reactors, commissioned in 1984. In 1987 Escom’s name changed to Eskom and became an incorporated state-owned company. It operated 27 power stations with a capacity of more than 33 000 MW. It also employed more than 56 000 people “with advancement and remuneration linked to performance, without reference to race, creed or sex”, according to its annual report.

By 1994 it embarked on a major eletrification project, connecting households in black townships and rural areas neglected by apartheid. In its first year it connected more than 300 000 households, overshooting its targets. By 2018 more than 90% of households were electrified, compared to 36% in 1994. In 2001 Eskom was awarded the Power Company of the Year at the Financial Times Global Energy Awards Ceremony in New York, and in 2005 the outgoing chairperson of the board said Eskom was generating sufficient revenue and that it is independent of government loans.

But in the summer of 2008 the signs of a creaking system became apparent when the first wave of blackouts hit the country – and Eskom became the target of state capture and corruption.

Blackout: The Economic and Political Cost

Next week Finance Minister Tito Mboweni will announce that government will, for the very last time, bail out Eskom. The company is drowning in debt, and the provision of another guarantee might ease the pressure on Eskom for the time being but will surely threaten South Africa’s credit rating once it comes up for review by Moody’s soon. Over the last 11 years Eskom has been ravaged by poor management, willful neglect, corruption and state capture. It has lost hundreds of qualified engineers to foreign power companies or the private sector which has in turn affected crucial maintenance operations on power stations reaching the end of its lives.

It’s been the central theme during a series of crisis meetings held by the Cabinet, officials from the department of public enterprises and the Eskom board over the last ten days: the platform is burning and something needs to be done.

The phrase – an MBA favourite denoting urgent, forced and fundamantal change – gained traction during the finalisation of the plans to unbundle Eskom.

And it became the rallying call in the days that followed as the power utility was crippled by outages and disruptions. Last Thursday there was outrage in some circles as the decision to break up Eskom into three separate parts was announced.

On Sunday stage four loadshedding was announced. On Tuesday the lights wents out.

On Wednesday Eskom could only produce 27 000 MW of electricity against the national demand of more than 30 000 MW. And on Thursday President Cryil Ramaphosa told the National Assembly that government is moving with speed to manage the situation.

In crisis meetings and special Cabinet sessions, the message was the same: Eskom is on the verge of collapse, there is no more money available to prop it up and delay urgent intervention – the platform is burning.

Pravin Gordhan, minister of public enterprises, has used all his powers of persuasion to force the power utility’s board to act with urgency. He has brought all the resources of his department – limited and in many instances, inexperienced – to bear in an attempt to coordinate a coherent response to the escalating political and operational crisis.

Although his powers to intervene in the affairs of state-owned enterprises are limited (it did not deter his predecessors Lynne Brown and Malusi Gigaba), the minister has pushed the boundaries, repeatedly reminding the board of their obligations and what the situation demands: effective, strategic and timeous action.

Among bureaucrats Gordhan, who has had a torrid four years in the eye of the state capture storm, is widely admired for his managerial skills and political acumen. Nothing, however, compares to the scale and breadth of what he’s dealing with now.

The president, Cabinet, the board, and senior government officials all know: Eskom is bankrupt, its systems are misfiring and there’s no turning back. The platform is burning, something drastic must be done.

Cheap Electricity was Eskom's Mission
Things didn’t used to be like this. In 2007 the company was humming along, with manageable and low debt levels, ample revenue to cover its expenses, its bonds were more sought-after than the government’s and it was an internationally respected and admired company. Eskom was established in 1922 through an act of the then-Parliament of the Union of South Africa. The Electricity Act established the Electricity Supply Commission, or Escom, a statutory body established to merge the various disparate private generation companies that mainly coalesced around the mining houses on the rand.

These mining houses realised the need for c

Low probability of load shedding for Friday
Feb 15 2019 06:16

Eskom says it is not likely to implement load shedding on Friday, due to an improvement in generation performance and strides made in replenishing diesel and water reserves.
This will be the first time in six days that South Africans are not facing rotational power cuts.
The power system remains "tight and vulnerable", however.

Ramaphosa: Load shedding a 'hugely damaging reality check'
Feb 14 2019 15:31

The re-emergence of load shedding is a "hugely, damaging reality check" of the crisis at Eskom, President Cyril Ramaphosa said.

The president was replying to members of Parliament who had raised issues on Eskom's crisis earlier this week in the state of the nation address debate.

On Thursday Ramaphosa said the "unprecedented failure" of Eskom's generation capacity over the last few days underlines the "severity of challenges" at the company and the "urgency of measures" needed to address them.

Last week, Ramaphosa announced that Eskom would be split into three entities - generation, transmission and distribution – and that government would support the balance sheet of the debt-laden power utility. The latter's details will be revealed by Finance Minister Tito Mboweni when he delivers the National Budget on February 20.

MPs however have criticised the president for his comments that he was "shocked" to learn that Eskom has started implementing load shedding again. The power utility on Sunday implemented load shedding for the first time since February, blaming it on technical issues at power stations. In response the president has said that there is "no single solution" for the problems of Eskom.

"There is no one silver bullet. Neither will restructuring, nor refinancing, nor cost cutting, nor tariff increasing, nor better plant maintenance ... have a necessary effect [on their own].

"We need to pursue all these measures and more – simultaneously in coordinated fashion and with purpose turn the utility around and we will turn it around," he said.

No privatisation
The president clarified that the unbundling was not "privatisation" as the three entities will be "100% state-owned".

He also clarified that steps to turnaround the entity must be inclusive and determined through a consultative process with stakeholders.

"We have not done enough to bring key stakeholders such as labour on board on various aspects of this matter but we are determined to correct this. As social partners and stakeholders, we have a common interest to find sustainable solutions to crisis at Eskom," he said.

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