Eskom Watch

Eskom casts spotlight on policy failures

Ramaphosa and Eskom
Eskom.jpg

The ANC government’s main ‘Mr Fixit’, Deputy President Cyril Ramaphosa, has a massive job ahead of him, fixing Eskom to save the party’s legacy after its first two decades in power.

Answering questions in parliament last week, he effectively admitted that  the government’s policy of race-based affirmative action did not work for Eskom. It will not apply in the drive to replenish the skills lost due to implementation of that policy – a loss in no small way contributing to the state-owned utility’s present crisis.

And it was not only the folly of the dogmatic application of that policy that is now exposed by the disastrous implosion of Eskom. The implosion has developed into potentially the biggest economic crisis confronting the country since 1994.

A report by the South African Institute of Race Relations (SAIRR) published last week, on the same day Mr Ramaphosa was responding to questions in parliament, tells much of the story. It exposes how a wide range of ANC ideological and policy stances converged in the management of Eskom to just about destroy what was once a world leader in electricity provision.

The report titled “The rise and fall of Eskom – and how to fix it now” compiled with energy expert Andrew Kenny as editor-in-chief, shows that:

  • Eskom’s freedom from political interference from 1923 until 1994, making it less regulated than privately owned suppliers in countries like the USA, was destroyed;
  • Pre-1994 it was an autonomous organisation run by technocrats, and engineers – appointed entirely on merit – were in charge. Post-1994 race-based affirmative action, political interference, and political appointments  saw highly skilled and experienced white engineers, managers, and technicians being offered generous ‘packages’ to leave;
  • To Eskom’s previous single brief – providing sufficient electricity – were added various political and ideological objectives;
  • “To everyone’s surprise, there soon began to be talk about Eskom being ‘unbundled’ or privatised. The State also seemed to be intent on taking away Eskom’s obligation to supply”; and
  • In 1998 Eskom was forbidden to build new power stations, and because of vague and confusing directives fell into a void.

n the meantime the country was running out of electricity. “Electricity demand was growing in tandem with the economy, and our ‘surplus’ electricity was steadily and predictably shrinking to nothing,” the report states.

The ANC, in a way luckily, did not get close to their 1994 election promise of an annual growth rate of 6%. If they did, the country would have run out of electricity by 2001 already. With a growth rate of around 3% annually, surplus supply ran out around 2007.

The big lie

In the words of the report: “One of the greatest lies of this era, often repeated by many ANC politicians, was that we ran out of electricity because we were ‘victims of our own success’ (unexpectedly high growth). Actually growth was unexpectedly low, and we still ran out of electricity.”

The present crisis fundamentally arose because additional power stations were not build “when it was glaringly obvious that we had to”.

According to the report Eskom is at least as much to blame as the Government. It should have understood the problem and forcibly brought it to the attention of the cabinet. The suggestion is that, with the right people in the management of Eskom, it might have happened.  

“The new managers at Eskom, mainly political appointments, seemed to have little interest in ensuring future electricity supply. Instead, they were preoccupied with other goals, such as racial transformation and keeping the price of electricity artificially low for social purposes.

“Accountants replaced engineers at senior levels, and those accountants lost sight of Eskom’s fundamental purpose, which is simply to provide electricity and cover its costs – not make a big profit or a high rate of return. Eskom became blighted with a damaging combination of ANC ideology and business school fashion,” the report states.

About the 1998 Department of Energy White Paper on the Energy Policy it states that the vision put forward betrayed “alarming confusion of thought” which translated into “an alarming confusion of policy on electricity supply for the next fateful six years.

“Completely contrary to its statist instincts, the Government seemed to be bowing to a fashion for private electricity supply, but without any commitment or coherency.”

Solutions

The authors of the report have clearly done their homework, and with substantial reference to what is also happening elsewhere in the world, also evaluated various options and offer potential solutions.

In the process it does not shy away from some other holy cows, and states among others: “In a rational world, the choice of energy sources for generating electricity would be strictly scientific and economic. It would seek the greatest benefit at the least cost to mankind and the environment.

“Unfortunately, the world is not rational. Today, energy choices are fraught with ideology and superstition. Some people hold with religious fervour that ‘renewable’ always means ‘good’ and that ‘nuclear’ always means ‘bad’.

“But if you stop to think about it, renewable energy includes slave labour, which is not good; and solar power originates in a gigantic nuclear reactor in the sky. And, of course, belief in global warming or ‘climate change’ pervades the politics of energy like a new apocalyptic faith.”

Obviously the SAIRR team has already done a lot of research and thinking about the subject. Hopefully Mr Ramaphosa’s newly appointed advisory panel not only read the 20-page report but will also invite its authors to give some inputs.

by Piet Coetzer

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