The crippling of Eskom is a textbook example of the follies and dangers of affirmative action and BEE (Black Economic Empowerment).

Under apartheid, which was a racist form of socialism, Eskom provided the

world’s cheapest electricity, very reliably. It has been systematically

ruined by the ANC government, with permanent harm to the economy.

The ANC converted Eskom from an electricity utility into an instrument of

patronage and political engineering. For political reasons, during the

1990s, tariffs were kept too low and power stations not built when it was

obvious we needed them. So we ran out of electricity in 2007, with

devastating consequences. Eskom’s excellent coal supply was ruined. 

Power stations were badly maintained and run too hard, so that they are now

failing. Medupi and Kusile Coal Stations were built in a panic, with bad

designs, bad contracting, poor workmanship and costly corruption. Eskom

cannot service its huge debt. Affirmative Action and BEE played a very big

part in this destruction.

I must point out that many of the most stupid Eskom decisions were taken by

white managers, especially in the financial section. This must be added to

the harm of affirmative action and BEE.

By “affirmative action” I mean “racial affirmative action”, where race is a

criterion for appointment. The policy is a lie from the start. Nobody

believes in affirmative action for the services they themselves receive.

Nobody would choose affirmative action teachers for their children. Look at

the schools ANC politicians choose for their children. Affirmative action is

degrading. It is an insult to call someone an affirmative action employee.

It demoralises the blacks appointed because of it and the whites not

appointed. Competent blacks suffer the affirmative action stigma. It leads

to a sense of both entitlement and resentment by those who receive it. It is

ruinous for efficiency.

In Eskom, qualified and experienced white engineers and managers were

persuaded to leave (often with generous packages) and replaced by less

qualified and experienced blacks. This was “space creation”. Eskom managers

were rewarded for increasing their proportion of black staff. This explains

their huge bonuses amidst load-shedding. More and more people were employed,

with high salaries. A white manager would be replaced by two or more black

managers. Eskom now employs twice as many people as utilities of the same

electricity production elsewhere in the world. Its wage bill went up, while

its performance went down.

BEE is essentially legalised corruption. In many African countries, if a

company wants to do business with the state, it has to give bribes to

leading politicians. In South Africa it has to be “BEE Compliant”, which is

pretty much the same thing. The BEE beneficiaries are usually connected to

the ruling party. 

Probably the worst BEE in Eskom is coal procurement. Coal stations require

enormous amounts of coal, typically 15 million tons a year for a big Eskom

coal station. You cannot move such amounts economically over long distances,

so the station must be built next to a coal field, as happened in South

Africa. The mine would be run by a big mining major, such as Anglo-American,

and the coal delivered to the station by conveyor belt. The system worked

well. It took full advantage of our coal, which is cheap and plentiful but

of low energy and high ash. Eskom led the world in burning poor coal. 

I was a junior engineer at Hendrina Power Station in 1987 and visited the Optimum

Coal Mine (now much in the news) that supplied it. The coal was separated by

the mine into better quality, which was exported, and worse quality, which

went to Hendrina. Although poor, it was of consistent quality and Hendrina

was set up to burn it. It worked well.

Then came BEE coal procurement. The existing coal mines were disliked by the

ANC because they were run by big, white-owned companies (“White Monopoly

Capital”). So instead coal was bought from BEE coal mines far away. The coal

was chosen not on price or quality but on a hierarchy of ownership: first

small black female, then small black male, then big black female – and so

on. The coal was expensive, bad and inconsistent, and had to be brought long

distances by rail or, much worse, by road, with horrible environmental

consequences. Up went Eskom’s coal bill, down came its performance. In

January 2008, when the rain fell on the miserable stockpiles of bad BEE

coal, they turned to slush and shut down a large number of our power

stations, and then our gold mines.

As usual the worst victims of Affirmative Action and BEE are poor black

people. They are the ones who suffer when their municipality appoints an

affirmative action engineer for their water supply and sewerage. They are

the ones who suffer when it uses very expensive BEE procurement for its

services and equipment. And they are the ones who will suffer most from

rising unemployment and increasing poverty as the economy reels under

Eskom’s failures.

Andrew Kenny is a professional engineer, a freelance journalist and a liberal.

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