Since March 26th 2024, we have had no power cuts. That would be unremarkable in most countries.
But in South Africa, we have come to expect that power cuts will continue indefinitely due to the mix of public sector mismanagement, corruption and the grip of ideology.
Last year we went through the most severe power cuts in the 15 years of load shedding. Eskom’s CEO, Andre de Ruyter, had quit in late 2022 in frustration at the extensive corruption, unending ministerial interference and having to deal with managers not up to their jobs. There was also an attempt to kill him, by lacing his coffee with a cocktail of cyanide and arsenic.
So the relief over the past 162 days is viewed by most South Africans as something of a miracle. And like all miracles, it was sudden and unexpected, at least to those without faith.
That “load shedding remains suspended,” in the words of Eskom, and has a very low risk of recurrence over the next six months would seem good enough for the moment. And if large capacity comes online from a combination of sources by April next year, load shedding is likely to end for good, says Eskom.
This is due in part to a sharp improvement in Eskom’s Energy Availability Factor, the key indicator which shows the amount of power it is producing as a share of the total installed capacity. Back in 2011, Eskom’s EAF was 85 percent, but by last year it slid to a low point of below 52 percent, against the international benchmark of 78 percent. It has now partially recovered to 67 percent.
Furthermore, the unplanned capacity loss factor, the ratio of unavailable power generation due to unexpected shut-downs as a share of total capacity, was 25 percent at the end of last month, nine percent down on the year.
So whatever Eskom has been doing seems to be working.
So what exactly has Eskom been doing?
Bheki Nxumalo, who took over as head of generation in March last year, has said the big game changer was reducing unplanned outages of power stations.
But this is an outcome rather than an explanation for the reasons about how this was achieved.
The official line is that the turnaround is all due to plans, committees, and appointments of good bosses at Eskom, President Cyril Ramaphosa’s Energy Action Plan, the President’s National Energy Crisis Committee, and Eskom’s Generation Recovery Plan.
Last year Eskom made Nxumalo the new head of generation. And a few months later Ramaphosa appointed Mteto Nyati, a turnaround specialist and former boss of MTN, as CEO of Eskom.
The new big bosses at Eskom brought in a mind shift. Nxumalo and Nyati had clearly insisted to their political bosses that they had to be able to do their job without interference.
They got rid of 45 percent of power station managers, scrapped the pay freeze which punished the good performers with the bad, and brought in incentives. And they brought in original equipment manufacturers (OEMs) to run part of the power stations. All that amounts to putting merit above all else.
Nyati moaned about affirmative action and empowerment procurement rules restricting Eskom’s agility, but has kept quiet after critics slammed him. He must have realised that he had to do what he could within the rules.
But why would the ANC allow more merit-based systems to be brought into Eskom?
Thanks to De Ruyter’s shocking revelations of corruption and incompetence in his 2023 memoir, they had no other option.
Also, they knew they would be severely punished at the polls in May 2024 if they could not reduce load-shedding.
Without the election, the power crisis effectively strangling the economy, and the need for a massive bailout, President Cyril Ramaphosa might not have responded with such urgency.
Then in last year’s budget, the government had to come in with a bailout of R254 billion for Eskom. That was roughly equivalent to the size of the health budget in that year, and involved taking the extreme measure of dipping into the central bank’s foreign exchange reserves to raise funds for the bailout.
The technocrats in Treasury seized the power they had from the bailout to exercise direct power over Eskom. To come up with a turnaround strategy, the Treasury commissioned a report by a group called the Technical Association of German Energy Plant Operators. The report said Eskom was dysfunctional and “no longer able to improve technical performance” and it needed to concession off power stations to private operators and exempt the coal fleet from many of Eskom’s rules on procurement.
Even before the report was made public this year after a long delay, the Finance Minister, Enoch Godongwana insisted that, “Eskom must concession all these (coal fired) power stations with clear targets.”
The case for such a solution to run facilities, which often involves deals with OEMs (Original Equipment Manufacturers), is made by the high-capacity operation of one of the units at Kusile. This unit is run by the OEM of the boiler, Mitsubishi, at an EAF of 90 percent. Going beyond this would mean inadequate maintenance.
The fleet of coal-fired power stations was not concessioned off and emergency procurement rules not brought in, but what happened was the next best solution. Instead the OEMs, the companies that built the power stations, have been brought in to run parts of power stations. We do not know the extent to which the OEMs are now running Eskom’s fleet or their precise mandates, but what they have done has helped keep the lights on.
The concessioning of power stations would have been the first prize, but was probably far too politically tricky for Ramaphosa to achieve. Imagine the screams from the comrades objecting to what they would call privatisation. Bringing in the OEMs on a case-by-case basis was probably a lot quicker and less controversial.
A number of OEMs have empowerment partners, allowing them to be approved as contractors. The expanded use of OEMs is bound to take business away from smaller favoured contractors, but so far there have been no loud public protests.
The use of OEMs on a large scale represents a mindshift. It is a mindshift that favours merit over race and political connections. The appointment is made on the basis of expertise with the system that sells across the world.
In South Africa that is indeed something of a miracle. We know it came under pressure, but that it happened at all is a ground for optimism.
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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