The crisis at at Eskom took a turn for the worse on Wednesday as suspended chief executive Tshediso Matona faced off with chairman Zola Tsotsi, while a protest by some 7 000 Numsa members shut down Medupi power station and the embattled utility instituted Stage 2 power cuts to avert total collapse of the grid.
At the same time, Deputy President Cyril Ramaphosa tried to put on a brave face, telling the National Council of Provinces in Parliament yesterday that the government would soon “have answers and solutions to the challenges of leadership” at Eskom but provided no specifics.
“The issue of immediate interventions that need to be taken, that continues,” said Ramaphosa, who was recently tasked by President Jacob Zuma to head a so-called War Room to devise ways to stabilise Eskom.
The embattled utility is not only facing a massive cash crunch, it is also grappling with ageing infrastructure and boardroom squabbles. And with each passing day Eskom, which generates 95 percent of South Africa’s electricity, finds itself edging ever closer to a full-blown catastrophe as apparent institutional failures involving governance and operational issues appear to be spiralling out of control.
“Obviously Eskom is damaging South Africa’s national interest,” said Azar Jammine, Econometrix director and chief economist.
“The worst sort of damage is being done to South Africa over the long term. I’m not so much concerned from a short-term perspective. Eskom’s power cuts are resulting in companies deciding not to invest. This means that in the long term, less goods and services will be produced and this will reduce growth,” he added.
Last week Eskom’s credit rating was cut to junk by Standard & Poor’s, compounding the outlook for the utility.
Yesterday, the latest developments pointed to a fast-running crisis which now also risks a complete shutdown of Eskom’s two new long-delayed power stations, Medupi and Kusile.
The stand-off between Matona and Tsotsi coincided with clamour by the National Union of Mineworkers (NUM) and the National Union of Metalworkers of SA (Numsa) for Tsotsi to resign.
Without decisive action, analysts say Eskom has become a hot political potato, whose impact may further jeopardise South Africa’s economic prospects, costing the country dearly.
Matona has filed papers opposing his suspension as unlawful with the Labour Court. He was suspended along with three other Eskom executives two weeks ago, pending an investigation whose full scope is yet to be disclosed. Yesterday, the Commission for Conciliation, Mediation and Arbitration confirmed that a referral was received on Monday from Matona relating to “unfair suspension”.
“In accordance with the CCMA practice and procedure the matter will be set down for conciliation and all parties will be notified,” the CCMA said.
Matona’s applications to the Labour Court and the CCMA come in a week of drama at the utility, amid reports of divisions within its board with some members also calling for Tsotsi’s resignation.
Eskom has notified the Labour Court of its intention to oppose the urgent application for reinstatement lodged by Matona.
The utility filed its notice after Matona took to the court to challenge his suspension on the grounds that he was not given fair reasons for his suspension. But on Tuesday, Eskom notified the court through its attorneys Bowman Gilfillan of its intentions to challenge Matona’s application.
The notice said Eskom would file its answering affidavit in “due course”. The matter is scheduled to be heard today.
A Bowman Gilfillan attorney who spoke on condition of anonymity confirmed that the firm would be representing Eskom. “We are not in a position to divulge what the answering affidavit will say because the matter is sub judice,” he said.
In his affidavit Matona said his suspension was unlawful and had caused him irreparable harm as there were no allegations of misconduct that had been levelled against him.
Numsa members downed tools at Medupi power station demanding the extension of completion bonuses beyond senior managers and an end to retrenchments and evictions from subsidised accommodation. The union’s head of collective bargaining, Steve Nhlapho, said about 200 contractors at the station had dismissed workers without any consultation with the union.
“The failure by Eskom to respond to these genuine and legitimate demands of workers, will force the union to escalate its organisational muscle and power until these demands are met,” said Nhlapho.
“We will be compelled to pull out our members into a full blown action, including workers at Kusile power station, in Mpumalanga.”
Numsa said yesterday’s protest action by its members had caused the total shutdown of Medupi power plant, affecting about 21 000 workers at the site when Eskom responded by locking the gates.
Medupi has experienced intermittent strikes throughout its construction history, contributing to its commission delay by five years and huge cost overruns.
At the beginning of the month, Eskom announced the first power was produced at Medupi and it was expected 800 megawatts would come on stream from the power station by June. This was as a result of the first synchronisation of unit 6 at Medupi.
Eskom said yesterday it was too early to quantify what each day of the strike meant in financial terms and also too early to comment if there would be any significant impact in terms of the timelines.
The union said it was convinced the workers’ reasonable demands could be resolved by Eskom without any undue disruption of work.
The other latest development is that of an unscheduled Eskom board meeting held yesterday at which Zola was expected to face a vote of no confidence. Fallout from this week has seen liquidity and operational issues facing Eskom pushed aside, causing Eskom’s critics to view Tsotsi as unfit to continue in his role.
Even so, the government has committed to provide a R23 billion liquidity injection to Eskom, but with very little clarity on how it would raise the money or if the apparent leadership vacuum at Eskom could affect the process.
Yesterday, Eskom instituted Stage 2 power cuts from 4pm to 10pm yesterday, taking out 2000MW of electricity capacity off the grid as it grappled with power generation outages. “Eskom would like to assure customers that load shedding is implemented as a last resort to protect the power system from a complete blackout,” the utility said yesterday.
Meanwhile, the Department of Public Enterprises told the portfolio committee on public enterprises yesterday that load shedding between stages 1 and 3 costs the economy anywhere between R20bn and R80bn per month, the Department of Public Enterprises (DPE) said yesterday.
It said if there was to be a country-wide electricity blackout the economy could suffer damages amounting to significant losses to gross domestic product (GDP) and civil unrest. The DPE said GDP growth targets of 3-6 percent would likely not be met in the short to medium term. GDP growth was 1.3 percent last year and the Treasury has projected it at 2.0 percent in 2015.
* With additional reporting by Ellis Mnyandu and Justin Brown in Johannesburg, and Siyabonga Mkhwanazi in Cape Town