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SA’s electricity woes to continue until wage agreement struck

Eskom substation at Goodwood at sunset. Picture: Ian Landsberg

Eskom substation at Goodwood at sunset. Picture: Ian Landsberg

Published Jul 4, 2022

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South Africa’s energy crisis looks set to continue as the struggling power utility and workers’ unions are yet to sign a wage agreement after a week of devastating blackouts.

Eskom continued to implement stage 2 and stage 4 rotational power cuts throughout the weekend, as industrial action continues after wage talks at the Central Bargaining Forum (CBF) on Friday did not conclude.

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Over the past week, the embattled utility has implemented the worst power cuts – stage 6 – the country has seen in more than two years as maintenance workers downed tools.

Workers’ unions and the Eskom management deliberated for almost 12 hours on Friday before Eskom finally made a wage offer with a proposed draft agreement.

The workers have been on a wildcat strike for two weeks, demanding up to 12 percent wage increases, while Eskom was offering a seven percent increase.

Eskom chief executive Andre de Ruyter on Friday said that power cuts had intensified as a direct result of the industrial action as the utility was only on stage 2 cuts before the strike.

De Ruyter said as many as 90 percent of their employees had still not returned to work at three power stations, mainly due to acts of violence and intimidation.

He said this was in spite of Eskom securing a court interdict against the strike, and workers’ unions urging their members to return to work while negotiations continued.

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“The key issue is the return, to allow us to lift load shedding. There are about three stages of load shedding because of unlawful industrial action. That is the major factor putting us in a position that we are in now,” De Ruyter said.

“This is an unacceptable situation where the country is held hostage by wildcat actions taken without any apparent co-ordination or leadership on a national basis, but intended to drive double-digit wage increases, which are clearly not affordable.”

As a result of low maintenance at power plants, Eskom is burning 14 litres of diesel a second at seven generation units to keep the lights on, which costs the utility millions of rand a day.

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Spokesperson for the National Union of Metalworkers (Numsa), Phakamile Hlubi-Majola, on Friday said they had taken Eskom’s wage offer to their members for a mandate.

Hlubi-Majola said they will meet Eskom management on Tuesday to give feedback in the CBF.

“We understand that the entire country is watching these talks with keen interest because resolving this is in the public interest, and there is a lot of pressure for us to give a response right away.

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“However, we ask for the public’s patience because we are a worker controlled union. We have a duty to consult members first, before we give a formal response to Eskom.”

On Friday, Eskom had 3 104MW on planned maintenance, while another 17 431MW of capacity was unavailable due to breakdowns.

Energy analyst Clyde Mallinson said many of Eskom’s supply challenges would have been prevented if the Koeberg nuclear power station was not taken off the grid.

Koeberg’s unit 2 was taken offline on January 18 to carry out major refurbishment work, which was scheduled to take six months, but has been severely delayed.

“Mallinson said that due to the entire Koeberg life extension refurbishment process, at least one unit was planned to be offline for 19 months during 2022 and 2023.

“Based on the actual figures of load shedding from January 18 to June 30, at the same average rate these outages will cost the economy R289-billion, or R58-billion if we use Eskom’s conservative figure of R20/kWh, rather than the more widely used figure close to R100-million per kWh,” Mallinson said.

“Add to this the estimated additional spend on diesel to run Eskom, and gas turbines run by Independent Power Producers of about R12-billion (over the 19 month period), and you have sufficient savings to construct 4GW of renewables that will produce the same annual energy output as Koeberg."

There have been growing concerns that prolonged and higher stages of rotational power cuts may persist, threatening any prospect of an economic recovery experienced in the first three months of the year.

Investec economist Lara Hodes said the generation and distribution of electricity was likely to contract further as power cuts continued to weigh heavily on the economy.

“Small- and medium-sized businesses are most vulnerable, especially those that cannot afford expensive generators or inverters,” Hodes said.

“Insufficient electricity supply remains one of the country’s key challenges and has added to the subdued consumer and business confidence readings.”

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