The cash-strapped Eskom is under pressure to reduce its costs amid falling electricity demand and claims that it was overstaffed.
Eskom’s handling of employee costs often comes up when t he utility applies for tariff increases.
In its reason for decision document in relation to its decision to grant Eskom a 5.23percent tariff increase in the 2018/19 financial year, National Energy Regulator of South Africa (Nersa) said Eskom had a history of overspending in operating costs. The regulator said Eskom was unwilling to implement “stringent measures” to contain its costs.
According to Nersa, Eskom was projecting to reduce employee headcount by 2percent to 33056 in 2017/18 from 33559 employees in 2016/17. For 2018/19 Eskom has forecast to reduce employee headcount by 4.2percent to 31675. “The reduction in the employee headcount is not due to restructuring by Eskom, but through natural attrition and employees leaving for various reason such as voluntary retirement,” said Nersa.
Cost per emloyee
Nersa said the average cost per employee for Eskom was R643000 for 2016/17, R675000 for 2017/18 and R708000 for 2018/19. “There is an increase of 5percent based on the average cost per employee, which is an inflation increase,” it said.
Eskom’s staff complement has also come under Nersa’s glare. The regulator said in 2007 Eskom was able to produce 239109 Gigawatt hours (GW/* ) with 32954 employees, which resulted in 7.26GW/* per employee. In its latest application to the regulator, Eskom applied to produce 216771GW/* with 39186 employees which translated to 5.3GW/* per employee.
“This means that Eskom is producing less GW/* with more employees and higher employee costs. The excess employees based on this analysis amount to 6232,” Nersa said. It said the cost of excess employees amounted to approximately R3.8bn.
Eskom spokesperson Khulu Phasiwe said yesterday that the power utility wanted to reduce costs, but ruled out retrenchments. “That is not on the cards at all,” he said. Phasiwe said Eskom’s priority was to improve its operational performance and reducing primary energy costs.
He was responding to a report yesterday that Eskom chairperson Jabu Mabuza said Eskom would appoint a permanent chief executive by the end of next month to begin the process of reforming the ailing utility, which might include reducing job numbers.
The National Union of Mineworkers (NUM) yesterday said it would resist unilateral moves to reduce the utility’s staff complement.
NUM Energy Sector Co-ordinator Paris Mashego said yesterday that the union, which he said had 17000 members at Eskom, expected to be fully consulted before any decisions were taken about cutting employee numbers. “Eskom’s problem is poor leadership and financial mismanagement. They must fix that first before rushing to cut jobs,” said Mashego.
- BUSINESS REPORT