Lack of maintenance budget at Eskom calls its leadership into question

Load shedding on steroids is the flavour of the week. Even Minister of Electricity Dr Sputla Ramokgopa is somehow left confused. The road to ending load shedding was coming along fairly too easily.

In the few months that he has been at the helm of leading Eskom, he has managed to reduce the severity of load shedding and power cuts by three stages in just more than three months. He even managed to escape the existential threat of grid collapse facing Eskom.

But were we too early to celebrate his successes? Just last week, Eskom power generation capacity under his leadership dipped below 54% Energy Availability Factor (EAF), coming down from 60% EAF just a month ago during winter.

Electricity demand during winter was peaking at 33 000MW. Since we exited winter, demand reduced to peaking at 29 000MW and out of nowhere as drastic unscheduled breakdowns of plant units, one after another, hit the South African energy sector.

Here is the truth that we have not been told.

Eskom has no money and budget to fix the 16000MW of the broken down power generation fleet. The reason the power plant units are shut and stranded is because there is no maintenance budget allocated to fix them.

There are no more scientific facts to explain the plant unit breakdowns within Eskom. It simply doesn't make any sense. Yes, the electricity minister delivers almost daily energy action plan press conferences, but all those explanations he gives about why we are now in Stage 6 don’t make sense.

A week ago in one of the Saturday energy action plan press conferences, Ramokgopa was asked by one of the reporters: How much has Eskom budgeted for maintenance over the 2023 calendar year period? And how much has Eskom spent in buying diesel over the past six months or so?

Ramokgopa said Eskom had spent more than R22 billion on diesel over the past six months. And that the power utility would be spending more money on diesel, including the entire allocated budget of R30bn or more, in diesel over a 12 months period.

On the question of the maintenance budget, the minister said only R10.5bn had been budgeted for maintenance and that budget would be spent over the period of 2023, on maintaining, fixing and repairing the power plant units that were scheduled for maintenance.

This is where it starts getting interesting. Why must Eskom prioritise spending huge amounts on emergency diesel, and only a third of that on scheduled maintenance? Does this make sense?

Well, of course, it doesn't! Eskom appears to have no money budgeted to return the 16000 MW of power generation units, while billions are wasted to go up in diesel fumes daily.

From a country and company perspective, the value destruction through this lack of foresight is staggering. The short-sightedness will cost the economy billions of wasted rand for a flimsy band aid.

And just like in the drama soapie “Days of Our Lives”, South Africans are given empty hope and promises in every energy crisis press conferences. But the truth is that this goes to show that neither the government nor Eskom the leadership is sincere about addressing the critical challenges in Eskom.

The solution is simple: just fix the damn power plants and load shedding will end. Yet there is no will by those in power to end the power crisis. Instead, as the energy crisis deepens, it opens an opportunity for those few who make money and benefits from our suffering.

This points to a failure of corporate governance and leadership. For this, South Africa must hold the electricity minister, Eskom’s board and its executive leadership to account.

We need answers and a timeline on how they plan to find the additional maintenance budget money needed to fix and repair the stranded Unplanned Capability Loss Factor of 16 000MW of stranded and broken down generation units.

I guess if Eskom were a single adult with no kids or responsibility, living in a carefree world, there wouldn't be any imposed burden on how it spends its income. But Eskom has the whole nation as its responsibility, and its kids, the whole nation, is starving of electricity.

But every day, Eskom spends R82 million on diesel alone. But back at home at the power plants, only R28m is spent on maintaining a critical fleet of power plants that provides electricity for the whole country, including South African neighbouring states.

In a nutshell, the government’s leadership needs to get its act together fast on Eskom.

This as the country has learntd that the National Treasury is facing a cash crunch and will propose budget cuts at its Medium-Term Budget Policy Statement on November 1. All eyes will be on what it says about Eskom.

The SA Revenue Service has also said tax collections have fallen by billions, with load shedding one of the contributors to the decline.

How Eskom revenue is budgeted and spent is important to the survival of the nation. This as load shedding decimates businesses and jobs, increasing the rate of unemployment.

OPPORTUNITY

However, in all this, there is great opportunity.

The real challenge is that we, as a country, sit with the challenges and opportunities of two extremes.

First, we sit with an ageing power station infrastructure. Money is needed to fix, repair and refurbish the power plants. The second opportunity is that we have an increasing demand for more electricity.

As a country, we must choose our energy path carefully. The ideal situation would be to make sure that we have enough electricity in our grid, while ensuring that we reduce the carbon footprint on energy generation.

We have to start massive investment in building brand-new base-load power plants and additional renewable energy plants. Electricity generation cannot be driven by one technology only.

As coal starts slowly disappearing, more newer technologies will be maturing and taking over the coal share. And as South Africa, we must be ready and start investing in emerging technologies for energy generation if we are to take South Africa forward and grow our industrial base.

South Africa has an abundance of all energy sources and resources, ranging from crude oil reserves and gas reserves to abundant sun and some wind, coupled with massive coal reserves to last us for some hundreds of years. This means we are not limited on our energy choice and path.

South Africa should be investing in converting coal plants into cleaner HELE (high efficiency low emissions) coal energy production. Converting and building brand-new, quick-to-deploy gas plants is essential to economic growth and, in addition, investing heavily in nuclear power generation.

We have to balance all the choices. We should encourage a path that balances the energy mix.

We fought for freedom. Our path to absolute freedom and prosperity for all is incomplete if we don’t have the freedom to decide our own energy sovereignty pathway. But don't forget that it is coal that is keeping the lights on.