The current debate on energy in South Africa has veered from Eskom’s founding vision as a producer of cheap, affordable and accessible energy. Photo: Siphiwe Sibeko/Reuters
The current debate on energy in South Africa has veered from Eskom’s founding vision as a producer of cheap, affordable and accessible energy. Photo: Siphiwe Sibeko/Reuters

Self interest is what is driving Eskom split-up

By Pali Lehohla Time of article published Feb 6, 2020

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JOHANNESBURG – The current debate on energy in South Africa has veered from Eskom’s founding vision as a producer of cheap, affordable and accessible energy.

Eskom was founded in 1923 and its first chairperson, Johannes van der Bijl. Although the apartheid government then excluded black people from accessing electricity, by 1994, when the democratic government came to power, it extended access to electricity universally.

As early as 1945, this energy strategy enabled South Africa to become one of the most advanced industrialised countries in the world, ahead of China and Korea. 

South Africa became a prominent platform for repairs and provider of war supplies for WWII due to its energy offering.   

The new mantra today is about alternative sources, but all these are mum on Van der Bijl’s vision, which led to a world-class state-owned enterprise (SOE) whose bonds were respected by the market.

In December, ANC national executive committee member and former deputy finance minister Mondli Gungubele said the blame for the state of Eskom lay squarely with the governing party. He said the party had failed due diligence.

If Eskom’s demise from being a world-class entity was therefore due to political and financial greed defects, why is it then necessary to divide the utility into three entities? What is the mischief that we are trying to address? Is this solution not a classical South African government signature defect of shoot first and aim later?

Self-inflicted woes have now mutated into a solution that has nothing to do with Eskom as an engineering and energy outfit. A consequence of this poor examination, which is being passed as analysis, is bound to result in the further cannibalisation of Eskom. The proffered solution doesn’t address the problem and will end up hurting the poor the worst. 

One has to look at the politics and various power technologies this agenda serves. The climate debate has opened up a sharp appetite for the decimation of Eskom as it transmits electricity from dirty energy. 

Even a reasonable transition from coal to cleaner energy has been doused by renewable disciples who also argue against nuclear as an unsafe and dirty energy. What has emerged is a directionless national discourse on energy, with scientists and engineers conspicuously absent by their silence. This has set the stage for those with deep pockets to position themselves politically and strategically along four self-interest groups to gain from power generating technology.  

First is the nuclear strand that aims at the acquisition of mining uranium as a strategic mineral for nuclear power.

The second group targets coal, because it will continue to be a source of energy for a while.

The third focused on renewables, while the fourth aims to benefit from the sale of diesel.

As would be expected, the forces with major political interests backing them tear Eskom apart and in this vortex of greed, the engineers, physicists, actuarial scientists are barred from making an input and thus reasoning is left out. Those who led the charge are politicians, accountants, and financial planners. 

We are once again at the juncture of self-interest.

Jan Oberlhozer, a returnee Eskom engineer, and now the chief operating officer, has said in interviews that after 12 years of neglecting maintenance at Eskom’s power stations, the power supply has become unstable and a period of “real, deep maintenance” is needed to stabilise the entity.

Oberholzer does not mince his words. The destruction of Eskom has nothing to do with a business model that it operated successfully over nine decades. It is about political interference that has opened up space for financial vultures to see an opportunity for this once high-grade asset.  

It should not be difficult for South Africa to return Eskom to its previous glory intact and not broken down.  

The solution suggested by Oberholzer and endorsed by chief executive André de Ruyter, is that it will take South Africa two years to get Eskom back to that.

If the root of the problem lies with state capture and neglect, why not fix that instead of turning it into a politically inspired R450 billion solution.  

On the wings of this strategy are value destroyers that aim to benefit from the restructuring of Eskom’s infrastructure with their various interests. Thus the project of cannibalising Eskom from a premier position as a generator of cheap, affordable and accessible energy will have been completed.

If it is about the poor, then let us research the roofing of future housing using solar panels. Such surplus energy can be provided to those who are energy poor through Eskom. 

Dr Pali Lehohla is the former Statistician-General of South Africa and former head of Statistics South Africa. Meet him on www.pie.org.za and @palilehohla.

BUSINESS REPORT

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