Eskom challenges and proposed solutions

ADF

Johannesburg - The African Development Forum (ADF) was inspired into existence by the recent passing of the Tuskegee Engineer Alumnae Mr Thami Mtshali, who brought iBurst to South Africa and was the illustrious pioneer of the Galela immune booster.

It was to honour his legacy but also to establish an erudite Afrocentric think-tank. At its recent webinar on the topical issue of Eskom, the ADF weighed in on key solutions.

First, there was consensus that we support the transfer of Eskom from the Department of Public Enterprises to the Department of Minerals Resources and Energy under the current Minister Gwede Mantashe, whose pronouncements on Eskom and the energy availability factor are well informed, cogent and in line with South Africa’s national interests.

Second, there was consensus that the future of electricity generation in South Africa will have in its mix renewables and nuclear among others. There can be no denying however that the country’s electricity grid will be largely powered by coal-fired power stations in the short to medium term.

Third, a range of key associated matters was noted and proposals as to their resolutions were offered as listed below:

The current load-shedding problem results from the poor performance of Eskom's base-load coal fleet.

The deployment of renewable energy alone will not solve the current energy crisis.

Maintenance executed at Eskom is not effective as it relies on external service providers and not Eskom staff.

Non-availability of parts, skills and contracts specific to maintenance.

Power Station managers operating without appropriate delegated authority.

South Africa should remain open to deploying a mix of energy sources such as nuclear, hydro and gas.

Reluctance to declare the national state of disaster subjects Eskom operations to risks.

Eskom's funding model, while blamed on Eskom, is essential, as a consequence of a poorly designed national economic development model, which in turn informs the macroeconomic framework currently in use in the country. This can be rectified, without which macroeconomic stability will always be at risk.

Reliance on foreign sources of funding for Eskom is not only costly but also compromises Eskom’s capacity to perform its developmental mandate, which contributes to national competitiveness, industrialisation and by extension, employment. Foreign financing also places unnecessary risks on SOEs and our energy security. Here, ADF can help with an alternative model, benchmarked globally, that avoids the above challenges but requires domestic policy/legislative changes.

Regarding the location of Eskom, ADF believes the placement of Eskom in its policy ministry is a well-considered view as it minimises the challenges of coordination, governance and implementations posed by a go-between ministry whose value might be less clear.

With Eskom being a National Key Point, the envisaged privatisation will pose a serious risk to national energy security. It should thus be avoided at all costs as it also leads to the financialisation of the state and the economy.

The inclination to make Eskom’s health dependent purely on tariffs constitutes a glaring unsustainability factor in the light of inadequate revenue, rising unemployment, a growing gap of inequality and a shrinking tax base and industrialisation agenda.

In addition to some suggested solutions above, the following were listed:

Need for a National Economic Development Framework to deal with finance, governance and funding of Eskom.

Declaration of National State of Disaster for Electricity to relieve schools, hospitals and businesses from the burden of load shedding

Liquidate Eskom’s debt immediately by reorganising our funding approach, which must be domestic and must include all players including the SARB as is typical in many developing and developed nations.