Chisom Jenniffer Okoye
2 minute read
1 Aug 2019
6:05 am

Eskom’s turnaround will not happen in 18 months – experts

Chisom Jenniffer Okoye

That target is unrealistic and over-optimistic, energy experts agree, with one saying it could take up to 10 years to get the utility back on track.

South Africa power utility giant Eskom imposed severe and highly unpopular power rationing, known as load-shedding, for ten consecutive days in March 2019. Picture: AFP / File / MARCO LONGARI

Eskom’s ability to get its house in order in the next 18 months as Minister of Public Enterprises Pravin Gordhan hopes to do, is over-optimistic.

So says experts who feel that target is unrealistic given the long-term issues the utility is currently facing.

Eskom’s acting CEO Jabu Mabuza said on Tuesday that the power utility had registered a whopping R20.7 billion net loss after tax for the financial year that ended March 31, a significant increase from their R2.3 billion loss experienced in the previous year.

This news came after Finance Minister Tito Mboweni announced last week that Eskom would receive a R59 billion bailout from government to be paid in two installments: R26 billion in the 2019-20 financial year followed by R33 billion in the 2020-21 financial year.

In addressing the issues regarding the power utility, Gordhan reportedly spoke of the great effort that was put in to get the work done and that it would take another 18 months to get the utility to operational safety.

Energy expert Chris Yelland said he strongly doubted 18 months would be sufficient and felt restructuring Eskom was a process that could take from five years to a decade to achieve.

He said there was also no clear plan currently on how they intended to do this and they were still waiting for the government to complete its White Paper report.

“They would also need the buy-in of all stakeholders and gain sufficient consensus to succeed in both the transition phase and end state. Right now the stakeholders have different voices and nothing is happening, so 18 months is a bit over-optimistic,” said Yelland.

“Even if Eskom planned to rearrange itself to being three subsidiaries, it would still be optimistic to say they would achieve this in 18 months. It would be the first step but there are still several other steps that need to be taken. We need to be realistic.”

Also doubting the 18-month time-frame was energy expert Ted Blom, who said although this could be achievable in other organisations or companies, Eskom was not one of them.

“I doubt Eskom will deal with its issues in 18 months. They still have an excessive labour force which costs them about R30 billion a year. Eskom does not have the authority from government to trim down so that may not be resolved in the next 18 months.

“There is also a big problem in terms of IPPs [independent power producers] who produce renewable energy. Eskom has lost between R34 to R50 billion because power the IPPs produce is given preferential treatment over the power Eskom produces,” said Blom.

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