Molefe Seeletsa
Digital Journalist
4 minute read
21 May 2020
10:55 am

Eskom: 21 employees catch Covid-19 but load shedding risk now dramatically down

Molefe Seeletsa

The utility's CEO covered a number of challenges faced by the power utility including their response to the Covid-19 pandemic during a media briefing.

Eskom CEO Andre de Ruyter. Picture: Moneyweb

Eskom chief executive André de Ruyter confirmed on Thursday that 21 employees and contractors had tested positive for Covid-19 cases in the Western Cape.

During a virtual media briefing on the “state of the system”, De Ruyter said those who tested positive for the virus were receiving the best treatment possible.

In addition, the utility said there would be only an 80% chance of just three days of load shedding over the winter. Thirty days were predicted earlier in the year, with the improvement a result of the utility being given an opportunity to do short-term maintenance due to the huge slowdown in the economy brought about by the coronavirus lockdown.

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The CEO covered a number of challenges faced by the power utility including their response to the Covid-19 pandemic.

He said that despite the challenges faced in the past four months, which include IT failure, Covid-19 and load-shedding, Eskom had made progress on its turnaround by focusing on:

  • Operational stability
  • Improved income statements
  • A stronger balance sheet, restructuring, and
  • Establishing a high-performance culture in the working environment.

He announced that the power utility’s debt had reached R450 billion due to the company not having enough revenue to cover its debt costs.

“We are taking decisive action to turn Eskom around as we are facing a significant number of challenges. We have a debt of R450 billion, we don’t have enough revenue to cover our debt costs,” he said.

Eskom had received a R56 billion bailout from government, with R23 billion already drawn down.

De Ruyter said Eskom had a “significant cost challenge” as the power utility’s operational challenge had increased to 30% over the last five years.

“We have been operating in an environmentally unsustainable manner in some of our operations and as a consequence we have been exceeding licence conditions. These are currently being rectified.

“Our business model is outdated. The world of energy has changed and we need to change along with it and as we change and divisionalise. We will see the operational structural inefficiencies become more apparent so we can address those,” he said.

The CEO said Eskom was developing plans to address its operational stability to improve its income statement and to address its balance sheet.

He said the power utility had been able to do some short-term opportunity maintenance during the pandemic.

“We have launched the reliability maintenance programme. We have resourced the programme and are making progress in addressing our maintenance backlog.

“We have taken steps to repurpose power stations that are reaching the end of their operating lives. This is in an attempt to ensure a just energy transition takes place and that we are able to continue to support those communities.”

The CEO continued that the company was going to be focusing on procurement savings and reducing its spending.

On generation, De Ruyter said this was not as reliable as Eskom needed it to be to improve current plant performance and to reduce the risk of load shedding.

“We have tackled initiatives to unlock additional capacity through the reliability maintenance and we have secured coal stocks that are required … the coal is adequate to sustain us through any situation that we may develop.

“We need to address the income statement by avoiding load-shedding and be more efficient in order to obtain a better return on assets. We are in the process of resolving our disputes with Nersa,” he added.

De Ruyter said there was still an amount of R28 billion from municipal debt that the utility was seeking to recover.

“We have continued to drive hard for payment agreements; not all of these agreements are always honoured. We have exited some 184 senior executives from the organisation through a voluntary severance programme. That has been a success in reducing our wage bill,” he said.

He said the company was going to embark on a renegotiation with its Independent Power Producers (IPPs) with a view to reduce the net costs to South African electricity consumers.

“We are cutting back on our capital expenditure. We have ideas on improving our big bill on environmental capital expenditure and we believe there are opportunities to create public and public partnerships through repurposing.

“We believe that this could be an important part of the just energy transition,” he continued.

With regards to the Covid-19 measures taken by Eskom, De Ruyter said the utility had put in place contingency plans for its facilities in order to ensure they could operate under a variety of different scenarios.

“We have made available the Eskom Academy of Learning in Midrand to the department of health to be used as a quarantine facility. We have been producing hand sanitisers, assisting in the development of ventilators and manufacturing of masks,” he added.

De Ruyter concluded by highlighting that there were improvements in the electric arc furnace in the past month and that opportunity short-term maintenance was being implemented due to low demand.

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