Is There A Viable Alternative To Eskom? (Part One)
Author: Jason Snyman
In this three-part article, we take a look at the future of Energy in South Africa, and is there a viable alternative for Eskom?
Eskom is a prime example of how corruption and incompetence is costing South Africa billions. Numerous scandals, tales of nepotism and corruption haunt us. Shady deals involving the Gupta family are but the tip of this iceberg ready to sink us.But, unlike the Titanic, when we go down the lights probably won’t be on.In the past ten years the price of electricity has escalated over 500%.
Consider that when Jacob Zuma became president in 2009, it cost Eskom R240.82 per MWh. The cost of producing electricity has increased by 182% since then. This, despite the fact that the amount of electricity being produced has decreased. Eskom has now sunk to the bottom quartile of energy production utilities. The price in 2017 is R677.91 per MWh.
Consider the allegations that Eskom’s CFO cut back the R95 a ton Matla coal in favour of R600 a ton Gupta coal.
Consider that Eskom auditors recently highlighted R3 billion in irregular expenditure which nobody has any answers for.
According to OUTA (Organisation Undoing Tax Abuse) a household which should be paying about R290 for electricity is now paying R1200. They have also just opened a criminal case against former Eskom CEO Brian Molefe for fraud and contravening the Public Finance Management Act and company law. OUTA’s documents on the case show that Molefe received payments of R8.1 million before his pension payout was exposed.Due to corruption, negligent accounting and mismanagement, the problems are snowballing.It may be time that we give serious weight to the question; ‘Is there something else?’
Eskom has ruled the South African power grid up until now and will likely continue to do so for many years to come. We’re forced to put up with their decisions, whether we like it or not.Now, they have applied for a 20% tariff increase to customers and 27% to municipalities. This increase is projected to take effect on 1 April 2018, should it be approved by Nersa (National Energy Regulator of South Africa).It’s worth noting that even before this proposed increase, the cost of electricity from renewable energy providers is already lower than Eskom’s average price. If one thing has become crystal clear to South Africans, it’s that no amount of protesting is going to put an end to the escalating cost of energy. It’s a lost cause.Apart from repeatedly delaying renewable energy programs while they flirt with nuclear options, the government hasn’t offered any support or incentives to home owners who invest in renewable energy. The US and some European governments do, so why don’t we? Because why would they want us to cut into municipal Nando’s chicken budgets?
Ruining The Little Guys
Back in 2008, Eskom customer Wendy Manuel was hit with a R19 000 bill. Eskom claimed this included an ‘accumulated amount’ that she was not billed for between 2004 and 2008. Then the figure climbed to R74 000 in 2016 due to interest. Her power was cut for more than a year and her business‚ one of the first black female owned engineering companies‚ went bankrupt. Eskom officials appeared to have ‘fabricated an affidavit’ which accused Manuel of tampering with her meter box. Last week, Nersa issued an unflattering report against Eskom, submitting that it is ‘difficult’ to comprehend how Eskom had failed to bill Manuel for almost four years, even though she had visited them several times to request her bills.
“I’m waiting on the final report from the Public Protector. After that, I’m suing for damages‚” she said.
Eskom: A History Of Incompetence
For a while back there, South Africa may have been considered the most romantic country in the world. Alas, even candle-lit dinners grow old.By the time January 2008 arrived, with a near-collapse of the national grid, we were sick of load shedding.There were no solutions to ease the power shortages. Bearing in mind that we knew this day would come since 1998, when the Department of Minerals and Energy released a detailed energy review in which it warned that unless "timely steps were taken to ensure that demand does not exceed available supply", generating capacity would reach its limit by 2007.And then, there we were, and the light at the end of the tunnel had effectively been extinguished.Eskom warned the public that this problem would continue until 2013, when the first new power stations would be brought online. But then 2014 arrived, and with it further load shedding. The Majuba power plant lost all capacity to produce power when a coal storage silo collapsed on 1 November.19 days later, Majuba was shut down for a second time, when a major crack was discovered in a second silo. Two plants were shut down on 4 November due to diesel shortages. Reports came in that the Palmiet and Drakensburg stations were also having problems due to a depletion of water reserve to the hydro plants.Gold and platinum mining operations were forced to shut down, keeping consumption down to the minimum amount needed to evacuate anybody that was still down in the mines.Eskom’s tour of idiocy was only just beginning to find traction.
Molefe stepped aboard this sinking ship and under his watch, load shedding appeared to fizzle out and then stop altogether. For this, he earned a salary of about R800 000 a month. Last year, he announced that we should go ahead and forget all about load shedding. He was confident Eskom would be supplying electricity without any problems.But can anybody living in South Africa right now really believe this? CEO’s who get paid over R9 Million a year are likely to say anything to appease the masses. Plus, we have no realistic idea how far our resources will take us. The availability of said resources tilts every time winter rounds the bend. And of course, one strategic strike from unhappy Eskom employees could bring the whole thing to its knees.A year into his term at Eskom, the man who ‘saved’ South Africa from load shedding was implicated in former public protector Thuli Madonsela's State Capture report. This report exposed his connection with the Gupta family and their company Tegeta Exploration, which supplies Eskom with coal. He claimed that these deals were already in place by the time he took over.Since then, Molefe has stepped down in the interests of good governance, returned for a brief period and has since been removed again. He has also resigned as a Member of Parliament.Then, acting CEO Matshela Koko was suspended earlier this year after allegations surfaced involving his stepdaughter. She was a director of a company that received R1 billion in business from Eskom.Last year Koko, too, assured Parliament that load shedding is a thing of the past. However, he also added that the risk will return by 2026 if we fail to make a decision now on whether or not to build new nuclear power stations.