South Africa’s governing African National Congress (ANC) is pushing for the declaration of a state emergency to tackle the current crippling power outages in the manner an emergency was declared to respond to the COVID-19 pandemic. The ANC wants the power cuts to end by the end of 2023. Interestingly, energy minister Gwede Mantasha is chairman of the ANC.
State utility company, Eskom has warned of difficult months ahead in 2023 due to prolonged blackouts nationwide. “We are going to have a challenging period over the next three months,” Eskom’s chief operating officer Jan Oberholzer disclosed during a media briefing, stressing “It is going to be a difficult period”.
“The outlook for 2023 is going to be very constraint,” outgoing chief executive of the utility Andre de Ruyter further declared during the presentation of the company’s annual financial results. Meanwhile the debt plagued monopoly utility is scheduled to increase electricity tariffs by April, even as it continues to struggle to meet its statutory responsibility to the nation.
The National Energy Regulator of South Africa (NERSA) in January approved 18.65% electricity tariff increase for Eskon in the 2023/2024 financial year. It had requested for 32% rise in the company’s multiyear price determination revenue submission. South Africa urgently needs between four to six gigawatts to meet current total energy demand estimated at around 25 gigawatts, official statistics reveal.
Several factors such as: huge debts, aging facilities, fraud, sabotage, corruption and criminal gangs have made it almost impossible for Eskom to deliver its statutory role to the nation. A number of power stations are allegedly run by criminal syndicates, with the involvement of corrupt employees. The utility has continued to operate at a loss. According to its latest financial report, the company posted R12.3 billion net loss during the financial year ending March 2022 compared to R25 billion loss over the same period the preceding year.
Africa’s most industrialized nation has been mired in an energy crisis for more than a decade, but it worsened in 2022, culminating in daily scheduled “load shedding”- sometimes for as long as 12 hours a day. Eskom blames the ensuing power dilemma on its aging coal fleets and poor maintenance of its facilities. Regular nationwide load shedding schedule to reduce pressure on the overworked grid is undermining businesses; the economy is struggling. According to the World Bank estimate recurrent power cuts cost the economy $24 billion in 2022 alone. South Africa’s central bank projects gross domestic growth will slump to 1.1 % in 2023 from 1.8 % in 2022, with 0.6 % of the slide due power rationing.
Eskom, which supplies 90% of the nation’s electricity is heavily indebted and is afflicted with mismanagement and corruption. The company has had 14 leaders since 2007, much of that turnover happened during the tenure of former President Jacob Zuma. The next chief executive to leave is Andre de Ruyter, who announced his resignation in December. He has been at the helm of Eskom for nearly three years and he will leave the company at the end of March. During his tenure he battled with criminal organizations that have infiltrated the state utility company. There were reports of several attempts on his life by the cartels he tackled. Ruyter moves about with a personal bodyguard.
The utility relies on trucks to move coal from small mines often hundreds of miles away and they are easily diverted and replaced with bad coal. Good coal is pricey abroad, particularly with the recent increased demand in Europe. The swapped bad coal, including discard and scrap metal, is fed into power stations, thus reducing generation capacity and causing breakdowns. Pundits say De Ruyter’s attempt to fix the corruption-plagued utility was sabotaged from within. Ostensibly, insiders cashing out from the rot did not allow his reforms to see the light of day. Ultimately, he threw in the towel and he leaves the company without achieving his dream of delivering a top notch Eskom.
Weak Justice Delivering System
Eskom’s management, including security manager Karen Pillay, who has received several death threats have complained of a lack of political will to prioritize the fight against criminality in the monopoly utility. The management lamented that just one out of 16 cases of sabotage recorded by Eskom in 2022 is in court. It also alleged that the National Prosecuting Authority (NPA) lack the expertise to handle the cases.
Meanwhile, Cyril Ramaphosa has instructed the South African police, particularly the Special Investigating Unit (SIU) and the Directorate for Priority Crime Investigation (Hawks), as well as the State Security Agency (SSA) to provide necessary assistance to the anti-crime unit constituted by Eskom in collaboration with a law firm ENsafrica some months ago. Eskom has also announced that persons accessing its sites, including its employees would have to undergo more thorough screenings. The government in December deployed armed men to protect the four coal-fired power stations in Mpumalanga province.