The
great
Eskom
debate

The great
Eskom debate

... it's time to flip the switch

Eskom is among the utmost risks to our country’s future. At the Manufacturing Circle we believe that the Eskom crisis also represents one of democratic South Africa’s greatest opportunities.

Unlike most other countries, South Africa is weaning itself off its carbon dependence not just to do its bit for the world’s +2° C challenge but because our very survival is tied to transforming our electricity sector. We can’t afford to build any more coal-fired mega power stations. And we don’t have the time.

For us, energy supply is a terrible risk. And a tremendous opportunity. (President Cyril Ramaphosa’s announcement on 10 June 2021, that the threshold below which businesses may generate electricity without licences would be lifted to 100 megawatts, points to the kind of opportunity which we believe is about be unleashed.)

(A few weeks after we made this comment here, about opportunity arising from risk, Eskom CEO Andre de Ruyter made a very similar observation. You can listen here to him telling journalist Toby Shapshak what he meant.)

Through Nedlac, business, labour and other key stakeholder groups are doing their level best to make a positive contribution to supporting Eskom for inclusive economic growth.

The Department of Public Enterprises has a roadmap. Eskom has a turnaround plan. Government ministries and departments are promising effective interventions and the presidency is chairing a high-level political task team.

Can business (manufacturing in particular) make a difference to resolving the great, seemingly interminable debate about how to fix our broken electricity supply? What can we do? How can business benefit – so that everyone benefits?

To keep the lights on and ensure economic growth, we absolutely need Eskom’s generation capacity as much as we will need an effective, accountable and independent transmission entity that is supplier- and technology-agnostic.

First up, should Eskom be saved?

Eskom, we believe, is only worth saving if it is willing and able to embrace a greater reliance on renewables and lessen our dependence on carbon while abdicating its sector dominance.

Like most South Africans, we believe that our electricity monopoly could do a better job of admitting its historical errors, its wastage and theft. But we accept that Eskom has great human capital and infrastructure that we can’t simply discard. We accept that a few bad Eskom apples have been vastly outnumbered by good Eskom people.

It might not be obvious as load shedding goes on and on but there are some encouraging signs that things could soon change for the better. Eskom claims to have made good progress on the five key elements of its turnaround plan. It is becoming more transparent and accountable. The Just Energy Transition (JET) is an extremely promising undertaking and deserves support from business. We believe this is a particularly worthy project that has the potential to contribute towards our generation-capacity needs, address environmental concerns, foster industrialisation and deliver social equity.

JET also points towards a sustainable outcome to Eskom’s debt, one which will allow Eskom to repurpose and transition its generation capacity. This enormous debt remains a millstone around our collective neck – it is in all of our interests to find and implement creative, affordable and sustainable ways to get it to manageable levels.

We might not believe that Eskom’s debt mountain is our fault. But, whether we like it or not, it is our problem. It is everyone’s problem.

Can Eskom be saved?

It has to be.

As load shedding dragged on in winter 2021, many people were understandably wondering whether Eskom was capable of being saved.

The utility has promised delivery against five key turnaround objectives:

  • Restructuring its balance sheet
  • Overhauling its income statement
  • Achieving operational stability
  • Restructuring to become fit for purpose (the purpose of South African prosperity, not Eskom’s interests)
  • Inculcating a high-performance, ethical culture.

If Eskom can substantively deliver against each of these five elements then yes, it (and the country) can be saved. But only if Eskom changes.

In this discussion we look at how Eskom is delivering on meeting these objectives. And whether it can be trusted to pursue this journey with determination, transparency and accountability.

In essence, we are asking:

Will Eskom be saved?

So here we address:

Then we consider:

What opportunities are there for industry?

And we end with a call to action – to join a multi-party, multi-sectoral movement to transform our energy sector to everyone’s benefit.

To help transform, empower and uplift our remarkable country.

Starting with the Manufacturing Circle’s Electricity Forum in October 2021. We want you to be part of something new and exciting.