Remarkable achievement as Eskom achieves 60% benchmark in energy availability factor

09/05/2024

Eskom breaks the historical mile of its plant performing consistently at more than 60% benchmark in energy availability factor.

The remarkable achievement comes after Eskom performed dismally for many years.

The recent over-performance is due to power plant maintenance, repairs and refurbishment and should duly be credited to the most able team at Eskom, starting with the board of directors led by Mteto Nyati, who is championing the generation recovery strategy at Eskom, and the executive team led by by Group CEO Dan Marokane, together with Bheki Nxumalo, the group executive for generation.

The team seems to be delivering way beyond expectations, given that Eskom is in its 42nd day of not implementing load shedding. This is an indication of true management and the Eskom employees and power plant staff who are delivering at a racing horse-like pace. Seldom do the workers get acknowledged for the sacrifices and effort they make to deliver constant uninterrupted electricity.

Until recently, Eskom’s performance was dismal, with huge plant failures across the entire Eskom power generation fleet. Every day was a nightmare as the stages of load shedding were dialled up and down. The situation at the peak of the load shedding crisis was, in summary, a circus.

We would wake up to no electricity. We would get ready and leave the house for the day, only to return to a home without electricity. This was the lived nightmare that, for several years, had become the “new normal” for South Africans, until recently.

The energy crisis has acted as a wrecking ball to the economy decimated by national shutdowns and disruption to global trade amid the Covid-19 pandemic.

Covid-19 pandemic was a short-lived experience and an economic disruptor, but I argue that load shedding was worse for the economy. It started years before Covid-19 and lasted till April 2024.

The true pandemic that paralysed the economy and South Africans has been load shedding.

It has been 42 days without load shedding.

However, political pundits find this suspicious on the eve of elections. They believe that the suspension of load shedding is primarily due to the election season that kicked off. They assert that Eskom is under instructions to keep the lights on at all costs until after the elections are over. True or not, that remains to be seen.

Eskom has admitted that yes, load shedding has been temporarily suspended and would resume during winter, depending on the power plants’ capacity.

Minister of Electricity Kgosientsho Ramokgopa shared some good news in his recent energy action plan update on Monday. He said Eskom had fought and defeated the UCLF energy crisis Achilles heel, which when he started his job as minister, was peaking at 18 500 megawatts as plants broke down.

Over a year, Eskom recovered just over 8 000MW, thanks to plant repairs and maintenance. That is a mean feat in overall performance. Yes, the Eskom team and the minister of electricity deserve a round of applause. I think they do, you be the judge.

The question is: Can they sustain the pace of improving performance over the coming months? The litmus test will be to observe performance for at least for a minimum of a year. Until then, we must hold them to account and remind those in charge to never again allow South Africa to slip into another unnecessary energy crisis.

Eskom unbundling

Eskom will also schedule a conference call with its financial creditors in the coming weeks, to provide a further update on the unbundling of its transmission division and the other implementation steps as contemplated by the Department of Public Enterprises’ “Roadmap for Eskom in a Reformed Electricity Supply Industry”.

Eskom’s debt facilities, including its bonds, will remain on its balance sheet after the transfer of the transmission division to the National Transmission Company of South Africa (NTCSA). During the interim period, transmission will remain a division of Eskom.

Upon completion of the suspensive conditions, the NTCSA will be operationalised and will:

– Be responsible for payment of all NTCSA creditors and employee salaries.

– Recover money from customers.

– Settle the inter-company loan obligations as agreed.

– Operate bank accounts for day-to-day operations.

– Liaise with Eskom treasury regarding liquidity requirements, short and long-term.

The NTCSA will not, until completion of Eskom’s full turnaround plan, be able to incur new debt facilities on its own balance sheet.

The composition of NTCSA board will be appropriately structured to recognise Eskom’s control while ensuring transmission’s independence.

By passing the Electricity Amendment Regulation Bill of 2023, Parliament has made way for the full and final completion of the Eskom unbundling process to be finalised and nailed to the cross.

Eskom has achieved the unbundling process without little push back from all quarters.

The process was hinged and dependent on finalising the legislation process of amending the Electricity Regulation Act. The Department of Minerals and Energy, under Gwede Mantashe, together with the Department of Public Enterprise, collectively achieved the momentous goal of quietly going about transforming Eskom through the unbundling process into a New Age company ready for purpose.

Will the unbundling process of Eskom achieve its liberalisation objective of the energy markets as a stated goal? We can pass judgement on that only in five to 10 years. It is too early in the day to make a judgement call on whether liberalisation of the energy markets and the soft privatisation and unbundling of Eskom was the right thing to do. Globally, most countries had to reverse the unbundling process due to its failures.

Challenges associated with unbundling are transitional costs, loss of economies of scope and possible insufficient investment in generation, technical and non-technical losses, information problems and power contract renegotiation costs.

Overall, unbundling increases the costs burden to the end consumer who must cross subsidies to all the entities and subsidiaries through the cost of electricity tariff, leading to electricity price hikes and increases to be borne by consumers.