Only a coordinated, multi-faceted approach can get Eskom back on track. This is the view of President Cyril Ramaphosa.
Responding to the debate on the State of the Nation Address (SONA) in the National Assembly, on Thursday, the President said the embattled power utility’s recent failure to keep the lights on highlighted the severity of the challenges the company faces and the urgency of measures needed to address them.
“There is no single solution to the problems at Eskom – neither restructuring, nor refinancing, nor cost cutting, nor tariff increases, nor better plant maintenance on their own will have the necessary effect.
“We need to pursue all of these measures and more, simultaneously, in a coordinated manner, and with purpose, to turn the utility around,” he said.
He said in the immediate term, there is a need to intervene aggressively to ensure that load shedding is addressed.
“The teams assembled by the Presidency, the Minister of Public Enterprises and the Eskom Board need to prioritise the building up of an adequate electricity generation safety margin to ensure the national grid is restored to a state of robustness able to withstand the demands that will be placed on it by new industrial capacity enticed through the 2018 Investment Conference.
Cutting costs and improving efficiency
Addressing MPs, the President said the leadership of the utility has already taken steps to cut costs and improve efficiency. He said, however, that much more needs to be done and it needs to be done more quickly.
“One of the tasks that are essential to ensuring secure electricity supply is a dedicated and detailed focus on maintenance.
“Maintenance doesn’t grab headlines, nor does it strike most people as even vaguely interesting but an effective, comprehensive maintenance programme, properly funded and led by skilled personnel, is the one thing that stands between reliable electricity supply and darkness.”
A collective responsibility
The President said the fundamental principle that must underpin government’s response to the Eskom crisis is that it must be inclusive and consultative.
“We accept, as government, that we have not done enough to bring some of the key stakeholders, such as labour, on board and are determined to correct this.
“As social partners, as stakeholders, as a country, we have a common interest in finding sustainable solutions to the crisis at Eskom.
“We therefore have a collective responsibility, which extends beyond our immediate interests, to work together to fix Eskom,” he said.
Restructuring to reduce massive risk to Eskom
Commenting on the restricting, which will see Eskom divided into three separate State-owned entities – Generation, Transmission and Distribution, all under Eskom Holdings, the President said restructuring the power utility will reduce the risk of a massive Eskom, that at times has, in its current form, been termed “too big to fail”, placing government in a position where all its eggs are in one basket.
“[The restructuring] will align Eskom with international electricity trends, where the vertically integrated electricity utilities have been broken up to enable better regulatory oversight through a single buyer model, and increase competition in the generation and distribution space, driving down the cost of electricity for the economies.
“A good example of this transformation is the People’s Republic of China. A unitary Eskom has proven to be difficult to lead.”
President Ramaphosa said that ultimately, the restructuring of Eskom is intended to ensure security of electricity of supply for the country, which is critical to building up the positive investor sentiment and confidence essential for the investment required to create sorely needed jobs.