Eskom’s challenges took centre stage at the first day of the Africa Energy Indaba as experts from around the world gathered in Johannesburg to seek solutions to enable adequate energy generation across the continent.
This comes after the country was left in darkness last week when embattled power utility Eskom was forced to implement load shedding after six of its generation units went down.
Opening the event energy Minister Jeff Radebe noted that a reliable, sustainable, competitive and secure electricity supply sector would be crucial to attract investment into Africa.
The minister said that the utility’s deteriorating plant performance, which was driven by old generation infrastructure, confirmed that the country was now in need of more investment in new generation capacity to replace the old power plants.
Maintenance over new build
Despite the minister’s views Eskom’s Head of Transmission Segomoco Scheepers, noted that the immediate challenge Eskom had to address was reliability which meant that maintenance needed to be prioritised.
“As things are there is sufficient generation capacity in the country to meet the demand, the problem is around reliability. So the priority for us at present is not new build but ensuring that what we do have is reliable. We want to keep those plants up and running.”
Scheepers added that costs were also a key contributor to the reliability challenges the utility is facing. “Costs are a factor, the reality is that we are experiencing a lag effect, for lack of a better term, where we may not have invested in maintenance on time and now our machines are becoming unreliable.”
Responding to a question on how the utility could become financially viable again, Scheepers added that Eskom would have to do a lot of work to reduce and contain costs.
“There have been extensive surveys that have pointed out that we are paying far more than we should for things so we need to do what we can to claw back costs. There are areas like efficient procurement where we are not doing enough so we will need to address those and finally our last resort is our tariffs which the energy regulator is looking at now.
“Ultimately we must address the operational challenges to secure reliability and ensure that the investments made in the utility produce power and returns,” he explained.
Scheepers added that with the budget speech set to take place on Wednesday he also expected that there would be some support from government to help strengthen the utility’s balance sheet.
Tough decisions and PPPs
Turning to the expectations of the budget speech and what he believed Eskom should do Dr Reuel Khoza, Chairman of Dzana Investments and former Eskom Chairman, said he would insist on right-sizing.
“As painful as it may be it is pointless to over employ, why have five people doing a job that two could do? This is something that is necessary to rescue the operation and make it functional again. It takes courage and somebody has got to be bold enough to do it,” he explained.
He continued: “I would also suggest that there is no harm in accepting that some of the solutions lie in Public Private Partnerships (PPPs). If I was government I would get the private sector to do what it does best and run with the professional side of things and then tax them accordingly and at every level.”
The Africa Energy Indaba continues at the Sandton Convention Centre in Johannesburg on Wednesday.