The high-level Eskom sustainability task team appointed by Pres Cyril Ramaphosa in December submitted its interim report with recommendations for a turnaround strategy to the President on 31 January 2019.
Commonalities between the task team and the Zondo Commission emerged when, during their session with the task team, Eskom trade unions emphasised the rampant corruption at Eskom. Although heads have already rolled over alleged irregularities at executive level, corruption and self-enrichment are still the order of the day throughout the organisation.
Four other problems that are prevailing in Eskom’s procurement process pertain to instances where black economic empowerment has led to products invariably being purchased at up to four times the market price; secondly it takes inordinately long before a product reaches its final destination because of internal red tape; in the third place, the poor quality of certain products necessitates ongoing repairs and maintenance; and finally, in some cases a middleman takes the place of a supplier of key equipment, which means that an Eskom engineer who has to install the equipment does not have ready access to a manufacturer’s product specialist.
As far as those problems are concerned, Solidarity proposed that the procurement process be decentralised and that when essential equipment is procured a technical expert should be part of the entire procurement chain.
Eskom is also experiencing human resource challenges. The task team made it abundantly clear to trade unions that Eskom’s organisational structure was bloated and that retrenchments could follow. While trade unions cannot agree with retrenchments, they made a counterproposal to rather focus on natural staff turnover, early retirement and voluntary severance packages. Another proposal was to use contractors in a circumspect manner because far too many projects, which could have been dealt with in-house, are sourced out. The trade unions also suggested a re-skilling of staff, especially when it comes to scarce skills.
Forced retrenchments will surely be included in the task team’s recommendations but what is of concern is that government’s current energy plan does not contain a social plan to deal with the impact retrenchments have on employees and their dependents by way of a just transition process.
As far as strategic decision-making at executive level is concerned, Solidarity recommended that Eskom’s board members should have the necessary expertise to manage a complex organisation and to be in a position to provide leadership to top management. Solidarity also recommended that operational managers be made part of strategic decisions, especially when it involves their operations.
The task team hinted that the unbundling of Eskom into three units, namely production, distribution and transmission, would be one of their key recommendations to the President. A recommendation on the phasing out of coal-fired power stations in favour of renewable energy is also a strong possibility. Num and Numsa are clearly opposed to this idea because of the further job losses it will bring. They also claim that renewable energy is expensive. In its response, the task team referred to a 2013 agreement reached at Nedlac and to an agreement Zwelinzima Vavi (former Cosatu General Secretary to which NUM and Numsa were still affiliated to at the time) had signed with government and business in terms of which players had committed themselves to renewable energy.
Secondly, the task team made the point that independent energy providers would be able to realise fast growth thanks to the favourable availability of natural resources in South Africa, and that in the end, electricity would cost 50 cents per kW/h, which would make it cheaper than primary energy. Moreover, an indication was given that government would soon (possibly at the Mining Indaba) make an announcement on the future of coal power stations.
Eskom’s huge debt burden of around R420 billion and municipalities’ outstanding debt of around R28 billion were also discussed. In this regard, the task team let on that defaulters might not be punished in an election year.
The task team all along emphasised the severity of the Eskom crisis, but it speaks volumes that one of its prominent members indicated that ideology would have to be set aside to rescue Eskom. It is indeed true that ideological mind shifts do offer the solution to many of the country’s other problems too.
Gideon du Plessis is Solidarity’s General Secretary