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Eskom crisis deepens, load shedding narrowly averted

Group executive of generation Thava Govender resigns, money for salaries questioned.

Group executive of generation Thava Govender resigns, money for salaries questioned.

Eskom load shedding.
Eskom load shedding.

Eskom on Monday night narrowly averted load shedding despite a decline in peak energy demand compared to 2007 and the addition of more than 7 500MW of Eskom installed generation capacity over the last decade.

These numbers are contained in energy regulator Nersa’s System Adequacy Report, published in August.

According to the report Eskom should have a reserve margin of 23.1% if energy imports, renewable energy and other power purchases are excluded. When these are taken into account, the margin should be 37.53%, according to Nersa.

The regulator also indicated that the availability factor of Eskom’s generation fleet has deteriorated to an average of 72.8% for the first eight months of the year, the lowest since 2015.

This comes after one worker died and another was seriously injured in an explosion at Eskom’s Lethabo Power Station last week. The utility announced that the relevant unit would be out of service for at least three months.

The reason for the explosion is not yet clear.

Eskom also earlier admitted that several of its power stations are suffering coal shortages.

And Eskom spokesperson Khulu Phasiwe announced on Twitter last night that one of the utility’s most experienced executives – group executive of generation, Thava Govender – has resigned and will leave Eskom at the end of the month.

Govender, who is also acting group executive of risk and sustainability, has worked for Eskom for 27 years.

He held various positions at the utility, including: member of the Eskom executive committee and various sub-committees; director of Eskom Enterprises; member of the board of the Rotek and Roshcon Group (an Eskom Enterprises subsidiary); chair of the Council of the Eskom Academy of Learning; and exco sponsor for the Eskom Expo for Young Scientists.

In addition, Eskom is a member of the GO15, an organisation that represents the largest grid operators around the world – and last October, Govender was appointed president of the GO15 steering board for 2017/2018.

Govender’s resignation follows that of the CEO of Eskom Rotek Industries Johnny Dladla last week “to pursue private business interests”. Dladla, who has been with Eskom for 23 years, will leave the company at the end of this month.

Sources within Eskom say the pressure on management to turn around the ailing utility is huge.

In another development, energy expert Professor Anton Eberhardt on Monday night tweeted an extract from a message sent to Eskom staff by chief operating officer Jan Oberholzer.

Under the heading “Let’s change the Game”, Oberholzer addresses Eskom’s “financial crisis” and “The 26th of the month”.

He states that Eskom’s interest bill alone amounts to R45 billion per annum.

In 2017/18, it was R25 billion at a group level.

Eberhardt commented: “Already that’s higher than the sums foreseen in their tariff application to the electricity regulator. Over the next three years, interest plus principal payments on debt will exceed R260 billion. Whew … ”

Oberholzer further tells Eskom staff that the R2.3 billion loss in 2017/18 is expected to be “much bigger” in the current financial year. He points to municipal debt to Eskom, which amounts to R16 billion, and says the bargaining unit wage increases and bonuses will cost Eskom “a few billion in the next three years.”

He adds that there has been “severe overspending” on overtime since April this year.

Moneyweb earlier reported that Eskom also dramatically increased its use of open-cycle gas turbines during the strike around June, which is also expected to drive its costs up.

Oberholzer then challenges Eskom staff to ask themselves three questions around the 26th of the month, which is presumably Eskom’s payday.

“Does Eskom have the money to pay me on the 26th?

“Have I earned my salary on the 26th … ” and

“Am I taking the 26th for granted?”

Oberholzer says he has observed that Eskom staff do not appreciate the financial crisis the utility is in and seem to feel entitled to their salaries and bonuses whether they come to work and do what is expected of them or not.

He says staff believe they are all entitled to salary increases and bonuses and that Eskom will find the money somewhere.

“Let me tell you the truth: we do not have the money,” Oberholzer states.

“Dear colleagues, the reality is that if Eskom had been in the private sector, we would probably have had to either decrease our staff or close our doors permanently if we look at the state of our finances.”

Brought to you by Moneyweb. The Ciziten.