BUSINESS MAVERICK / 09 SEPTEMBER 2019 - 14.11 / SIKONATHI MANTSHANTSHA
This week Eskom starts interviews to find its 14th chief executive in ten years. The person that will eventually be appointed needs to be appropriately skilled and qualified, have global experience, and capable of executing major infrastructure investments. Race should not at all feature as a precondition for taking Eskom to the next level.
After 25 years of appointing people for the only reason they are black has robbed the whole economy, which did more than anything to reverse the very black economic empowerment and growth it sought to advance.
Eskom’s survival, and operational requirements, not politics, should be the only thing that occupies the board, and the minister of public enterprises, when making the appointment. If that happens, Eskom may just have a good chance of stopping the revolving doors at Megawatt Park, and put in place measures to ensure the next capital investment phase is smoother and more efficient than the current one.
It was a hot and sunny Limpopo day on 07 August 2007 when Jacob Maroga turned the sod to start the R70 billion construction of the Medupi power station in what was still Ellisras town. In the 12 intervening years, twelve other Eskom chief executives have come to occupy Maroga’s position, and like him, all left prematurely. Many of the departures were quite unceremonial and as dramatic as Maroga’s own departure in 2009.
The incumbent, Jabu Mabuza, will leave end October, after helping appoint a successor to Phakamani Hadebe.
R140 billion after Maroga’s turning the sod at Medupi, all six generating units have finally been connected to the national grid in Lephalale town. The original five-year project has dragged into 12 years. But eventually, and hopefully within the next three months, Medupi will continuously produce the full capacity 4,788 megawatts of power.
That record is far from impressive. Corruption won hands down. And then some level of incompetence. 12
At Kusile, the electricity plant under construction outside eMalahleni, the situation is even worse. An R80 billion project in 2008 has turned into a R160 billion nightmare. The Kusile power station is still far from finished.
For Eskom to avoid such a monstrosity again in its next capital investment phase, the preparation needs to start now. Planning for the next power station is the only way for Eskom to retain the project management capacity it has developed during the construction of the two power stations, as well as the Ingula Pumped Storage in the Drakensberg.
Because the opportunities for an engineer to build a power station from nothing is scarce, far and few in-between, the people who worked on the projects will now be looking at other market for an opportunity to implement what they have learnt. But Eskom needs not lose these project managers and engineers. It needs to engage them by planning for the next piece of infrastructure.
Sure Eskom has not a cent to its name to even dream of building another major piece of infrastructure, but if it is to remain viable, it must build more power stations to replace the ageing infrastructure that will be decommissioned soon. Its possible three coal-fired power stations have now exceeded their design life, and will be demolished starting 2022.
In the medium term, that infrastructure will need to be replaced. The planning must start now. And the skills acquired during the construction of Medupi, Kusile and Ingula will help smooth the next building project. But the people are not just going to stick around if they are not being engaged, and given enough reason to stick around.
Necessarily, we will still need many more coal-fired power stations, the environmental risks notwithstanding. We just have too much coal to ignore. After nuclear, coal is still by far the cheapest source of fuel for the size and mass of the infrastructure we need to power up the economy.
Of course, by all of this, I am not campaigning against renewable energy. The fact of the matter is that to power a growing economy, we will need all hands on deck: coal, nuclear and renewable energy sources. 13
Of all these, the loss of skills at Eskom has proven the most destructive and costly.
The brain drain needs to be stopped. A stitch in time saves nine. All those engineers who built Eskom’s generating infrastructure before the current pieces left and sought action elsewhere, at great cost to the country.
Eskom is on the record saying any growth in economic activity above 1% per annum will mean the return of load shedding. If we are to avoid making load shedding a permanent feature of life in South Africa, the powers that be in government and at Eskom need to see infrastructure investment as a continuous endeavour. The stop-start-stop approach is way too costly.
But for this to happen, Eskom needs to stop the revolving executive door. Pravin Gordhan, the public enterprises minister, and president Cyril Ramaphosa have a chance to appoint the most competent of the candidates, regardless of his race or proximity to the ANC’s preferences. 20
Gordhan cannot afford to repeat the ruinous mistakes of the Jacob Zuma regime. We are still going to pay for this for many years to come.
During the very corrupt reign of Zuma, and his public enterprises ministers Malusi Gigaba and Lynne Brown, the only thing that mattered for appointment to a senior position was their perception of how amenable the candidate was to enrich them and their friends.
Very few people, connected and corrupt friends of theirs, got rich beyond their wildest imagination as a result. The rest of us are still paying for it all.
And the economy has been bleeding as a result.
The CEO to be appointed, therefore, needs to be not a political deployee to further some other nefarious desire, but a capable and skilled individual who must also be allowed to do his job of planning for Eskom’s long term survival.
The starting point would be to give him the capacity to start planning for future infrastructure needs.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER