Eskom lacks necessary human capital - NUMSA

Irvin Jim says SOE lacks required competencies at all levels of the organization


14 December 2019

Press Statement

NUMSA is dismayed and extremely angered that every December and January the country’s economy is plunged into a crisis by the Eskom management and board because of costly loadshedding which costs the country billions of rands.

NUMSA has consistently raised with the Minister of Public Enterprises, Pravin Gordhan, that if we want to get out of the expensive, dangerous and destructive load shedding, which can only destroy the jobs and livelihoods of all communities across the length and breadth of the country, all that is needed, is for him to wake up and appreciate the hard, concrete reality that Eskom does not have the necessary human capital for maintenance of the current fleet of power stations. This is advice which he has consistently ignored.

Eskom does not have the required competencies at all levels of the organization starting from the board to senior management to the power stations. All competent Eskom engineers, some being NUMSA members, have been pushed back and replaced by clueless novices who know nothing about maintaining a plant or how to prepare for December and January’s peak demand, maintenance of plants, let alone preparing for annual summer rains.  

What is shocking about this crisis are the repeated lies by the Eskom Board, Minister Pravin Gordhan and COO Jan Oberholzer laying the principal blame on the ageing of coal power stations and lack of maintenance. A key take-away from this crisis is that the Board, Minister Pravin Gordhan and COO Jan Oberholzer are technically incompetent.

NUMSA would like to remind the Eskom Board, Minister Pravin Gordhan and COO Jan Oberholzer about the conclusions of the ESKOM report to NERSA dated 6th August 2014 following electricity supply shortages and load shedding on 6 March 2014 which stated the following:

“High and increasing reactive maintenance, and the decreasing amount of proactive maintenance, are the result of the constrained system, now aggravated by the reduced plant reliability and also by capital expenditure constraints. Eskom is convinced that the only way to restore plant reliability is to put an emphasis on proactive maintenance, which includes refurbishment. If this is done, availability should improve. More maintenance must be performed, more effectively and efficiently” (ESKOM Report to NERSA, 6th august 2014).

It’s quite clear that many underlying causes contributing significantly to the unplanned outages on coal power stations were known to Eskom as early as 2014. The recycling of these reasons is an insult to South Africans. What South Africans want to know, what has been done since then?

Jabu Mabuza, the Chairman of Eskom board and Acting GCEO, has admitted to being conflicted by virtue of the fact that his family has business interests in form of Sphere holdings at Eskom through the supply of coal and Maintenance, repair and complimentary services for boiler plants and high pressure pipework at 13 Eskom power stations (Babcock Ntuthuko Engineering). Dentons startling revelations about power stations maintenance contracts said the following:

“The monitoring of the performance of the maintenance contracts has not yet been reviewed, contracts are not performance based”. 

NUMSA wishes to advise the Eskom board to review the existing maintenance contracts, and that they should be performance based and enforced through more focused contract management. It is NUMSA’s submission that Eskom has some of the best performing engineers who successfully delivered the best performing plants in 2017. A good example was the performance of Kendal power station in 2017, which was at 80% - 90% performance under the leadership of Christopher Nani who is an exceptional Engineer. However, for political reasons, it has been almost three years that he has been suspended with full pay on trumped up allegations, in the name of fighting state capture. NUMSA is aware that many other qualified and exceptional engineers at Eskom are basically being marginalized and are not allowed to do what they do best which is to maintain Eskom power plants. As a result, the severity of not maintaining Eskom power plants by Engineers who know how to manage the generation fleet has led to these power plants being broken down to the point of unpredictability.

This is the reason why the current Eskom management team and the board have been sending conflicting messages bordering on lies to the point of completely misleading the President, who made unfounded allegations of sabotage.  NUMSA is of the view that there is absolutely no excuse under the sun for Minister Pravin Gordhan to appoint unsuitable, unqualified and incompetent people to the board at Eskom. This includes the current crisis where both the Chairperson and the GCEO who have no requisite skills. It is therefore NUMSA’s submission that this is what we have experienced from Minister Pravin Gordhan, not only at Eskom, but he has done the same at SAA.

We are calling on the President to do the country a favour and redeploy Minister Pravin Gordhan away from our critical SOE’s and it stands to reason that the current board needs to go. We are calling on the board as a collective and as individuals to resign, failing which we might be left with no option but to approach a court of law to remove them from Eskom as their attempt to run such a sophisticated institution without the necessary skills, and their lack of experience has been very costly to the country and the economy.

All critical sectors of the economy such as mining, manufacturing, smelters, foundries lost millions of rands. This includes SMMEs who will never recover from this disaster of load shedding. What is going to follow is the retrenchment of workers across all sectors of the economy. NUMSA is convinced that the behaviour and conduct of this board – including senior management, has been reckless and completely undermined what is supposed to be their fiduciary duties. If anything, we see the board as delinquent directors who should be held personally responsible for the reckless and irresponsible leadership they have demonstrated at Eskom.

This unforgiveable recklessness of load shedding is not only going to destroy much needed jobs, but it is pushing the country into an economic recession. No doubt, against the backdrop of Moody’s rating agency which has given the country 3 months’ notice to turn the economy around or face a downgrade. This has become free ammunition to throw the economy into a junk status and will serve as an impetus to drive the obvious agenda of Minister Gordhan to unbundle Eskom to meet their target of 31 March 2020.

It is not a secret that Jan Oberholzer, who is masquerading as a Chief Operating Officer (COO) has never run generation as he comes from a distribution background. He used to sell electricity. He cannot be the one who is at the helm of overseeing the core business of Eskom. If truth be told, the new GCEO Andre de Ruyter is just a lawyer who came to increase costs and he also has no clue on how to run Eskom, let alone turning around any plant. All that he did at Nampak was to simply auction a number of Nampak divisions. The big question is therefore: why has he been brought to Eskom at a time when Eskom needs a competent, qualified Engineer to drive a turnaround strategy?

This leads us to the conclusion that the current load shedding which could have been completely avoided, is deliberately being allowed to create this economic crisis to justify the escalation of the connection of more IPP’s onto the grid. This is exposed by the fact that Minister Pravin Gordhan, the DPE and the board have no plan to turnaround Eskom as we know it. The fundamental question to Minister Gordhan and the Eskom board is: where is the turnaround plan for Eskom?

The only obsession and plan which they have is the plan to connect more IPP’s to the grid. This breaking up or unbundling of Eskom does nothing to fix load shedding, Eskom’s indebtedness, declining sales volumes, the high cost of primary coal and IPP’s. In fact, what is not being said is that the whole mission of this unbundling is about taking away Eskoms Transmission Operations, the entire national grid, Eskom’s control centre and the system operator and generation assets (hydro stations including Peaking plants, which are necessary for grid stability) under the ownership of ISMO.  Furthermore, this new Transmission entity wants to be in charge of the IRP and the IPP procurement office.

The whole mission is to fast track more IPP’s onto the grid which is the ultimate plan behind the unbundling of Eskom which has nothing to do with a plan to turn around the entity and address its glaring challenge of declining sales.

It is against this background that NUMSA calls on the President to take drastic measures against the board and ensure that Eskom has leadership with the necessary requisite skills. In the immediate the President must convene a meeting of NUMSA, NUM, Solidarity and all competent Engineers from Eskom with one item on the agenda: to put together a team consisting of Eskom engineers including all those who have been marginalised by the current leadership and those who left but have solid knowledge on how to save Eskom. Their task must be to end load shedding with immediate effect. We are further calling on the President to respond to the following demands:

1.  NUMSA demands that government cancels or re-negotiate coal contracts, IPP contracts Bid Windows 1,2,3 and target no less that R10 billion year-on-year on the IPP costs.

2.  We demand that government must move swiftly to setup an Eskom renewable energy company that will be allocated 70% of the built programme of the IRP 2019. 

3.  NUMSA wants to reiterate that the so-called plan or roadmap presented by Minister Gordhan is not an Eskom plan, but an IPP plan as it is promoting the establishment of a transmission company owned by the state by March 2020 whose single mission will be to grow more IPPs. There is absolutely no scope to grow Eskom as all Eskom power plants will be decommissioned and replaced with expensive, pathetically unreliable IPP’s.

4.  NUMSA demands an Eskom plan which will increase Eskom sales volumes. We reject the opportunistic pressure and propaganda that has been mounted by IPP soldiers of fortune who are putting pressure on Minister Gwede Mantashe, without any scientific basis, that he must continue to load more IPP’s on to the national grid.

5.  We are calling on Minister Mantashe and the President to remain firm and resolute in providing leadership that ensures that we have an energy mix in the country where all sources of energy including nuclear must be up for debate.

6.  NUMSA repeats its demand that the Eskom plan must be very clear and speak to how it will reduce Eskom’s primary coal costs, IPP costs, primary energy costs and diesel costs.

7.  NUMSA calls on all South African citizens to join in on our principle demand for a move toward renewable energy, but that this must be a just transition as a cost and pace the country can afford.

8.  We demand that the current IRP must ensure that Eskom owns 60% to 70% of renewable allocations of the IPPs, which could be defined as a socially owned renewable sector.

NUMSA wants to put on record that there is no alternative to fixing and turning around Eskom. There are many fly by night specialists who present themselves as specialists of alternative forms of energy such as solar panels, IPPs in the form of wind, sun, etc. What is often not shared is the cost of installing solar panels especially in light of many people being unemployed and communities being victims of Eskom’s power cuts.

It is our position that the National Treasury must move away from austerity measures and increase budget allocations to Municipalities so that they can develop Local Economic Development programmes in order to create jobs and that communities and municipalities can be able to pay Eskom’s high electricity tariffs.

In essence, what NUMSA wants to sharply raise is that those who want to present IPP’s as the panacea of our energy challenges, are misleading the nation. The obvious weaknesses and challenges of REIPPs are that they are pathetically unreliable and the energy supply is intermittent due to its dependence on weather patterns. Furthermore, the REIPPs will weaken the grid reliability strength. This is the reason why there is not replacement for an energy mix which meets the energy demands of the country.

It is against this background that NUMSA rejects the clumsy and opportunistic closure of Eskom power stations which is going to destroy jobs, and is at the core of the crisis of load shedding. We reiterate that we are not against the movement from fossil fuels to renewable energy but we are firm in that there must be a Just Transition and that when renewables are implemented they must be at a cost and at a pace that the country can afford. We need a socially-owned renewable energy sector which is why we are firm that Eskom must own and control 70% of REIPPs in the IRP 2019.

The NUMSA Central Committee (CC) resolved that in the first quarter of 2020, the union will serve a Section 77 notice and we have already resolved jointly with the National Union of Mineworkers (NUM) to embark on rolling mass action. We will be calling on our federation SAFTU and we will be making a clarion call to all other federations including Cosatu, that there is absolutely no reason why workers should not take a stand and embark on the mother of all battles in the form of a national strike to defend our energy sector, in particular Eskom, and to fight against the privatisation of all our SOEs such as Transnet, PRASA and SAA.

For this programme to succeed, NUMSA is calling on all workers across all sectors of the economy, the employed and unemployed to ready themselves for this important rolling mass action in the history of our struggle.

Aluta continua!

The struggle continues!

Statement issued by Irvin Jim, NUMSA General Secretary, 14 December 2019