EFF statement on collapse of Eskom and loadshedding

17 October 2019

The EFF is not surprised by the failure of government to stabilise Eskom and electricity supply. There is no reason why the country should be experiencing load-shedding because demand for electricity is low seeing that it is summer: Eskom should be selling less electricity than it produces. The country is experiencing load-shedding because of the incompetence of Minister of Public Enterprises Mr. Jamnandas Gordhan, collapse of governance at Eskom and lack of strategic direction by the board.

The appointment of Mr. Jabu Mabuza as the Chairperson and Acting CEO of Eskom was the strongest indication yet of the collapse of governance at Eskom. We have warned in the past that the continued interference by the Minister in the affairs and management of Eskom will lead to a complete collapse. This is because the idea from the beginning is for Gordhan to privatise whatever is left of Eskom. Therefore, he cannot save the power utility, make it sufficient if the point is to privatize it.

In addition to self-inflicted governance problems, Eskom is facing serious cash problem. The money that Eskom was given in the past did not assist because there are power purchasing agreements with Independent Power producers (IPPs) for renewable energy that are not affordable to the consumer. Mr. Gordhan lied to Parliament and said that the renewables are cheap yet it is not true. The cost of IPPs is three times the cost of generation production and this cost is passed through to the consumers, affecting cash flow and demand.

Mr. Gordhan and his incompetent board at Eskom does not have the capacity, the political will and sophistication to comprehend challenges facing the power utility and instead resort to misguided simplistic solutions. The government cannot be trusted to guarantee small businesses that are losing billions because of load-shedding. To stabilise the governance of Eskom, increase electricity demand and ensure that there is no load-shedding, the interventions must be implemented:

1. Cancel all purchasing power agreements with IPPs with immediate effects.

2. Cancel all evergreen contracts with coal suppliers with immediate effect.

3. Maximum collection of revenue from companies that owe Eskom, in particular mining companies.

4. All coal mines that belong to Eskom must be brought under the operational control of a state-mining company, and prioritise supply of coal to Eskom at a price affordable to Eskom and the economy.

5. Appoint the CEO in an open and transparent process that will lead to the most suitable and qualified candidate to fill the position.

For as long as Eskom remain a target for privatisation by multination companies, South Africa will continue to suffer load-shedding that is choreographed to create an impression that the company is unable to deliver electricity and therefore must be sold. South Africa must remain vigilant and guard against theft of public assets.

Issued by Mbuyiseni Ndlozi, National Spokesperson, EFF, 17 October 2019