Treasury/VGBE Report: Ramaphosa’s Energy Action Plan was wrong as it misdiagnosed coal power stations underperformance

3 March 2024

The National Treasury Report, prepared by Germany’s VGBE consortium on the poor performance of Eskom coal fired power stations has irrefutably confirmed that President Cyril Ramaphosa’s Energy Action Plan (EAP) completely misdiagnosed the challenges at these stations and pursued interventions that made their underperformance worse.

To regain lost ground and improve the performance of coal fired power plants in the short term, while investment in renewable energy generation is ramped up for long term energy security, the DA is calling for the immediate abandonment of Ramaphosa’s EAP and operationalization of the recommendations in the Treasury/VGBE report. Compared to Ramaphosa’s failed EAP, the Treasury/VGBE report was put together by ‘experts with decades of experience in the operation and maintenance of coal fired power plants.’

Launched in July 2022, the EAP made erroneous recommendations that failed to improve plant performance and saw the Energy Availability Factor (EAF) plummet to an all-time low. Some of the misdiagnosis included:

The misplaced belief that bringing the remaining units at Kusile and Medupi online will lessen loadshedding;

Focusing on securing spare parts from original equipment manufacturers and neglecting partnering with OEMs in running the new plants.

Increasing the budget for critical maintenance but limiting plant maintenance in order to keep the plants running at all costs.

While the unbundling of Eskom is essential, the EAP failed to address the complex personnel structure that has increased red tape and compromised technical efficiency at plant level.

In contrast, the Treasury/VGBE report – unencumbered by political bias, provides a realistic diagnosis of what has gone wrong at Eskom’s power stations and the evidence-based interventions needed to improve generation output, namely:

Partnering with Original Equipment Manufacturers to run the plants like Medupi and Kusile in order to ensure a continuous improvement process.

Urgent decentralization is needed in order to devolve management responsibility to power plant level. According to the report “This empowerment includes full budget responsibility and accountability of the Power Station General Manager”.

To reduce load losses, a comprehensive, systematic, and standardized maintenance approach is needed in order to improve plant performance. The current practice, according to the report, is that ‘The plants have been forced to continue operating at the expense of their technical condition.’

Due to technical competencies deficit at plant level, ‘…an interim external expert team… which reports directly to the National Treasury… should be permanently situated at each site to follow up key risk areas and intervene if required.’

If Eskom implements the recommendations contained in the Treasury/VGBE report, Eskom has a realistic chance of improving the generation output of Eskom power plants and reducing the energy deficit in the short term. However, if the ANC government continues to champion Ramaphosa’s discredited and redundant EAP – through the Minister of Electricity Kgosientsho Ramokgopa, the consequences will keep getting reflected in the high number of incidents, trips, and partial load losses.

Issued by Samantha Graham-Mare, DA Shadow Minister of Electricity, 3 March 2024