Eskom enters a new year with no chief executive.
Molefe, hailed by many from various sectors as the saviour of Eskom who did
away with load-shedding forever, has resigned. Molefe’s resignation followed
shortly after a controversial report by the Public Protector on state capture,
in which Molefe and Eskom featured prominently. For Molefe, the shadow cast was
seemingly too long and it appears he decided to get out of the spotlight.
acting CEO Matshela Koko, who has taken to using social media to express his
views on energy matters, focusing on renewable energy, nuclear power and
transformation. In reading his tweets, it becomes a little clearer what Eskom
might look like should Koko be appointed CEO permanently.
CEO essentially has three messages. First, he is a huge fan of nuclear energy.
Second, he is not a big proponent of renewable energy and SA’s Renewable Energy
Independent Power Producers Program (REIPP). He believes renewable energy is
In terms of
the REIPP Eskom must buy electricity from independent contractors at rates
determined by the National Energy Regulator (Nersa). Koko seems to believe that
the rates the IPPs are paid are too high. He says Eskom will never pay more
than 77c per kilowatt hour (kWh) for (new) wind and solar power contracts. He
also states that Eskom’s target is 62c/kWh. He tweets that “more than that is a
Eskom has enough surplus capacity on its system to no longer deem it necessary
to negotiate (further) contracts with independent energy suppliers. At the same
time, Koko is pushing very hard for a new nuclear build programme – harder than
any other person to occupy the CEO position in any capacity before him.
Sadly, he is
silent on the cost implications such a venture. The potential cost per kilowatt
hour for a new nuclear reactor will most definitely be far in excess of
message relates to transformation and it seems Koko is very determined to drive
ANC policy ideas – nothing has been formalised yet – to the hilt at Eskom. One
example is the comments on coal mining giant Exxaro’s plans to reduce its black
ownership from 51% to 30%.
procurement policy has shifted to one where the company only wants to buy coal
from majority black-owned suppliers.
Exxaro has been one of the biggest and most transformed Eskom suppliers. Koko
seems to ignore the fact that Exxaro’s (majority black) shareholders voted in
favour of reducing the black ownership of the company. Without any insight into
why Exxaro may need to do this transaction, Koko just says that Exxaro is
showing “Eskom a finger”.
major change is that Koko’s Eskom is cutting off rural municipalities for not paying
their debts. The interruption of electricity supply is presently mainly
occuring in the Free State, North West, Mpumalanga and Northern Cape.
compelled to resort to this step in consideration of Eskom’s financial
sustainability,” Koko says in a statement on the matter.
Eskom’s debtor analysis, the action does seem needed now more than ever.
According to the analysis – available on the utility’s website – for the
financial year to 31 March 2016, municipalities owed Eskom R11.3bn. The interim
results for the six months to 30 September 2016 show that matters are getting
worse and municipal debt has increased to R15.4bn. A real curiosity is that he
is cutting off these poor rural municipalities while yet, to date, there has
been no discernible action taken against the suburb of Soweto, whose debt is
rampant – and still increasing.
For the 2016
financial year to 31 March 2016 Soweto owed the paratstal R4.7bn (excluding
interest). For this period, Eskom stated that the average Soweto collection
level had improved from 16% to 18%. That means 18 out of 100 electricity
consumers in Soweto were paying their bills.
interim results for the six months to 30 September 2016 show that Soweto’s debt
has increased to R5.1bn, of which R4.8bn is older than 60 days. In addition,
the power utility notes that the average Soweto collection level has again
declined from 18% to 14%.
insists that it is dealing with the issue by waiving debt as an incentive for
consumers to convert to prepaid meters. If this were a successful intervention,
surely Soweto’s debt wouldn’t be going up? Also, if Sowetans can get debt
waived, why not poor rural municipalities?
Eskom’s 180 000 clients in Soweto getting such preferential treatment?
Styanauthored a book on the energy crisis titled Blackout: The Eskom Crisis, published in 2015. He writes here in his
This article originally
appeared in the 2 February edition of finweek. Buy and
download the magazine here.