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5 things on De Ruyter's to-do list as he starts at Eskom

Jan 06 2020 14:26
Lameez Omarjee

As Andre de Ruyter officially begins his role as the new Eskom CEO, some energy experts have agreed that no single person is capable of solving all of the power utility's problems.

In frank terms, one such an expert - Chris Yelland - said that it should not be expected for De Ruyter to solve the operational issues and load shedding, by a "wave of a magic wand".

"Eskom is not a one-man business. There is nothing he can do with immediate effect that is going to change the immediate operational performance of Eskom," Yelland told Fin24 by phone on Monday morning.

De Ruyter's appointment was announced by Public Enterprises Minister Pravin Gordhan in November, 2019. While Cabinet supported the appointment, responses from the public was mixed – with detractors such as the Economic Freedom Fighters and trade union Numsa labelling De Ruyter's appointment as anti-transformation.

De Ruyter is now starting in his new role 10 days earlier than planned, following calls from Cabinet after the re-emergence of load shedding in late December which then escalated to unprecedented Stage 6 power cuts.

Despite President Cyril Ramaphosa promising no load shedding over the festive period – until January 13, 2020 – Eskom introduced stage 2 load shedding on Saturday night due to a conveyor belt failure at Medupi power station. Load shedding was implemented right through Sunday until early on Monday morning.

Eskom at this time will not be issuing comment on De Ruyter's first day on the job, but several other energy experts have shared insights on what the new CEO should prioritise.

1. Inspire an Eskom team

"He is the CEO and his job is to build a team around him of very competent, capable, people who he can work with, trust and rely on," Yelland said.

"It is not him that is going to save Eskom – it is the team around him, and they have to drive the new vision and inspiration through to the different layers of management, down to the power stations and to the remote distribution centres," Yelland explained.

The energy expert believes that De Ruyter should focus on the long-term strategy and structure of the power utility. Yelland added that De Ruyter will have to "revitalise" morale at the organisation too. 

In the same vein, energy expert Bryan Majola also emphasised leadership. Majola, who is also a board member of the South African Energy Efficiency Confederation, suggested that De Ruyter deal with governance issues at the power utility and ensure those guilty of wrongdoing are punished. 

2. Solve technical problems at Medupi Power Station

Government and Eskom have said that De Ruyter will lead the reorganisation of the power utility into three entities – generation, distribution and transmission. However, independent energy expert Lelo Mdhladhla has put forward that De Ruyter rather focus on immediate issues such as ensuring security of energy supply, as the load shedding crisis warrants it.

Most load shedding incidents in 2019 resulted from breakdowns or technical failures at the Medupi Power Station, Mdhladhla told Fin24 by phone on Monday. One issue in particular was the breaking down of a conveyor belt at the power station – in October 2019 and most recently in the first few days of 2020. "They need to look at fixing the mechanics of Medupi Power Station," Mdhladhla said.

Majola similarly called for technical failures at both Medupi and Kusile to be resolved urgently.

These two multibillion-rand power stations were first commissioned in 2007 and were meant to bolster electricity supply. The opposite has happened.

3. Improve planning for maintenance

Mdhladhla said Eskom turned to load shedding during unplanned breakdowns, because other power stations were not available due to maintenance. He explained De Ruyter should ensure maintenance is scheduled in a way that power supply is not impacted negatively in the case of unplanned breakdowns.

Hilton Trollip, a researcher with UCT on energy policy, said De Ruyter will have to improve Eskom's energy availability factor, which has been declining steadily. De Ruyter will have to make sure that the average availability of the power plants improves – and this will require changes at management level.

4. Secure 5 000 MW additional power

Gordhan has previously said Eskom needs an additional 5 000MW to bolster capacity. Mdhladhla commented that De Ruyter must "accelerate" the procurement process for this power.

Yelland explained that many of the issues Eskom is facing, applies to the electricity supply industry as a whole. These are policy and regulatory issues which go beyond Eskom and fall on government.

"Many of the immediate solutions SA needs cannot be implemented by Eskom. They can be implemented by changes in policy," Yelland said. These policy interventions include allowing for independent power producers to join the national grid. Yelland explained by allowing customers, IPPs and municipalities to join the grid, it will help relieve the generation burden on Eskom.

Similarly, Trollip suggested that with more power on the grid, there might be less load shedding. "Eskom and the department of energy, mainly the department of energy, are stopping a whole lot of South Africans from connecting their own generators to the grid to give us all power, while there is a massive shortage. This is nothing short of scandalous," said Trollip.

5. Hit back at political interference

Intellidex head of capital markets research Peter Attard Montalto said that De Ruyter should first get to grips with the organisation. "His priority is to understand the limitations of what Eskom can do and what energy policy needs to do with the private sector. Otherwise he will simply be chasing his own tail," Montalto told Fin24 in an emailed response.

The new CEO is going to have to "define a clear separation" for his role and that of Eskom executives against what Montalto described as "micromanagement" by the Department of Public Enterprises.

Trollip is also of the view that De Ruyter will have to establish the autonomy of his executive management team so that they can do what needs to be done without political interference.

"The issue with Eskom over the past 12 years is that the executive team has been interfered with hugely," he told Fin24 via phone.

Trollip said that a number of government department policies are not aligned. "The first thing he (De Ruyter) is going to have to do is assert the necessary autonomy to get the executive team to develop their own plan, based on their own expertise which they are hired for and then to pull together," he said.

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