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Ex-CEO sheds light on Eskom troubles

Feb 19 2015 09:30
Matthew le Cordeur

Sandton – Smart grids would create load management, where Eskom could manually turn off all pool pumps instead of load shedding, said former Eskom CEO Jacob Maroga.
Maroga was a panelist discussing "smart grids" at the Africa Energy Indaba on Wednesday, where he told delegates that if Eskom could go back in history and had called for 12 IPP plants instead of the two massive power plants, perhaps the country would be in a different scenario right now.

He spoke to Fin24 about the topic, as well as looking back at the history of Eskom and how it could climb out of its current predicament. (You can listen to the full interview below.)

A smart grid for load shedding

“If you make meters intelligent (which can identify different appliances) … and can be controlled remotely, what we’re doing as load shedding now could be done differently,” he said. “If we’ve got [a] smart grid, systems op control is able to press the button and just switch off all pool pumps.

“I’m sure we could go a long way without load shedding,” he said. “Then the next switch off could be geysers. So if you have smart technology that can go into commercial and residential and can discriminate between different appliances, you could do load shedding differently, without much disruption.

“I think over time, we will evolve there,” he said. “It will be called load management as opposed to load shedding.”

“Those technologies are already there,” he said.

Shopping centres and business offices could roll out this technology in the next few months, he said.

From CEO to energy expert

Medupi and Kusile were the biggest of their kind in the world, said Maroga, but have been marred with delays and he said South Africa would not be experiencing load shedding if they were operational.

Maroga must be one of South Africa’s leading minds on energy. The Wits-educated electrical engineer joined Eskom as a technical manager in 1995, just as the country was kick-starting its democratic dispensation.

His rise was quick. He was manager of distribution at Eskom from 1998 to 2000, MD of distribution from 2000 to 2002, MD of Transmissions from 2003 until 2007, and finally CEO of Eskom from 2007 until 2010.

He fell out with President Jacob Zuma’s cabinet and was fired under a veil of a voluntary resignation.

In his interview with Fin24, his views on “keeping the lights on at all costs” and halting maintenance for the 2010 World Cup were not positive, which could have been one of the reasons behind his loss of favour with the president. We will never know.

He has not had a good time since he left Eskom. He lost a court battle, where he sought damages of R85m over what he termed his illegal firing and this year Eskom took him to court to recover a loan of R2.4m, which he claimed he's paying back according to the agreed repayment scheme.

While his legacy at Eskom and his subsequent fall out may be questioned, his views and knowledge on the energy sector are probably worth hearing about.

An overview of Eskom

Maroga sat down with Fin24 in a disused booth at the Energy Indaba to retrace the history of Eskom when it was first set up as a commission nearly a century ago. He also looks at the issues it currently faces and what the likely solutions would be going forward.

Listen to the in-depth interview here:

He starts with the 1922 Electricity Act, which he says was mandated to create abundant and cheap electricity wherever was required without making a profit or a loss.

“It was supposed to create an electricity platform, where industry can take off,” he said. “And that mandate lasted for 60 years.”

He said the bulk of the power stations were built from the 40s to the 70s, where apartheid’s economic systems were boosting industry and so Eskom was keeping up with the growth.  

When sanctions curbed growth in the 80s, it impacted on Eskom, which was still building power stations to meet demand. The De Villiers Commission was set up and it concluded that Eskom couldn’t have an industry mandate of abundant energy - it must be run like a company. They changed the management structure as well as the legislature framework around Eskom.

This was the beginning of the Eskom as we now know it.

White paper on IPPs

He said the 1998 white paper to bring on board IPPs was excellent on paper, but very complex to execute. “In that paper, it anticipated that 2007 is coming and we are going to have a problem, because demand [was] growing and we [were] going to run out of capacity by 2007,” he said.

Nothing happened and in 2004, government went back to Eskom and told them to start building more power plants to meet demand. “Until then, Eskom was not supposed to build as they wanted to bring on board new players,” he said.

“It was a good plan. Bringing in new players means new foreign direct investment in the country, it brings new skills to the country, it creates a comparative platform for Eskom and there were many positives, but it just didn’t happen,” he said.

He said globally at the time the world was going through its own energy issues.

Project management issues

Maroga said that Medupi and Kusile were some of the biggest power stations in the world and that perhaps Eskom was taking on too much with little project management experience in this new area.

“If you have not been building for 20 years, it’s a problem,” he said. “It is now clear that those challenges are coming to the forth in terms of project management (it’s late) and in terms of cost escalation.”

Issues around maintenance was a 2010 issue, said Maroga. “Because of 2010 [World Cup], there was a decision to say, ‘let’s not do load shedding to do maintenance. So let’s keep on the lights and defer maintenance’.

“What we see now is plants breaking down because they were not being maintained,” he said. “So you now have a widening gap.”

He said the cascading issues of delaying plant construction from 1999, when they tried to get IPPs on board, to the delays with the current projects as well as the 2010 maintenance shut down have caused this situation.

“Now the idea is to try to claw ourselves back out of this,” he said. “Make sure you do maintenance, make sure you get Medupi running.”

IPPs will work without Ismo

Understanding what gets IPPs to come in is the big issue, he said.

“We are now getting experience with the renewables,” he explained. “They are now going for base load IPPs... it’s based on the experience we’ve had. I believe we can have the IPPs without the Ismo [Independent Services and Market Operator] bill.”

“It is complicated, we mustn’t trivialise it,” he said. “But you can still do a lot of IPPs in the current arrangement.

"I think IPPs will be the way to go," he said.

A player in the global nuclear supply chain

“Nuclear is a long-term energy security issue,” he said. “It takes time and it has to be done under guidance from a government programme.

“Nuclear also goes beyond energy,” he said. “When you do nuclear, you are putting [down] an industrial platform.”

The idea would be to be able to produce locally-developed equipment that can supply not only our nuclear capability, but also supply nuclear components globally.

“You we could become a hub of components of … valves [for example] that goes in your nuclear plant, but you supply the whole world,” he said. “That’s what China’s doing.

“We should be looking at that.

“I don’t think [nuclear] will affect IPPs,” he said. “There is still space for IPPs.”

eskom  |  load shedding  |  energy


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