As National Energy Regulator of South Africa (Nersa) kicks off the second day of public hearings in Cape Town, energy expert Ted Blom is appealing to South Africans to submit their comments on Eskom’s proposed electricity tariff increases. The hearings will be held in all nine provinces and run until February 24.
On Monday, various structures gathered at the Southern Sun Hotel where Eskom defended its application for 16.6% tariff hike for electricity consumers. It is pushing for a 10- to 15-percent increase in electricity prices next year, followed by increases of 50-percent over the next few years. This is meant to service R27 billion toward its current debt which reportedly exceeds R400 billion.
Aside from the attendance of Nersa and Eskom; there were also local entities representing townships and around five different independent power producers who held presentations. Agri SA also attended and pleaded with Eskom to find an interim relief to load shedding, stressing its devastating impact on business operations that ultimately threaten food security.
Apart from the staggering debt, the ailing power utility has come under fire for mismanagement, corruption and load shedding. On 10 December last year, South Africans were appalled by Eskom’s execution of Stage 6 load shedding, which sheds 6,000MW from the power grid and left most of the country in the dark for several hours at a time.
Eskom had thereafter released nearly daily statements on proposed load shedding, with Stage 2 inevitably kicking in at the start of February.
Due to what Blom described as “intense interest”, Cape Town’s hearings were extended over two days. The expert, who boasts more than 30 years of experience, slammed Eskom’s proposed tariff hike as “unconstitutional”, emphasising the immorality of demanding money from 3-5 years ago that consumers didn’t owe at the time.
“I made a statement at the hearing (on Sunday) that it is retrospective increases of very real disruptions of the economy because you cant recover the money (from) a customer that paid you the old electricity tariff has disappeared and will klap (smack) you if you come with a new claim for more money from a past sale-but Eskom gets it right every time,” exclaimed Blom.
He noted that Nersa acknowledged the relevance of his statement but admitted that it was still bound by regulations.
Blom said the other issue which took centre stage was the embattled utility’s history of ‘alleged’ corruption.
“I made the contention that the very department standing in front of us asking for R27 billion, had itself omitted to tell us that they had bribed Deloitte with R300m worth of illegal tenders. I wanted to know from them how they, with straight faces, could ask us for more money and tell us there’s no corruption within Eskom,” said Blom.
Blom was referring to Eskom’s then-chairman, Jabu Mabuza’s explosive testimony in October 2019, where he accused Deloitte of engaging in “pure corruption”, with former Eskom executives to secure consulting deals to the tune of R207 million. Deloitte is one of the “Big Four” accounting organizations in the world and describes itself as a multinational professional services network with headquarters in London, United Kingdom. It is understood that Eskom’s civil claim against Deloitte surrounds the payment of just under R60 million for only three weeks of ‘dubious’ work on two projects in 2016.
“Eskom is still captured, people mustn’t forget that for one moment. They’re ducking and diving, not answering the questions ethically and honesty. The problem is the people with smug smiles and faces sitting in front of the hearings are the very people who have not whistle-blown for 10 years of the corruption at Eskom, they’re taking fat salaries of multi-millions Rands each and honestly, as far as I’m concerned, those are the people we don’t need in Eskom,” said Blom.
Blom likened a resolution to South Africa’s load-shedding to repairing the much needed yet broken-down ‘car’ that is Eskom. The expert stands firmly behind his belief that repair to the utility will require the South African government to invest in imports in order to keep the lights on.
“The coal contracts haven’t been signed yet because, as I said, there is a lot of corruption in the coal department. You need to take the car off the racetrack so you can re-do the engine properly, refurbish it, fix the wheels, fix the steering, everything. I agree with (Andre) de Ruyter that you need space,” said Blom.
Blom explained that there are processes that need to be followed in order to acquire the equipment needed for repairs to take place. Not only do these take time; but the transport, construction and cost may become added barriers. He explained that the turbines alone are 15 meters in size of and will need to be shipped.
“The issue is how do you create this space? I’m saying that load shedding is so disruptive to this negatively growing economy that we can’t afford it. We need to import 5 Gigawatts of spare power- in other words a ‘spare racing car’ while the other is being fixed. We rent that on a monthly basis to give Eskom enough time,” he suggested.
Loadshedding has also caused an uproar from many local and corporate businesses, who have cited sometimes drastic deficits.
“In the mining industry, if they know there’s load shedding, they can’t with a clear conscious send their workers underground. They can’t even start up the smelters because if there’s load shedding, those pots would freeze, and it will take you six months to unfreeze them but chipping them away. We don’t have choice; we need to import power to give security of supply to our heavy industries otherwise they’re going to shed another 3 million jobs,” explained Blom.
During a media briefing by Eskom’s newly appointed Andre du Ruyter, it was explained that load-shedding may become a norm. However, du Ruyter is confident that the utility will pull through and announced that Eskom faces unbundling which would allow individual issues to be tackled.
The new CEO said the appointment of boards for Eskom’s generation, transmission and distribution divisions could be finalised as soon as next week. Blom however, is not convinced this will work, saying that repair would take at least five years.
“With respect to de Ruyter, who’s got only a month’s experience at Eskom, I would eat my hat if he is able to refurbish 120 boilers at a pace of 90 days per cycle within 18 months. I don’t think its possible- the parts are custom made from overseas, you have to get into the que to have the parts made, the historic timeline is waiting 18 months for parts to be made for these big generators. Eskom has got at least 10 damaged shafts because of neglect and incompetence of engineers.
“I think it’s at least a 5-year recovery period, irrespective of the coal thing. That’s a different issue because it’s on the fuel side- if they don’t fix the fuel, they’re going to mess up the (machineries) anyway.”
At Monday’s hearing, participants questioning Eskom’s operational shortcomings were told that the technical questions will have to be answered at Wednesday’s hearings in Port Elizabeth, as the technical team was not in Cape Town.
“It’s a similar thing that happened last year (2019) we asked a lot of questions about availability- Eskom had hidden the disastrous availability at Mudepe and Kusile (poor stations) from the public. They put the tables up in Port Elizabeth and they showed that Mudepe could only achieve 65% of its target availability and Kusile- a disastrous 20%. In fact, 19.1%,” said Blom.
“Eskom always blamed the old plant. Here was their brand-new plant not performing, in fact performing worse than the old plant.”
“Unfortunately, it’s not a continuum. So, we ask the questions in Cape Town and for those people who don’t go to the PE hearings, they’re going to miss the answers. I intend monitoring it and I will go public with the answers,” he added.
Blom noted the significance of public hearings in holding those in power to account.
“At least it opens up a forum. The fact of the matter is that it doesn’t win you any friends. What I picked up at the presentation is that Eskom is getting a bonus for exceeding its coal budget by 14 billion- they’re claiming another R2b for prophetic cost controls.”
“If you don’t have these hearings, these things don’t come out and you don’t have the interrogative environment where you can actually put your questions. If Nersa plays its role, they have to answer those questions,” said Blom.
As a result of intermittent, ongoing load-shedding, many citizens are investing in alternative energy sources. For several months Blom has proposed an audit of Eskom to root out any problematic individuals to make way for sustainable solutions.
“I think the public has had enough. (They’ve) now learnt that, with democracy, if you don’t stand up, you’re going to be told to shut up and pay. If you can’t afford these increases and you agree with me that they’re not justified and warranted, we need a clean for forensic audit before we can even think of paying more. Certainly, the unions are already there,”
“I’ll have a big chance at the Gauteng hearings where I’ll take up all the questions that arise in the eight previous hearings. It seems to me that the government is feeling the heat of the disruption of energy shortage in the industry.”
Blom has appealed to the public to comment on the tariffs, to assist in his presentation in Gauteng on the 21st February.
“It’s all hands-on deck, it’s getting rough. We need public support. Eskom has 5 million customers more or less. if I don’t garner even 20% of the vote behind me, it makes it very difficult for me to stand up there and tell the panel that I’m representing SA citizens. This is a democracy, if you keep quiet, you will not be heard. You need to stand up,” appealed Blom.
Nersa is expected to make a decision on the tariff hike by 27th March, which Eskom is expected to implement on April 1st.