The political capturing of Eskom started in earnest in 2008 when the company started handing out tenders and contracts for its new build program which at that time was worth around R385bn over five years, writes James-Brent Styan.
The Eskom crisis is the ANC's fault. Sorry. It just is. And no, I'm not even referring to all the warnings over the years that the country would run out of electricity; warnings that were largely ignored. That was long ago. I'm talking about the current crisis. Let me explain with the facts.
1. Cadre deployment
It starts with the appointment of state-owned enterprise (SOE) boards and the leadership of those entities. For parastatals like Eskom, the ANC, as the ruling party, holds all the sway and no candidate can get to be on an SOE board without the ANC's approval. This, by the way, happens at every other parastatal including the SABC (think Hlaudi Motsoeneng) and SAA (think Dudu Myeni).
At Eskom the continued and damaging political interference from the ruling party has seen the company have six different boards and ten different CEOs over the past ten years. Over the same period we have seen six different ministers of public enterprises and seven different ministers of energy. One ex-DPE minister was Barbara Hogan. In November 2018 Hogan testified at the Zondo commission of inquiry into state capture about her time in the hot seat. She described the conduct of President Jacob Zuma as reckless, negligent and designed to frustrate governance at SOEs.
Hogan was asked why she believed she was fired as minister in 2010. "It's my firm belief that my resistance to the strong views of president Zuma in relation to the appointment of certain preferred candidates to the positions of CEO brought him to the conclusion that I would not do his bidding," she said.
Hogan testified about the ANC's role in making key appointments at parastatals and said it became apparent that the ANC considered the cadre deployment policy as their right to instruct ministers. "I regarded this as an abuse of power and usurping the authority of the minister and the Constitution," said Hogan.
She was fired, by the way, in the presence of the ANC's secretary general, Gwede Mantashe.
2. Blocking and delaying key legislation
The revolving leadership door in all these positions of power meant critical energy and electricity legislation including, for example, the key Integrated Resource Plan, was either delayed indefinitely or scrapped. Another example is the ISMO Bill that was introduced in Parliament in 2010. Its purpose was to dismantle Eskom's monopoly as the sole purchaser of electricity in South Africa.
The ISMO Bill was meant to allow Independent Power Producers (IPPs) to feed into the national grid, or to feed power directly to consumers, thereby reducing pressure on Eskom's generation capacity. The bill was even drawn up and completed in Parliament but was finally withdrawn thanks to the ANC using its majority power, before it could be processed in the National Assembly.
Former DA MP Lance Greyling fought a long battle to get Parliament to vote on the bill just to see his efforts come to nothing.
"The ISMO Bill was consistently blocked from being processed. It would nurture a more competitive environment in the energy sector, reduce electricity costs, deliver more stable and efficient electricity and create real jobs for the poor," he said.
Without key policies the country has been driving blindly in the dark on a clifftop.
3. Involved with procurement – Chancellor House
The political capturing of Eskom started in earnest in 2008 when the company started handing out tenders and contracts for its new build program which at that time was worth around R385bn over five years. The Eskom build is the biggest capital program ever embarked upon in South African history, dwarfing the arms deal's paltry R30bn.
The ANC got directly involved via an entity known as Chancellor House Holdings which was the empowerment partner to a power company called Hitachi Power SA. Hitachi Power Africa is a subsidiary of the German-based Hitachi Power Europe GmbH and was established in late 2005.
In 2010 Hitachi Power SA – along with its ANC empowerment partner – won two mega boiler contracts from Eskom worth R38.5bn for Medupi and Kusile. In 2014 the ANC's investment arm ended its relationship with Hitachi Power Africa. But the contracts had been awarded and remain ongoing. Should they have been awarded at all? In December 2018 Minister Pravin Gordhan confirmed that the Medupi and Kusile power plants were not functioning optimally and said the blame should go to contractors. Eskom's chief operations officer Jan Oberholzer has suggested that the company would seek answers from Hitachi.
4. Soweto debt
Soweto owes Eskom R17bn in unpaid debt, as much as all the rest of country's municipalities combined. Soweto has never been cut off. Meanwhile poor rural municipalities are cut off regularly. Sowetan debt has been scrapped twice in the past, so this R17bn is new debt, not legacy debt.
There can be only one explanation for the double standard and that is the massive voting bloc that Soweto is for the ruling party. And yes, R17bn is significant to a company struggling to pay its debt obligations.
Finally, and this is less of an indictment of the ANC and more a criticism of the president who came into power on a wave of Ramaphoria. In December 2014 Zuma put Ramaphosa in charge of a War Room meant to fix Eskom.
Instead, since Ramaphosa became president, the country has seen significant load shedding – including at a level never before seen: stage 4. This can perhaps be explained away, for example, by accusing unions of sabotage, but what can't be explained is the president's comments in a recent interview that he is "shocked" at the Eskom situation.
One would have hoped that the president is being briefed regularly if not daily about the Eskom situation given the clear vulnerability and risk to the economy. Yet it seems the president is largely unaware of how dire things really are. It appears to be a massive Ramafailure.
Ps. How dire are things really? Perhaps Eskom's recently published stage 8 load shedding schedules should give us an idea.
- James-Brent Styan authored a book on the energy crisis called Blackout, The Eskom Crisis published in 2015. He writes in his personal capacity. Follow him on Twitter: @jamesstyan
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