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Eskom, Then and Now

Updated: Feb 7, 2023

Electricity was publicly used in South Africa for the first time with the opening of the electric telegraph line between Cape Town and Simon's town on 25 April 1860. It was built for the benefit of shipping and commerce. The line itself was a single galvanised iron wire mounted on wood poles with porcelain insulators.

The first central power station in South Africa came online in 1891 due to the conclusion being reached that a "central station supplying public or other buildings by means of transformers" would be more efficient than a number of individual lighting plants. This led to the Table Bay Harbour Board building which constituted South Africa's first central power station and distribution system.

With the discovery of gold on the Witwatersrand, and the ever-increasing demand for electrification as these mines delved deeper underground, the notion of a central electricity undertaking gained support from businessmen, engineers and others. This culminated in the establishment of the Victoria Falls Power Company Ltd (VFP) in 1906. By 1915, four VFP thermal power stations – Brakpan, Simmerpan, Rosherville, and Vereeniging – had been built with a total installed capacity of more than 160 megawatts.

Even at this early stage, the Transvaal colonial government put a limit on the existence of the VFP, providing for the state expropriation of the company, or any other electricity undertaking, after a period of 35 years. The Power Act was introduced on 28 May 1910 as the state viewed the provision of electricity at the public service to be placed under its authority.

In 1923, the Electricity Supply Commission (ESCOM) was founded by Dr HJ van der Bijl. He borrowed R16 million from the State and began putting his plans into action. From the outset the undertaking was a success and within 10 years, Dr van der Bijl was able to pay back the State loan. Under his expert guidance, ESCOM progressed from strength to strength and within a short period of time, Dr van der Bijl was able to fulfil his promise: South Africa was assured of sufficient inexpensive power for its fast-growing industries.

Right up until the dawning of South Africa's all-inclusive democracy in 1994, Eskom continued to supply the country with some of the cheapest, most reliable electricity in the world. In the period 1960 until 1992, Eskom installed 19 power stations. That means every 20 months, a new power station came online – on time and on budget! Eskom was so successful that by the end of 1990 it was supplying more than half the electricity in Africa. In its 1994 annual report, it proudly promoted the fact that it was the world's lowest cost producer of electricity.

In a foreword to a book all about Koeberg, Dr John Maree wrote that in the period between 1960 and 1994, Eskom was able to reduce the real price of electricity by 35 percent, and they could foresee that by the end of the century i.e. the year 2000, they should be able to reduce the real price of electricity by another 10 percent.

Eskom produced 56 gigawatts of electricity with 17,000 employees in 1994.

So, what went wrong? Today, in 2023, we struggle with daily blackouts and some of the most expensive electricity prices in our history. How did we, as a country, take a utility that was among the best on earth a mere hundred years ago and, effectively, destroy it?

Chronic power failures began back in 2007, and the term "load shedding" was euphemistically coined. But this was just a result of what had come before. In 1998, a white paper was drafted by the Department of Minerals and Energy and the then Minister, Dr PM Maduna. In this document, it was stated that as of the time of publication, approximately 60 percent of South African households had access to electricity and, with regards to making up the shortfall as well as the projected growth of the population of the country, we would have to prioritise the building of new power supply units as a matter of urgency over the next 10 years. His successor, Phumzile Mlambo-Ngcuka, pretty much ignored the recommendations of this document stating that "it will never happen" and that "we have enough supply". If a finger of blame is to be appointed, it would start with her, a shortsighted woman appointed according to the ANC cadre deployment policy with absolutely no qualification regarding the portfolio that she was entrusted to oversee.

As embarrassing as it was for then president, Thabo Mbeki, to have to issue an apology to the nation on his government's lack of foresight in terms of generation capacity, and the timeframe in which it would become overused, the worst was yet to come. As per the findings of the Zondo commission into state capture, the single biggest contributor to Eskom's destruction post 1994 was ex-President Jacob Zuma and his cabal of cronies.

According to the findings of the Zondo commission, former President Jacob Zuma knowingly and willingly facilitated audacious looting and wanton mismanagement at Eskom during his almost 9 year rule. Eskom entered into irregular contracts with R14.7 billion mainly with entities linked to members of the Gupta family, who were Zuma's friends and in business with one of his sons.

"The evidence proves a scheme by the Gupta's to capture Eskom, install the Guptas' selected officials in strategic positions within Eskom as members of the board, the committees of the Board and the executives, and then divert Eskom's assets to the Guptas' financial advantage. Central to the Guptas' scheme of state capture was President Zuma, who the Guptas must have identified at a very early stage as somebody whose character was such that they could use him against the people of South Africa." – Chief Justice Raymond Zondo

The judge recommended that prosecutors consider filing criminal charges against former Eskom CEOs Brian Molefe and Matshela Koko, ex-chief financial officer Anoj Singh, and some members of its 2014 board.

At the time of writing this blog piece, Molefe had been arrested on unrelated corruption charges. Koko, his wife, and stepdaughter were also arrested. Sing, too, had been arrrested.

Right now, Eskom is weighed down by about R400 billion of debt and unable to afford to properly maintain its aged plants, it continues to subject the nation to rolling blackouts to prevent the group from collapsing, curtailing economic growth and deterring investment.

President Cyril Ramaphosa, who succeeded Zuma, estimates that more than R500 billion were stolen during his predecessor's tenure. However, considering that he was Zuma's deputy president, I find it hard to believe that he knew of nothing that was going on at the time. I find it even more difficult to believe that he, himself, didn't benefit from state capture in some way. Yet, the ANC has gone out of its way to put distance between him and his predecessor on every level.

As Dr van der Bijl showed all those years ago, Eskom can be restored to its former glory, but in order for this to happen, a few things have to happen first in terms of policy, both within government as well as within the utility. As of March, 2017, Eskom employed about 47,600 people, compared with 32,600 a decade before. To compound the problem, this bloated workforce is being paid about double the norm in 35 other countries on the continent, at around $61,000 per employee per year. A World Bank study in 2016 found that Eskom is potentially overstaffed by as much as 66 percent, or around 15 000 redundant jobs.

Trade unions balk at talk of job losses. Government does not want to be seen as overseeing a retrenchment campaign. And potential investors are increasingly skittish at the mismanagement on display at the utility. However, if Eskom ever wants to revisit its heydays, it is going to have to deal with the problem it has regarding overstaffing and inflated, unjustifiable salaries.

Ultimately, the government of 2023 may not be capable of turning the fortunes of Eskom around. It may be wholly hamstrung by its own internal policies, based on the tenets of communism. It may be that we need to change the discussion in terms of what is sustainable, and the hard decisions that will have to be made for us to realise our future, as a nation. As for myself, as much as I empathise with those stuck in positions at Eskom that are no longer justifiable, we cannot be held to ransom by a few fat cats as the rest of the country circles the drain.

My solution – we need to start to embrace entrepreneurial spirit, a free-market economy, and a culture of incubating excellence rather than trying to have the public sector effect transformation within our society all by itself. Our economy will not survive it. At some point in time, the poor will rise up to tell the privileged black elite that this was not what they voted for, and that they expect better from those who promised so much, yet delivered so little to so many.

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