Opening remarks by Eskom Chairman Mpho Makwana – System status briefing and Winter Plan 18 May 2023

19 May 2023  

Distinguished guests, ladies and gentlemen, members of media houses, members of the public, and Eskom Guardians, on behalf of the Eskom Board, management, and employees, it is our privilege to brief the South African nation on the status of the electricity system and the winter plan this morning.

Our obligation as a power utility in South Africa, as required by the Grid Code and our licencing conditions by the NRS, places a responsibility on us to inform our customers of the status of the system when it becomes evident that the performance of our power system will adversely affect our customers. Under the Transmission Division, the National System Operator plays a critical role in ensuring the reliable and efficient operation of the power system by balancing dispatchable energy and ensuring the integration of renewable energy sources.

Our power system is severely constrained mainly because of poor performance of the Eskom coal fleet. The newly-appointed Mr Bheki Nxumalo and other executive colleagues will expand on this further. With the winter season upon us, the power system will be even more constrained. Weather forecasters anticipate a much colder winter season than experienced last year, which will result in higher electricity demand, as heating of our homes and spaces is required.

As has been stated in many previous updates, rotational load shedding is implemented from the National System Operator’s perspective to mitigate the probability of a total system collapse or a total country-wide blackout.

The Board of Directors, as reported in our update earlier this year, approved a 24-month Generation Fleet Turnaround and Recovery Plan, which is being implemented in earnest.

We are now 21 months closer to attaining the penultimate goal of 70% EAF by 31 March 2025.

We are in full support of Eskom management in their efforts to improve the performance and the life extension of the Generation coal-based power stations.

We fully comprehend the adverse impact of rotational load shedding on South Africa’s already fragile economy and its people. We are doing everything to mitigate the intensity of rotational load shedding, including taking lessons from the rest of the world. We have seen that effective rotational load shedding during winter months requires a co-ordinated effort among all stakeholders in a country.

South Africa has implemented a successful rotational load shedding programme that schedules power outages based on a rotating roster, ensuring that the entire country experiences equal downtime and the burden of rotational load shedding is spread across all regions and industries, We continue to draw valuable lessons from global best practices and country-specific case studies.

Lessons from Vietnam, Japan, and Australia provide useful insights on how we, as Eskom, government, and industry leaders, can improve electricity supply and resilience during winter. Eskom’s debilitating impact on South Africa’s economy and competitiveness is undeniable. The Board of Directors is working tirelessly with all our key partners and the Shareholder to turn the tide on this negative reality.

As you will see from management’s presentation, we are implementing a host of interventions ranging from improving our plant availability to increasing the utilisation of plants traditionally meant for peaking and intensifying interventions to reduce demand.

These interventions are critical for reducing the impact of load shedding in the short term.

However, more interventions are required to ensure sufficient energy to support South Africa’s economic growth in the medium term.

The Board, through the Business Operations Performance Committee, is working to assist the Generation team in ensuring that the recovery of the plant performance is sustainable. This includes improving our collaboration with industry, NECCOM, and several government departments. The generation recovery plan depends on focusing on the recovery of six priority power stations, namely, Tutuka, Majuba, Kendal, Matla, Duvha and Kusile Power Stations, while sustaining the performance of our best-performing power stations: Medupi, Matimba, Lethabo, and Peaking.

We have also seen improvement at Camden Power Station, one of our oldest power stations. We believe that, with dedication and focus, we can get similar results from Hendrina, Grootvlei and Arnot Power Stations.

We have stabilised leadership in the division by deploying experienced former power station managers to roles that give leadership and depth to areas of concern, including within our Primary Energy Division. The recovery of three units at Kusile Power Station is underway, and we should see the units returning to service the in November /December 2023. We also welcome the debt relief that we have received from the Treasury. It will certainly go a long way in ensuring that the capital (Capex) funding required to plan in time and execute adequate full maintenance and refurbishment required at existing power stations.

While we are expecting to go through winter for the first time this year without 960 MW available from Koeberg Unit 1, it is a necessity to ensure completion of the life extension and steam generator replacement. The unit is scheduled to return to service in September 2023, and a month later Unit 2’s outage will follow. The plan is to end the 2024 financial year with an energy availability factor of 65%.

Beyond our own generation capacity, we are also vigorously pursuing the Transmission Development Plan, according to which we have numerous projects at different execution stages to expand our transmission grid to allow for the connection of new generators and provide for grid stability.

On 24 April we held our National Demand-Side Management Indaba with emphasis on a collaborative initiative with our customers and energy-intensive users in collectively implementing demand management response initiatives. India has been implementing a National Demand-Side Initiative and offers valuable insights to learn from. Our own past successful campaign, 49m, has foundational homegrown experiences that inform our approach as well. As I mentioned earlier, this coming winter season will be challenging.

I believe another mechanism for curbing higher stages of load shedding is through the implementation of demand management responses.

The best lesson from world-class high-performing organisations is that organisations with the best people win. This strategic focus is much needed to ensure sustained improvement of Eskom’s performance. I am pleased that this is top of mind for our Head of the Generation Division and our Human Capital Executive. We have also made good progress with the search for a new leader for Eskom. We should soon be appointing the new Group Chief Executive once we have concluded all the Board and Shareholder processes, as outlined in our MOI.

Dealing with corruption is central to creating an uplifting work environment as well as being a partner of choice to suppliers and OEMs that aspire to ethical values and best practices. Corruption undermines value creation and is an enemy of progress. It must be uprooted completely so that it does not hinder our efforts of performance improvement.

Working through NECOM streams, we see the fruits of collaboration between our internal forensic department, SAPS, and the SIU in dealing with cases of corruption.

Numerous arrests and prosecutions are underway. People are being brought to book before the courts. We also note of what the former GCEO said in his book. It must be noted and placed on record that trust was broken in the most repulsive manner possible.

Transgressions were carried out by an executive in a fiduciary position, in possession of proprietary information of a national key point, who evaded being vetted, breaching the POPI Act, various aspects of an Executive Director’s duties as defined in the Companies Act, the PFMA, and his contract of employment clauses on confidentiality. Our Corporate Governance teams are reviewing all this and will take appropriate and reasonable steps to ensure that the Board takes all necessary action.

Through the Audit and Risk Committee of the Board, we will also embark on an independent investigation to get to the bottom of and veracity of the allegations made.

We are continuously looking at mechanisms, processes, and practices to improve the quality of our internal controls to root out the negative parasitic effects of unethical behaviours and corruption.

A reliable and efficient electric grid is vital for the growth and development of any country.

Countries that invest in building a robust electric grid are better equipped to power industrial growth, support the economy, and foster sustainable development practices.

Successful countries with well-established electric grids often enjoy increased economic prosperity, higher standards of living, and improved quality of life. Efficient electric grids also help to reduce energy waste, minimise greenhouse gas emissions, and protect the environment.

Issued by Eskom Media Desk, 19 May 2023