NUMSA's comprehensive response to loadshedding 

27 March 2019

The National Union of Metalworkers of South Africa, is extremely dismayed and angered by the pattern of consistent load shedding imposed on us by the Capitalist ANC government, led by ministers Pravin Gordhan and Jeff Radebe, and implemented by the current Eskom Board and Phakamani Hadebe, the GCEO of Eskom. On Human Rights day, 21 March 2019, 13 million South Africans were without electricity because of the ANC government, and its incompetence when it comes to the Eskom crisis.

As a union, we have reached a stage where there is no other way but to view this as yet another example of the extremely poor performance of the current board and the senior management of Eskom led by the GCEO, Phakamani Hadebe. In fact, we view their mismanagement of Eskom as nothing less than economic sabotage and we are calling on President Cyril Ramaphosa to move swiftly and remove both Minister Jeff Radebe and Pravin Gordhan for the role they played in this disaster. We reject their apologies and we further demand that the government disclose that when load shedding takes place, which companies are benefitting from load shedding? Who are the diesel suppliers? We also want to know if the IPP’s are receiving payment when they are unable to meet requirements and fail to deliver energy to the grid.

The union is of the view that both the board of Eskom and the clueless management must go and in the recent past, we have been very vocal about how hopeless this leadership has been when it comes to the running of Eskom.

Eskom is strategic to the economy of this country and we cannot continue to risk the economy and the job security of workers. Jeff Radebe has been consistently absent and understands absolutely nothing about Eskom. He only becomes available solely to defend the interests of the IPP’s. This begs the question – why must he continue to be the Minister of Energy? He has completely failed to diagnose the obvious challenges, which confront Eskom and even as we tell them what must be done in closing the four holes that are sinking Eskom, they have no interest and absolutely no idea on how to put together a turnaround strategy. What is needed is an Energy mix which is affordable for our country. In the meantime, it is the South African public, and working class communities and the poor who are victims and bear the brunt of load shedding – this, we reject with the contempt it deserves.

STATE CAPTURE IS ALIVE AND WELL IN THE CURRENT BOARD OF ESKOM

NUMSA has previously called on Minister Jeff Radebe to dismiss the current Chairperson of the Eskom Board, Jabu Mabuza, as a result of his own self-revelation in the State Capture Commission where he confirmed that when he was appointed as the Chairperson of the Board, he has a conflict of interest because his family has business interests in Eskom.

It is Jabu Mabuza himself who disclosed in the State Capture Commission that he was appointed as Chairman of the Board of Eskom, despite him having family business interests in Eskom, both in the boilers and supply of coal.

To outsmart the public on this obvious conflict of interest, he responded to say that he had set up a blind trust to administer the affairs of the company. Mabuza’s brother-in-law owns a coal company which supplies to Eskom. NUMSA is asking Minister Jeff Radebe, how Mabuza, with business interests in Eskom, could be appointed the chair of the Eskom Board, and how this is not a conflict of interest? How does the blind trust exonerate him? NUMSA demands from both Minister Jeff Radebe and President Cyril Ramaphosa that Mabuza be removed as chairman of the Eskom board with immediate effect, as we are firm that he is conflicted. In this regard, all our rights are reserved and we are taking legal advice on this.

Every day that we have rolling blackouts is detrimental to the country. Stage 3 load shedding, costs the economy more than R3 billion a day. In the 2015/2016 financial year, load shedding cost the economy R90 billion calculated using the cost of unserved energy of R85/kwh. This is why we are very clear that the country cannot tolerate these clueless individuals in these critical positions. Of course, Jeff Radebe will not listen to us because together with the board and Phakamani Hadebe they are brought together by a united resolution to privatise Eskom through the IPP’s. Our assessment of both the board and the senior management of Eskom, convinces us that they are incapable of turning Eskom around.

Jeff Radebe chose to ignore us at the expense of the South African Economy and its people. NUMSA has been consistently calling for the removal of the entire board in favour of a competent management team at Eskom. In particular, Eskom must be given a competent GCEO and competent board. Hadebe does not have the necessary technical skills required to run Eskom. In fact, many of those in positions of leadership at Eskom are clueless. We have been very vocal about these appointments to both the Minister of Energy and the Minster of Public Enterprises.

For example, individuals such as Jan Oberholzer, who is now the COO of Eskom. Before this appointment he was the General Manager of Projects at Eskom’s Capital Expansion Program. We know he did not leave that position voluntarily. There problems with his performance which Peter O’ Conner, the senior manager at that time, was unhappy with and he was forced to leave. It boggles the mind therefore why such a person would be reappointed to the very crucial post of COO. This question of competent leadership is at the centre of the collapse of Eskom and why our country is enduring, consistent, permanent load shedding. With this leadership, we are like a ship in the middle of the sea with no compass. NUMSA has identified a comedy of errors regarding the following appointments:

1. Andrew Etzinger, (Group Executive for Generation) – zero Generation Operation experience

2. Jan Oberholzer (Chief Operation Officer) – zero Generation Operation experience

3. Phakamani Hadebe (Chief Executive Officer) – zero Energy Sector experience

4. Jabu Mabuza (Chairman of the Board) - zero Energy Sector experience

5. Eskom Board of Directors – only 2 out of 8 board members have Power Utility experience but none have generations operational experience. Over and above this leadership which is not in a position to help us, President Cyril Ramaphosa – consistent with the agenda of the current political elite, appointed a conflicted Sustainability Task Team made up of a bunch of IPP advocates such as:

Anton Eberhard

Brian Dames [has since resigned]

Tsakani Mthombeni

Sy Gourrah [Has also resigned]

Grové Steyn

Frans Baleni

Mick Davis

Busisiwe Vilakazi

Their only mission was to recommend the unbundling of the State Owned Enterprise (SOE) to further the aims of privatisation of Eskom through the penetration of more IPP’s onto the National Grid.

We are convinced that the real target of unbundling Eskom is the Systems Operator. The Systems and Market Operator is critical to the expansion and deeper penetration of independent power producers. The ANC Government is determined to take the System Operator out of Eskom into a standalone company owned by government so that it can expand IPP’s, at the expense of Eskom. This will eventually lead to Eskom’s destruction.

The current Ministerial determination makes no provision for Eskom to participate in the building of new generation capacity. As things stand, only IPP’s can build new generation capacity and not Eskom. The white paper of 1998 was even better because it had set aside 70% of new generation capacity for Eskom and 30% for the IPP’s. NUMSA does not support the privatisation of energy, and it is obvious that the ANC and DA, wish to embark on the wholesale privatisation of Eskom.

What we have in Eskom today is a board that serves the interests of IPP’s and a senior management led by Phakamani Hadebe, who also act in their interests. They also have the backing of two ministers who are clearly biased in favour of the disastrous program. To make matters worse, they took the South African public for a ride by putting together a group of Cabinet Ministers to set up a Ministerial Task Team led by Deputy President David Mabuza, whose vision of the economy and Eskom is completely distorted.

NUMSA rejects President Cyril Ramaphosa’s and Pravin Gordhan’s politically factional approach to Eskom. We reject their cheap tactic and strategy by attempting to divide NUMSA and NUM in the consultation process around the unilateral unbundling of Eskom with the potential real threat of many jobs being lost. NUMSA will not undermine its relationship with the NUM and the unity of Eskom workers at Eskom, and we respect the right of NUM to have a meeting with President Cyril Ramaphosa. However, we are questioning the approach which is clearly based factional lines, and leaves NUMSA out of the consultation process.

Minister Pravin Gordhan should have agreed to call all unions collectively which represent workers at Eskom. Last year, during wage talks, we were told that meaningful consultation would take place. Since then, we not been consulted as promised. The fact that President Cyril Ramaphosa saw no need to also consult NUMSA, is clearly a well-calculated strategy to divide NUMSA and NUM members at Eskom. We reject this with the contempt it deserves.

We have sufficient information to back up our belief that that President Cyril Ramaphosa and Pravin Gordhan’s claims that they will not retrench workers at Eskom, and that it will not be privatised, is nothing more than a lie.

We call on all workers at Eskom to face the fact that truth is truth. It is a fact that the ANC government was informed through Eskom’s independent studies that the connection of IPP’s can only happen if more power stations are decommissioned. The direct results of such a move would lead to the loss of 100 thousand jobs – both at Eskom and in backward and forward linkages of the economy – of which the majority of jobs lost will be in Mpumalanga. It is clear that retrenchments will resume after the elections.

On the lie that Eskom is not being privatised, again here, the facts are loud and clear. Eskom is being privatised through the decommissioning of Power Stations which are being replaced by privately owned IPP’s. This is what privatisation is all about. The following demonstrates how Eskom is being unilaterally privatised.

NUMSA has been questioning the justification of load shedding being driven by the unavailability of capacity and the recent cyclone which hit mainly Mozambique and Zimbabwe. We reject claims that Eskom has no capacity when Eskom deliberately disconnected from the National Grid the following power stations:

·         Hendrina

·         Komati

·         Grootvlei

Furthermore, during December of 2014, the country experienced persistent load shedding and the then Eskom CEO, Tshediso Matona briefed the nation where he tried his best to explain the link between Maintenance & Plant breakdown using his unimpressive “Car analogy”. President Zuma fired him within six months of his appointment. Phakamani and Mabuza are even worse. They know even less than Matona and they have no clue where and what the problems are which are confronting Eskom. As to why the President is not taking any action against them remains a mystery.

During his press briefing in mid-January 2015, Matona pointed the following as the major contributing factors of load-shedding:

There is a severe maintenance backlog leading to unplanned outages (load losses)

On Tuesday (19 March 2019), Pravin Gordhan, Jabu Mabuza, Phakamani Hadebe & Jan Oberholzer all spoke on the issue of the lack of maintenance at Eskom generating plants as if it is something new, but the same song was sung by Tshediso Matona. The current Eskom board & Exco has been in existence for more than 14 months. They are directly responsible for what is happening.

It’s been more than three years since the country experienced load shedding at this scale. Clearly, since the arrival of Mabuza and Phakamani Hadebe together with their incompetent Exco, the maintenance of Eskom generating plants was stopped. As a result, we are stuck in this situation.

What is even more irritating, is they lied during the Press Conference last week where the Minister and his crew blames plant performance for blackouts, and misleads the public by saying that we are in stage 4 when the country was plunged into stage 5 with a shortfall of 4900MW. Any person who runs Eskom should know that this shortfall of 4900MW constitutes Stage 5 Loadshedding. This happened in the presence of the Minister, GCEO Phakamani Hadebe, the COO Jan Oberholzer and board chair Jabu Mabuza. This is the reason why NUMSA maintains that these people are deliberately misleading the public.

NUMSA wants to put it on record that the following are the direct major causes of load shedding and until the point that these are correctly and fully addressed, load shedding will be a norm for South Africans for many years to come:

1.  Eskom Generation’s assets are old and they need significant investment

The board submission in 2015 indicated that 80% of the coal fleet capacity is in urgent need of major equipment restoration & replacement in order to achieve a technical life of 60 years. This submission by the then board is consistent with what has consistently happened regarding the lifespan of Eskom Power Stations. It has always taken the board to extend the lifespan and the necessary investment has always been done.

Furthermore, this statement disproves the repeated lie that Eskom Power Stations are being closed because they have reached the end of their lifespan. The truth is that the current Eskom Power Stations that are being closed, can have their lifespan extended. However, the ANC government, the Eskom Board, the newly appointed GCE Phakamani Hadebe, have taken a conscious decision to close them for the sole purpose of making way for the IPP’s. This is despite the fact that many jobs are being destroyed by such a decision and they have no plan for a Just Transition that will secure the job security of workers. NUMSA regards this as a declaration of war, which must be rejected by workers and it is a fight we will take to the streets through a Section 77 strike in terms of the LRA. Eskom and workers’ jobs are not for sale.

The new board of Mabuza chose to ignore this and decided to pursue IPP’s. They compromised the budget in order to deal with urgent maintenance required by existing coal power stations.

This permanently confused leadership of Eskom and the board, in their desperation to impose, at all material costs IPP’s onto the national grid, and in so doing, shifting the blame of the poor performance of the IPP’s onto the power stations, is done in order to further justify the connection of IPP’s onto the National Grid.

The South African public has been informed by the very same leadership that renewable IPP’s total installed capacity is 4000MW.

We therefore challenge them to answer and to justify that how this load shedding took place against what they announced as guaranteed installed capacity that is generated by IPPs?

The IPP’s are wholly inadequate in providing consistent power supply as shown below:

During morning peak at 06:30 AM on Tuesday (19 March 2019), the Renewable power that was sent out to the grid was less than 200MW. This was shocking given how renewables are perceived to be our future expansion plans.

On the same day, renewable IPP’s at 18:35, sent out only 530MWof power to the grid. On the 20th March 2019, the energy the renewable IPP’s sent to the grid was less than 550MW at 07:25. During evening peak on the same day, Renewable IPPs power sent out was less than 700MW.

This then begs a question as to, is there value for money on the renewable IPP’s that are currently operational? And secondly, the renewable energy capacity listed in the draft IRP 2018, will it be enough to meet the electricity demand in the future? Given the current performance from the renewable IPP’s, where they struggle to even meet 50% of their total installed capacity, it’s likely that South Africa will suffer capacity constraints issues in the future. Therefore, the closure of power stations will leave an indelible mark on our economy.

If we had leadership and a board with a vision, they would understand that the immediate task would be to invest and extend the lifespan of all Eskom power stations whilst opening up the discussion about the necessary and sustainable energy mix when it comes to renewables, and how to put together a socially-owned renewable energy sector.

When renewables are introduced, they should be introduced at a price the country can afford and that they will not destroy Eskom and the Eskom market. Renewables must have capacity and ensure that the country is not plunged into permanent load shedding, which is clearly the order of the day with the IPP’s. It is clear that the IPP’s fail the test for a Just Transition.

We have demonstrated that the common narrative by Pravin, Mabuza, Phakamani & Jan who want to link the aging of Eskom generation plants and poor performance and therefore conclude that failures are mainly attributed to the fact that Eskom power stations are old, is a lie. The reason why Pravin, Mabuza, Phakamani & Jan are doing that is to facilitate more IPP’s onto the grid.

This is where both the ANC and the DA position on Eskom is dangerous for workers of Eskom and the South African public. Both organisations have common interests and common action, which is to privatise Eskom through unbundling and IPP’s. NUMSA calls on all Eskom workers to reject the organised Maimane right-wing DA march to Eskom. This march is a march to destroy workers’ jobs and to hand over the country’s energy into the hands of the private sector, which will make the South African electricity tariff completely unaffordable at a time when we need a competitive electricity tariff to create the most needed jobs.

NUMSA remains firm that the current decommissioning of power stations must be stopped with immediate effect. All existing power stations must be reconnected to the national grid, which will provide enough capacity to put an immediate stop to load shedding, and stop retrenchments of workers.

Such action will allow us time to launch the necessary, democratic and transparent debate about the future energy mix of South Africa. Such an energy mix consensus which moves us away from fossil fuels to renewables will start to be implemented in 2030 and beyond. The energy mix must be at a price and pace the country can afford. The Denton report said the following in 2016 about Eskom coal stations:

“The age distribution of Eskom coal fleet is not dissimilar to that of international utilities as 70% of plants in Europe have been in operation for more than 30 years. The average age of coal fleet in USA is greater than 40 years with a significant proportion greater of total generation capacity is being in excess 50 years old. Thus, the age of Eskom coal fleet, does not on its own explain the state of the fleet and the challenges faced by Eskom to attain acceptable levels of plant performance.”

While the age of the Eskom coal power stations is expected to contribute to the deterioration of plant performance, it cannot be said to be the major factor for poor plant performance. Instead, the manner in which the plant has been operated, maintained and refurbished has played a great role in the current poor plant performance.

2.  The role of Planned Maintenance in preventing load shedding

Eskom in the past has reduced planned maintenance (reflected in the Planned Capability Loss Factor (PCLF)) in order to maintain "Keeping the Lights On (KLO)" strategy. The reduction of proactive maintenance due to the deferral of outages has led to more corrective maintenance being required. This has led to a situation where a substantial outage backlog has been accumulated.

The maintenance has been compromised and this has been attributed to the increased frequency of plant faults such as the rise in boiler tube leaks. Behind the lack of maintenance of power stations is simply to collapse Eskom and make a way as a cheap tactic for IPP’s. Unfortunately, the technology of IPP’s is dependent on whether there is wind or sunlight.

Phakamani can’t continue to blame Matshela Koko and Brian Molefe for load shedding while he’s been occupying the CEO office for more than a year. How can he justify receiving a fat salary of R8.5 Million per annum if he has no clue of how to maintain the plants and ensure that there is plant availability and that the national grid is not compromised?

3. Coal power stations under-investment

Eskom coal power plants have experienced 10 years of under-investment in capital expenditure (capex) which is largely the result of cost cutting due to financial and capacity constraints. The past decisions of under-investment of plants, which are at their mid-life, is also critical and significantly contributes to the current poor plant performance. The abovementioned major contributory factors to load shedding may differ from plant to plant, but they remain the common major contributory factors to the significant rise in plant breakdowns. The big question therefore is why this belt-tightening when the money has been allocated from the National Fiscus for the maintenance of these power stations if it is not to collapse Eskom and act in the interest of IPP’s?

4.  We demand to know which companies benefit from load shedding?

NUMSA remains extremely vigilant – whilst it has government to play a Public Relations exercise in become easy for the ANC tendering apologies through ministers (which we reject with the contempt it deserves). We know as a matter of fact that when there is load shedding, there are particular interest groups that print money out of Eskom and the public purse. We demand that they must announce the details of how this load shedding has cost the economy and how it has cost Eskom.

This ANC government’s recklessness is rejected and it must account for plunging the country into a crisis, risking the destruction of many workers’ jobs and positioning the country as being a risk market destination for investment.

The above mentioned major contributory factors to load shedding requires significant amount of investment. This is given the fact that Eskom’s financial health (balance sheet and liquidity position) has deteriorated over recent years as a result of high levels of debt, continued fall in demand for electricity due to significant rise in tariffs and the expensive renewable energy independent power producer (REIPP) contractual requirements, which are unnecessary and expensive considering the excess capacity.

The newly signed IPP’s by Jeff Radebe will increase Eskom’s operating costs and therefore make it difficult for Eskom to invest in coal power stations, and maintain an affordable tariff. The direct result of the expensive IPP’s will be to destroy the Eskom market.

NUMSA is adamant that load shedding will remain around for a considerable amount of time because Ramaphosa and Pravin do not have an interest in fixing Eskom except to privatise it. This is demonstrated by their appointees who consistently demonstrate that they are out of their depth in resolving Eskom’s immediate issues.

Therefore, we have no choice but to continue to mobilize the masses to reject IPP’s and to reject the unbundling of Eskom. It is clear that the Capitalist ANC government, motivated by rampant greed, will continue to worsen the suffering of the working class and the poor, for its own selfish gains. It is the duty of the working class, who are the creators of wealth of this economy, to unite to defend Eskom, and to save Eskom jobs. We cannot afford to fail in our mission. The future of the nation is at stake, and it is up to the working class to save us all.

Aluta continua!

The struggle continues!

Issued by Irvin Jim, NUMSA General Secretary, 27 March 2019