Confidential Eskom report shows 50% vacancy rates in keys posts during loadshedding crisis

The Democratic Alliance (DA) is in possession of a confidential internal Eskom report from the power utility's Corporate Technical Audit Department, authored in late 2007, and circulated internally just a few months before Eskom declared force majeure on its major customers, which shows in clinical detail how Eskom's management had comprehensively failed to address "critical vacancies" in two critical areas -- senior management posts, and short and long term coal procurement positions.

This report supplements the conclusions drawn by an internal Eskom memo, released by the Democratic Alliance in September, and authored by Susan Olsen, a leading international expert who had been recruited by Eskom (see here). In that memo, Olsen had warned that "without intervention", Eskom's primary energy generation faced "collapse", and would not be able to "meet current needs, much less future requirements". Olsen's memo, like the confidential report we are now releasing, demonstrates that Eskom received ample warning of the serious coal supply problems it faced, were presented with steps to remedy the situation, but appeared to do little to respond, other than to fire Olsen.

Notably, in the Susan Olsen memo, reference was made to how Eskom's lack of experience and failure to understand coal markets played a significant role in their later supply problems, and how Eskom's "hemorrhaging [of] talented staff" had left the power utility lacking "leadership, experience, knowledge and direction".

Now we have in our possession a report from Eskom's own Corporate Technical Audit Department, which confirms exactly these points. It highlights an astonishing 50% vacancy rate in Eskom senior management - or E band level positions - and warns that these human resource deficiencies risked the effective procurement of coal supplies. It states that "filling of these positions is essential to securing of coal supplies and managing the contracts in place" and that Eskom "should review its recruitment strategy and recruiting structures".

The report also reveals serious problems in short and long term coal procurement positions. This was in November 2007, just months before the country was plunged into a major electricity supply crisis, when Eskom declared force majeure on January 24, 2008.

Equally ominously, the report warned that "a contract shortfall of approximately 10Mt (Megaton) existed in 2005 and this will grow to 26Mt by 2011 and 34Mt by 2019... Of concern is the growing shortfall from 2008 onwards" (our emphasis). Again, the proximity of this warning to the period of load shedding, and the fact that there is little evidence that Mr. Maroga acted on these findings, raises serious questions about the Eskom CEO's handling of the energy crisis.

The report in our possession shows very clearly that human resourcing issues were one of the key reasons for Eskom's coal procurement problems, and that the problem was not being addressed at a pace that was anywhere near sufficient. This is yet further evidence that Mr. Maroga's tenure as CEO of Eskom has proved something of an unmitigated disaster, and that he needs to tender his resignation.

Statement issued by Cobus Schmidt, MP, Democratic Alliance deputy shadow minister of energy, November 2 2009

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