THE EFF STATEMENT ON THE NEW BOARD OF ESKOM AND THE ENERGY CRISIS IN SOUTH AFRICA

Friday, 30 September 2022

The Economic Freedom Fighters (EFF) notes the announcement of the new board of ESKOM by Jamnandas Gordhan. We strongly believe that the appointment of a new board will not help in solving the many crises of ESKOM, including huge debt, neglected strategic energy infrastructure, and now perennial load shedding. The crises of ESKOM are primarily fourfold:

1) Lack of coherent energy policy for South Africa

South Africa does not have a practical and implementable energy plan. This is evident in the chopping and changing of direction; the failure to build additional generation capacity despite evidence of growing demand; and the current collapse of more than half of Eskom's generation capacity.

The current incoherent energy policy based on the misguided notion that seeks to significantly replace coal with wind and solar power and close down more than 18 gigawatts of Eskom's older coal capacity by 2035 is driven by nefarious intentions to collapse Eskom's generation capacity and not commodify electricity. Once Eskom does not have a monopoly over electricity generation and supplies electricity to all as a public good, electricity will become not only expensive but will be produced on the basis of profiteering and greed.

A sound and coherent energy policy should secure the minimum amount of electricity supply that is needed to keep the lights on every day for the whole year without interruption. Furthermore, a coherent policy that can guarantee dependable and affordable electricity is needed for economic growth as a public good and not some commodified tradeable assets on the Johannesburg Gambling Stock Exchange. Equally important, a coherent energy policy should be underscored by state‑ownership of electricity generation that has the capacity to generate electricity from coal, nuclear, gas, wind, solar, and other dependable sources with an appropriate balance.

At the heart of a good energy policy is a clear, believable, and doable plan to plan, build, and maintain electricity infrastructure in a way that doesn't put future generations in debt.

2)  Irrational imposition of IPPs

IPPs are at the core of Eskom's financial disarray. Eskom admits that the primary energy costs increased because of the use of more expensive IPP sources and yet there is a desperate drive to entrench IPPs at Eskom. In 2019 and 2020, there was a dishonest commitment to renegotiate contracted prices with IPPs in an effort to bring down rampant primary-energy costs. The EFF warned anyone who cared to listen that those who made the commitments were speaking with forked tongue as there was no intention of doing that. We are vindicated today because Eskom's own financial statements show that the 13% increase in primary energy costs is the major contributor to the R18.9 billion net loss reported in March 2021.

South Africa's financial sector has recklessly over-exposed itself by giving unjustified loans to many of the IPPs' renewable projects with the hope that future generation of electricity will be solely supplied by these IPPs. Nedbank alone has financed more than 42 renewable energy projects and can only get its money back if Eskom collapses. As a result, any decision, be it irrational or nonsensical, is driven by the need to secure these irresponsible loans, at the expense of the South African economy.

To stabilise Eskom finances, all contracts with IPPs, particularly for renewable energy, should be cancelled and the misguided programme to open up more bid windows like the Minister of Energy is doing should be stopped.

3)  Incompetent and clueless CEO and COO

The EFF has been a lone voice in calling for the immediate firing of the Eskom board and the incompetent and useless Chief Executive Officer Andre de Ruyter and Chief Operating Officer Jan Oberholzer. We maintain that the incompetence and arrogance of Eskom's CEO and COO have fastened the collapse of a system that was all on its way to collapse.

De Ruyter was appointed to champion renewable projects from inside Eskom and has now made it his business to dedicate the whole of Eskom to being a buyer of electricity from renewable projects. This is evident by the consistent collapse of power generation as Eskom is now neglecting maintenance and is failing to procure spare parts. Instead, he spends most of his time attending panels of United State of America sponsored propaganda, speaking about things he does not know.

De Ruyter failed to manage a simple food packaging company, and they appointed him well knowing that he would fail to manage Eskom's complex system, a necessary ingredient to collapse Eskom quicker. Cyril Ramaphosa's belief in De Ruyter is not a belief in his competence but an understanding that he will deliver on the mandate to entrench IPPs and collapse Eskom. As long as the incompetent, useless, clueless, and directionless CEO and COO remain in office, the appointment of the new board is meaningless.

4) Conflict of interest

The people appointed by Jamnandas Gordhan since his appointment as Minister of Public Enterprises are conflicted. He first appointed Jabu Mabuza as Eskom Board Chairperson, CEO and supplier all at the same time. Now he has appointed Paul Mpho Makwana, who currently serves as Chairperson of Nedbank, as an independent non-executive director of BTE Renewables, two beneficiaries of the collapse of Eskom. Makwana has no interest in the existence of Eskom in a manner that will secure dependable and affordable electricity as a public good for all. His appointment as Chairperson of the Eskom Board is a demonstration of how emboldened Jamnandas is, who feels he is above all, including acceptable good governance practices.

The EFF maintains that the immediate solutions to South Africa's energy crisis are to remove De Ruyter and Oberholzer from Eskom premises; standardise all coal prices; urgently complete Medupi and Kusile; and cancel all power purchasing agreements based on a clear and coherent energy policy that puts Eskom and clean coal generation at the centre of electricity baseload. The appointment of the Eskom Board announced by Jamnandas will not stop loadshedding.

The South African government should seriously consider seeking the expertise of black executives who previously managed the crises of load shedding. The recycling of Solidarity members has proven to be a dismal failure.

Statement issued by the EFF, 30 September 2022