Act now to end load-shedding catastrophe, says SAFTU

The South African Federation of Trade Unions is deeply alarmed at the latest massive crisis at Eskom.

When load-shedding began in 2008 it was a national emergency. When it happened again in 2014 and 2016 it was a national disaster. Today in 2018 it has become a national catastrophe!

South Africans are paying a terrible price for years of corruption, mismanagement and incompetence and will continue to do so for years to come unless there is a drastic overhaul of this vital public utility.

The Eskom Board is paralyzed and has no solution to their failure to maintain the flow of power to their consumers. Instead it has tried to shift the blame on to others.

First it tried to attack the workers with a zero percent wage and it is still threatening to get rid of 7000 jobs. Now it is turning on its consumers, with more load-shedding and a threatened 15% a year tariff increase for the next three years.

Not only are the power cuts disrupting the lives of individuals and families, but are jeopardising thousands more jobs as companies struggle with repeated power cuts, which will drive some of them to close and retrench workers.

We are suffering from the disastrous consequences of years of looting of billions of rands, manipulation of tenders and contracts to benefit corrupt individuals and gross mismanagement and incompetence by successive Eskom boards.

At its interim results presentation in November, board chairperson, Jabu Mabuza, said R2.3bn in irregular contracts have so far been identified and handed over to authorities.

This may well be just the start. A forensic probe is now examining some contractors working on Eskom’s new power stations, Kusile and Medupi.

Public Enterprises Minister Pravin Gordhan says that “Kusile and Medupi’s three units should be giving us 780MW, but they are not – those are serious issues”… Some contractors’ work at the two power stations was “falling short of design and quality” – including services provided by local and international firms. Somebody is making money out of the doubling of the cost of Medupi”.
In 2007, the initial costing for six units came in at R69.1bn. By 2013, it had risen to an estimated R105bn. In 2016, it rose to R135bn. The most recent estimate is R145bn.

“We have to find out who are the beneficiaries of the doubling of the cost,” said Gordhan. He named Hitachi as one of the companies for which there needed to be “consequences” for poor work.

Gordhan has ordered top executives to cancel their holidays, but welcome though that is, it will do nothing to excuse their failure to take action much earlier when the evidence of Eskom’s likely inability to maintain power supply first came to light.

They blame “unpredictable breakdowns of some of its units” yet evidence is emerging that it had not adequately invested in the maintenance of its generation units since 2010, particularly when it came to major repairs; and work on some repairs has been substandard, resulting in more breakdowns. It was therefore absolutely “predictable”.

The Mail & Guardian quotes inside sources saying that crucial maintenance work has repeatedly been put off — some of it directly as a result of state capture — and now the effects are being felt.

More than R2-billion reserved in 2015 and 2016 for the maintenance of Eskom’s coal plants was used to pay R1.5-billion to McKinsey and Trillian.

Another R658-million was used as prepayment to the Guptas mining company Tegeta Resources and Exploration for coal, and hundreds of millions of rands were paid to Tegeta for coal that was never delivered.

Another excuse for Eskom’s generation problems is difficulties with coal supply, due to inherited problems with coal contracts, and with diesel supply to run the open-cycle gas turbines, normally used as a last resort.

Yet according to Anna Marth Ott, CEO of Middelburg Chamber of Commerce and Industry, coal is piling up at the mines, uncollected by Eskom. Middelburg is positioned between three large Eskom power stations, and there are 170 coal mines within a 200 km radius of the town. She told The Witness on Tuesday that Eskom had ceased taking delivery of the coal for reasons unknown to her, for the past month. “How can Eskom tell us there is no coal?” she asked.

These are the very coal mines in Mpumalanga which are predicting the loss of 40 000 jobs if Eskom outsources energy generation to independent power producers. So there is clearly no lack of capacity in these mines to deliver enough coal for Eskom, but incredible lack of foresight by its management not to have made plans to get that coal delivered to the power stations.

It’s the same wth diesel.

The Mail & Guardian reports it has established that the latest coal supply crisis could have been averted if the parastatal had notified state oil company PetroSA that it would require emergency diesel.

By the time the SOS was sent out two weeks ago, PetroSA, which had helped Eskom successfully to avert load-shedding during the June to October winter months, was coming out of a crisis of its own. Its production plant in Mossel Bay had been down for longer than 28 days and had not produced any diesel.

But PetroSA spokesperson Tumo Mogamisi told the M&G that: “When PetroSA embarked on the plant statutory shutdown in September 2018, there were no orders for diesel from Eskom, nor any indications that Eskom would soon require emergency diesel supply for their power plants.”

The forensic investigation into Kusile and Medupi must be broadened to probe how the board and management failed to make these contingency plans when the warning signs were already flashing.

It must also investigate the extent of the damage done by former Eskom chief executive Brian Molefe, former executives Matshela Koko and Anoj Singh, former board chair Zethembe Khoza, and former public enterprises ministers Malusi Gigaba and Lynne Brown.

Both the Treasury and Parliament’s portfolio committee on public enterprises recommended that criminal action be taken again them all for incurring irregular expenditure which lost Eskom billions of rands and brought it to the brink of destruction.

SAFTU welcomes Eskom’s own internal action to dismiss14 senior executives, open 12 criminal cases, and finalise 858 out of 1 049 disciplinary cases, but more news to be done, and this must be one of the many urgent priorities for the new National Director of Public Prosecutions Shamila Batohi.

The federation also welcomes Eskom’s court battle, in which SAFTU also played a role, to recover the R600m unlawfully paid to Trillian.

Important though these moves are, however, even if they are all successful, this will not save Eskom from bankruptcy. A much more fundamental change is required if it is to be pulled back from the brink.

Eskom is forecast to make an R11.2bn loss for the current fiscal year, and it has already warned that this will be exceeded. It owes more than R400bn in debt, which is projected to rise to R600bn over three years if debt levels are not contained.

Even if the government were to agree to Eskom’s request for a R100bn “debt relief” by taking that amount onto its own balance sheet, it would still leave Eskom burdened with having to pay back billions of rands in interest.

At his press conference with the Eskom board on 6 December, Minister Gordhan revealed that he has no plan at all, beyond banning holidays and urging everyone in Eskom to try harder to plug the leaks of money.

The fundamental problem with Gordhan’s approach is that while giving welcome assurances that privatization was not on the agenda, he still expects Eskom to act as if is was a private company, only concerned about balancing the books.

His address to the press conference was peppered with simplistic lectures about what you must do if your income is R1000 and your expenditure R1500. Where do you find the R500 shortfall? You must find it somewhere, but not from the government, he said, because there is nothing in the budget for that. And private investors will surely not put their money in an institution which is leaking money and will generate no profits.

Unless government steps in and rescues Eskom it will collapse, and if it collapses the whole economy will collapse, with disastrous consequences for the people of South Africa.

We cannot afford not to have Eskom, and there is no shortage of money stashed away by the richest members of the world’s most unequal society.

SAFTU demands that as well as recovering every rand pillaged from Eskom, government must urgently impose taxes on the rich – a wealth tax, and taxes on capital taken out of the country and stashed in tax havens.

It must complete the cleaning out of SARS and start properly collecting all the existing taxes on the rich – estate duty, donations tax, securities transfer tax and transfer duties – which raise at present raise a tiny proportion of total taxes (1.4% in 2016-17) – because they are so easily avoided.

These measures would bring in enough revenue to save Eskom and turn it into an efficient and accountable provider of affordable electricity to the nation.

SAFTU also demands the democratisation of the boards of Eskom and other state-owned enterprises. Over the past few years one board after another has been implicated in acts of corruption, fraud and other crimes, as well as being negligent and incompetent in the exercise of their duties.

The only way to stop this is to stop appointing people who come from the world of big business and think along in the same way as them – ‘me first’ and ‘get rich quick’. Instead we must elect representatives of workers, consumers and communities on to these boards, with a strict mandate to hold senior management fully accountable and blow the whistle on any criminal activity within the organisation.

Finally we must put a stop to those 70 000 job losses and intensify the fight against the privatisation of electricity generation to capitalist independent power producers, so that they can feed off the body off Eskom and make
huge profits.

In the long run there has to be a move towards renewable sources of energy, but right now we still need more coal urgently, and the move to other forms of energy must be a ‘just transition’ which safeguards the workers’ jobs in both mining and electricity generation, and protects the communities who have been dependent on mining and electricity for their livelihoods,

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