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Experts mull over Eskom’s future as South Africa awaits IRP

African Utility Week connects with the industry leaders for the entire power, energy and water value chain. (Image source: African Utility Week)

While South Africans may still be relatively in the dark over the release date of the updated Integrated Resource Plan (IRP) outlining the country’s future energy plans, experts agreed on the future of energy in South Africa will be very different

Energy experts Ted Blom and Dr Grove Steyn, who serves on the presidential task team on Eskom, partook in a panel discussion at the African Utility Week and POWERGEN Africa conference and exhibition in Cape Town covering issues relating to the future of Eskom, the planned unbundling of the utility and energy in a future with climate change.

Blom said, “Eskom’s governance has collapsed. We don’t know who is running Eskom because it certainly does not look like it is the board. All it can be is a third force.”

“We simply do not know who is held responsible because it is not maintained properly and not run properly. So, in terms of Eskom of the future – it’s already dead in the morgue. All we are throwing money at is for more people to be corrupt,” he added.

Blom also called Eskom’s debt burden a “fallacy.” “They want you to pay this debt but 75 per cent of that debt is not due and that is why I have called for a forensic investigation.”

Blom said that corruption and mismanagement are well entrenched in Eskom. According to him, South Africans are made to believe the money (debt) is due to Eskom but more than three-quarters of this monies are due to corruption and mismanagement.

He noted that the Medupi Power plant as an example. In 2008, the quote for building Medupi was US$2.32bn, he said.

“A year ago, I went back to Eskom to verify that amount and today Medupi is running at US$11.96bn for a half-finished project. If that is not corruption and mismanagement, then I don’t know what is and I don’t understand why we have to pay for that,” Blom stated.

But for Steyn, the debt trap is very real. “Eskom is indeed in a debt trap. It is now being bailed out by government almost on a monthly basis and even the US$1.62bn allocated in the budget is not going to be enough to fill the gap and get Eskom out of the debt trap.

“So, it is quite serious, and it means we will have to start thinking outside the box and find a range of solutions to help ensure - given Eskom’s systemic role in the economy - we do not end up in a situation where we have a full on default on debt.”

Steyn also remarked on Eskom’s relevance in the future where the energy space is more competitive.

Steyn said that as the technological-economic paradigm changes, the cheapest power does not necessarily come from large coal-faced power plants but from smaller-scale renewable projects.

Steyn alluded to an Eskom with a changed business model. “Around the world, traditional large-scale utilities have been successful in changing their business models and becoming players in the renewable energy space but that is a radical change that will require drastic changes in Eskom. The parts of Eskom that run the grid and the distribution business, will, of course, continue to exist and will be very important for our future.”

Blom said that the IRP should be a basic exercise and be redone annually with no big surprises. “It’s a disgusting disaster. Our future relies on it. We need certainty and transparency and not attempts to hide behind the IRP to play to secret agendas of third forces. That is not acceptable,” he said.

The African Utility Week and POWERGEN Africa conference and exhibition ended on 16 May 2019.

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