Money alone can't fix Eskom - analyst

Energy expert say Eskom is financially unsustainable.
Energy expert say Eskom is financially unsustainable.

Energy expert Chris Yelland says government has to fix the real problems at Eskom‚ not just throw money at the parastatal.

Speaking to the publication on Monday‚ Yelland said the issue at hand was that Eskom’s finances were not healthy – the reason it had initially told employees they were not getting a wage increase.

“What we are seeing here is the result of the financial stress at Eskom. If Eskom was not under financial stress it would not offer a zero percent increase. The real underlying reason is the financial stress at Eskom. Loadshedding is just a symptom of a deeper problem. The deeper problem is the financial unsustainability at Eskom‚” he said.

“It is no good throwing money at a problem because that is what government has been doing … at Eskom.”

He said‚ looking at the regulatory framework and structure of Eskom‚ it would be a lengthy project to fix the power utility.

Eskom workers staged a protest outside the company’s head office in Sunninghill‚ Johannesburg‚ on June 14. The workers were angry after management came to the negotiating table with a zero percent wage offer‚ while unions were demanding a 15% wage increase across the board.

Eskom indicated that the wage impasse coincided with alleged acts of “sabotage” at some of its power stations‚ reducing power output and forcing the power utility to resort to load-shedding. This was just a week after Eskom had informed the public that there would no be load-shedding this winter.

Yelland proposed that government reverted to its 1998 white paper on energy policy‚ which included details on how to restructure Eskom and improve the entire electricity supply industry.

The document proposed unbundling Eskom’s generation division into a number of competing generation units‚ which could be state-owned or private-public partnerships. It said Eskom’s transmission division should become an independent system and market operator‚ ensuring equal and non-discriminatory access. It also proposed changes to Eskom and municipal distribution.

“My view is that all our eggs are in one basket‚ which is Eskom. That is the problem. It makes sense to unbundle Eskom into a number of different operations … If Eskom goes on strike‚ the whole country falls over. This is a high risk. We are seeing the results of that today. We saw Eskom having labour unrest and the whole electricity supply industry collapses‚” Yelland said.

He warned that if South Africa did not deal with structural issues at Eskom‚ the same problem would resurface every time there was labour unrest at the power utility‚ placing the country’s electricity supply at risk.

“It is a never-ending thing. It is like South African Airways. If you throw money at it and don’t fix the problem‚ you will be throwing money at it again and again‚” he said.

Eskom is once again implementing load shedding, which means that parts of South Africa may be without electricity from time to time. What exactly is going on at the power utility and what led to load shedding being implemented again?

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