Our Recent Past -"Shift performance and grow sustainably"
“Shift performance and grow sustainably”
Eskom’s final decade to date has in many ways been its most tumultuous. Its reputation hit a new low, and there were serious concerns that South Africa’s famous power utility had done itself irreparable harm. The rolling blackouts that began towards the end of 2007 cast a gloom over the country, and the economy took a hit, as mines were forced to tap back on production, losing out on the potential gain when palladium and platinum prices hit record highs in early 2008. Even though President Thabo Mbeki apologised for not heeding Eskom’s call for capital expansion, this did little to erase the perception that Eskom was at fault. It would take a change in Eskom’s leadership, and some serious soul-searching by the organisation, to turn perceptions around and put the organisation back on the front foot.
In the current political climate, where state-owned companies (SOCs) are seen by the government as “strategic instruments of industrial policy”, it is easy to forget that, in 2000, the talk was of privatisation. In fact, government actually announced its intention to privatise all SOCs by 2004. There was talk of creating an electricity market in South Africa to be modelled on something like Nord Pool Spot, Europe’s leading power market. The market would allow for independent power producers (IPPs) to go directly to large customers and enter into contracts with distributors. For various reasons, the plan was deemed unviable and shelved in 2004. Instead, Eskom was to remain at the centre of South Africa’s electricity industry, with IPPs augmenting supply. However, there was (and continues to be) a move to “corporatise” Eskom. Corporatisation is “the transformation of state assets or agencies into state-owned corporations in order to introduce corporate management techniques to their administration” (Wikipedia). This is a worldwide trend and has been used in New Zealand and Australia to reform the electricity markets. In a 2000 interview, Jan de Beer, CEO of Eskom Enterprises, mentions that “Eskom will probably be corporatised soon”. Many of the changes that have taken place at Eskom in this last decade should be seen in the light of the drive to bring business techniques and imperatives to the running of the organisation. Furthermore, the controversy around electricity price rises can also be seen in this context; a fundamental rule of business is that “there is no such thing as a free lunch”, and in Eskom’s case, the cost of the lunch includes the electricity it took to make it.
Interestingly, in that same interview, Jan de Beer states, “if you had to sell Eskom power stations today in an overcapacity situation, obviously the value would be different to that if you had to sell it seven years from now when you would be experiencing a shortage of power”. How right he was, and the government’s failure to finance new build has been put down to the fact that it could not raise the necessary money from the private sector. In some ways, this speaks to that old Eskom chestnut: “profit”. The recent MYPD3 application has elicited some angry responses from pro-poor and pro-worker organisations that do not see why Eskom should make such a handsome profit; why not forego that profit and use it to subsidise poor consumers? The problem with that argument is that South Africa is reliant on foreign capital to fund infrastructure expansion. The government would love to spend money on its own terms, but it does not have that luxury; it needs overseas financing. But it costs money to borrow money, and reputation counts for a lot when seeking favourable financial terms.
Hence, it is important that both Eskom and the country itself strive for good investment ratings in order to keep the cost of borrowing as low as possible. One of Eskom’s strategic objectives is “ensuring our financial sustainability”. For that to happen, your financials need to show healthy profits. It is not as if profits are going to rich shareholders or are being splurged on inflated corporate salaries; they are being reinvested in the company to ensure that future generations of South Africans enjoy security of electricity supply.
One of the major pitfalls of state-run companies is underinvestment. It is very tempting for governments to divert surpluses towards social spending, instead of investing in the industry. In a way, this was South Africa’s problem in the early 2000s. The political pressure for social spending meant that infrastructure spending was neglected. Jan de Beer (in the same interview) proved prescient about the effects of underinvestment in South Africa’s electricity system: “Something to remember is when the electricity demand exceeds the current overcapacity, this will require huge investment, and whether you privatise or not, the electricity price will have to go up.”
In 2003, it was clear that South Africa would indeed face an electricity shortage, and Eskom’s Board of Directors took “a final decision” to return three power stations to service: Camden, Grootvlei, and Komati – none too soon, as peak demand jumped from 31 928 MW in 2003 to 34 195 MW in 2004. Yet the political momentum at the time was not behind beefing up generation, but in connecting more people to the grid. By 2004, thanks to this electrification drive, millions of South Africans were enjoying better lives.
In March 2004, some 7.8 million households had been connected, a massive jump from the three million households connected in 1990. Partly in recognition of this achievement, in 2004, Eskom won the Markinor Sunday Times Grand Prix Award for having done the most to uplift the lives of South Africans. It was also identified, in that same year, by Markinor Sunday Times, as South Africa’s most admired brand.
This probably would have been the ideal time for the government to ease off on the electrification programme and put all its effort into helping Eskom avert a looming generation crisis. But that is not what happened; instead, the drive to achieve “universal access” to electricity continued apace. In 2004, in his State of the Nation address, President Mbeki stated that universal access was a policy goal to be achieved by 2012. The problem for Eskom was that, by around 2003, most of the low-hanging fruit had been plucked, formal urban settlements had been electrified, and electrification efforts would focus more on rural areas. Electrification in rural areas is somewhat costlier and requires more bulk infrastructure by way of extended transmission networks and transformers; understandably the rate of electrification slowed. In 1997, there were half a million connections; in 2006, there were just over 150 000. The government’s desire for universal access was also somewhat complicated by changes in policy. Up to 2001, Eskom paid for electrification through cross-subsidies from its major customers. When Eskom’s price compact with government expired, the National Energy Regulator (NER) introduced a more transparent pricing system, which made cross-subsidising unviable. Further, since Eskom started paying taxes in 2001 (as part of the corporatisation process), it was felt that government (as part of its welfare and development function) and not Eskom should be subsidising the electrification programme. So, from 2001, the capital cost of new connections was funded directly from the fiscus. In 2002, the Integrated National Electrification Programme (INEP) was set up, and in 2005, it was established within the Department of Energy (at the time, it was the Department of Minerals and Energy). Yet, even though the budget came from government and was channelled through INEP, it still fell on Eskom to do the bulk of the actual work of electrification. Although municipalities played their part, Eskom was, and continues to be, responsible for the vast majority of connections.
In 2012, Eskom’s CE, Brian Dames, stated that, “more than 83% of South African households now have access to electricity”. Clearly, President Mbeki’s target of universal access by 2012 was not reached; however, 83% is still a great achievement and is in line with some of the most optimistic predictions from earlier in the decade.
In 2007, academic researchers at UCT’s Management Programme in Infrastructure Reform and Regulation wrote, in an assessment of South Africa’s electrification programme, “it is difficult to underestimate the significance of the electrification programme on the welfare of South Africans”. Making allowances for the necessarily constrained tone of academic papers, the endorsement rings loud and proud.
In that same paper, the researchers noted that the DoE’s target of 80% electrification by 2012 would require “strong political backing, hugely increased electrification budget allocations, and a dramatic step-up in terms of capacity”. Clearly, there are people within Eskom and government who, in the past five years, have gone beyond the call of duty to keep the electrification drive going. Of all South Africa’s transformational stories, electrification is one of the most compelling. To think that, in just over two decades, the provision of electricity has gone from a service reserved for a privileged minority to an instrument of poverty alleviation that has improved the lives of tens of millions of South Africans.
The achievement is even more extraordinary given the leadership ructions Eskom went through during the decade. In 2005, Reuel Khoza’s term of office expired, and Mohammed Valli Moosa succeeded him as Chairman of the Board of Directors. Khoza left an organisation that had undergone rapid transformation during his tenure. A respected figure, he had sought to underpin his efforts with a very strong commitment to tracking results. The 2005 Annual Report ran to 400 pages and listed just about everything Eskom did (and did not) achieve, including attendance records of directors and board meetings. While Khoza had enjoyed a high profile as Chairman, Moosa sought to reduce the public visibility of his office. He felt that, as a non-executive Chairman, his most important function was that of neutral and objective oversight. His low-key approach came under attack when, in late 2007, the country experienced rolling blackouts, and Eskom was forced (in early 2008) to introduce load-shedding to protect the integrity of the grid. The quietly spoken Valli Moosa now took flak from the media for not being more visible during the crisis. But he defended his stance, saying that should he need to interrogate the executive team, he could do so without a pre-ordained agenda and in a spirit of fairness and fact seeking. He felt it was important for the executives to take the lead and for the Chairman to remain independent.
That executive team was headed by Jacob Maroga, who had succeeded Thulani Gcabashe as CE in mid-2007. Valli Moosa had overseen the “rigorous process”, as he called it, involving 270 candidates and ending in Maroga’s appointment to one of the most important jobs in the country. Maroga had joined Eskom as an engineer in 1995 and had then worked his way up the ranks to become a managing director in 2000, before landing the top job. Maroga and his executive team (which included the likes of Brian Dames, Erica Johnson, and Steve Lennon) had a lot to contend with. In 2007, Eskom’s reserve margin had shrunk to between 8 and 10%, well below Eskom’s desired 15%. Construction had started on the Ingula pumped-storage scheme in 2006 and on Kusile and Medupi coal-fired power stations in the following year, but it would be some years before they could send power to the grid.
Although two gas turbine plants, Ankerlig (Atlantis – near Cape Town) and Gourikwa (Mossel Bay), came into commercial service (first phase) in 2007, it was not nearly enough to avert the shortfall. The stations had been designed to deal with peak demand in the Western Cape and to use an open-cycle gas turbine (OCGT), which ran off diesel – a very expensive source of fuel.
In 2007, Eskom warned that, over the next five or six years, the system would be constrained and called for a collaborative effort from all stakeholders to minimise the likelihood of power interruptions. President Mbeki helped take some heat off Eskom by acknowledging blame for the oversight in planning. On 12 December 2007, he made a public apology, stating “Eskom was right, government was wrong”.
Nonetheless, it was still Eskom’s problem to fix, and in order to avoid repeating the mistake of underinvestment in capital expansion, Eskom would have to get South Africans used to the idea of paying cost-reflective tariffs. Moosa left the organisation in July 2008 (after his contract had expired), but not before helping Eskom move towards cost-reflective tariffs by devoting time and energy to the NERSA price application. In December 2007, there was a 14.2% increase, which was shortly followed by a 13.2% increase.
Moosa was replaced by the chairman of Business Unity South Africa (BUSA), Bobby Godsell. On his appointment, Godsell called for a “Team South Africa” approach to the electricity crisis: “This is a national crisis, and we need a national effort to respond to it.”
Godsell called for lessons to be learnt from the failure to heed the warnings of a 1998 White Paper that had predicted that South Africa would run short of power. But he argued that it would be unhelpful to simply seek out scapegoats. Godsell’s appointment coincided with a global financial crisis that hit South Africa’s growth rate and led to a significant drop in demand for electricity. This took some pressure off the country’s tight power system.
Godsell, who was a former head of AngloGold Ashanti and a former president of the Chamber of Mines, had a reputation for mediating the interests of labour and capital. He was well regarded by the mine unions for his work in Anglo American’s employment practice policies, which began in 1974 when he worked as a labour relations expert. His considerable negotiating skills were, however, not enough to avert a nasty spat with Jacob Maroga towards the end of 2009. On 28 October, Maroga presented his vision for Eskom (in the form of a strategy document) to the Board. Godsell made it clear that it did not accord with his vision for Eskom and presented an opposing vision, which listed “41 concerns” with the way things were going. Both documents had been sent (six days earlier) to the Board members, who made it clear that they preferred Godsell’s vision. Both Maroga and Godsell offered to resign over the clash, and the matter was put to the Board – who discussed it in the absence of the two parties concerned. The Board elected to keep Godsell and accept Maroga’s resignation. Godsell then announced to the general staff that Maroga had tendered his resignation. This was denied by Maroga, who carried on his duties as CE.
Although the Eskom Board is ultimately answerable to its shareholder (who is represented by the Minister of Public Enterprises), it should, according to Eskom’s corporate governance structure, function independently and without prejudice in doing what is in the best interests of the company and of the country. On 9 November, Godsell resigned, saying that the government did not uphold the Board’s decision. Hogan appointed long-standing Board member, Mpho Makwana, to act as Chairman with executive authority – “de facto interim executive chair”. Maroga left the organisation on 11 November, and the Board immediately began searching for a new CE.
But there were some highlights in 2009. In September of that year, Eskom won the Golden Key Award for Public Body of the Year – an award given by the South African Human Rights Commission and the Open Democracy Advice Centre for promoting openness and compliance with the provisions of the Promotion of Access to Information Act (PAIA).
Meanwhile, the process of settling on a new CE was delayed, while the matter surrounding Maroga’s departure was mulled over by the High Court. On 1 July 2010, Eskom finally put the sorry saga behind them when Mpho Makwana was confirmed as Chairman and Brian Dames was made Chief Executive. The two wasted no time in charting a new direction for Eskom.
For Dames, becoming CE constituted the crowning moment in a career at Eskom that had begun in 1987 when he had joined as a graduate in training at the age of 22. Dames was born in Britstown in the Northern Cape and holds a BSc (Hons) in Physics. He held various positions at Eskom, including Power Station Manager, Engineering Manager, GM for Nuclear, and CEO of Eskom Enterprises. While at Eskom, he earned a Graduate Diploma in Utility Management from Samford University (USA) and an MBA.
Clearly, this nuclear physicist, whose first Eskom pay check was R1 440, had been identified from the start for a major leadership role in the organisation. He was appointed just shy of his 45th birthday, which made him Eskom’s youngest-ever CE. In a world of corporate imperatives, public transparency, and the unyielding bottom-line demands of jittery global capital, Eskom needed a person at the helm who understood not only the science of electricity, but the exigencies of business.
In a 2006 interview, Dames described his management style as “no surprises, set tough targets; clear leadership-behaviour expectations, and then let leaders get on with it”. He described his personal philosophy as “treat everybody with honesty and respect”. It seems that Dames has lived by this maxim, and he took over the hot seat with the support of both major unions, Solidarity and NUM. His first move was to strike an open, matter-of-fact tone. In an interview with the press, conducted in October 2010, he stated, “We need to draw a line in the sand, leave the past behind, and work on building the organisation”. He further noted, “We don’t want to go back to load-shedding. We want to keep the lights on in the next seven years, but it will be tight, especially in the next two years”. At that same meeting with the press, he noted, “The key thing for the Board is that the CEO has the full backing of the executive committee … We now look forward with excitement as our strategy is created”.
Dames and Makwana had been doing plenty of groundwork to change “the smell of the place” from the stifling air of leadership intrigue to the fresh winds of transparency and consultation.
Perhaps reminiscent of John Maree and Ian McRae going out to the regions and speaking with managers, Makwana and Dames made it their business to find out what Eskomites on the ground were thinking. (They also got input from business, organised labour, customers, and other stakeholders.) They identified four critical concerns that employees had about Eskom: keeping the lights on, safety, leadership, and reputation. They also identified the behaviours employees felt were most damaging to the organisation: unethical behaviour, negative attitudes, and negative operational behaviour. Then, at a Management Committee meeting in August 2010, Eskom’s leadership defined, and aligned themselves to, a common purpose: to provide sustainable electricity solutions to grow the economy and improve the quality of life of people in South Africa and the region.
On 20 and 21 October 2010, a further step was taken to “define a new and brighter future for Eskom”, when a strategic review was discussed at a “Board breakaway”. From this meeting, various resolutions were confirmed that would have a significant impact on the direction Eskom was to take. The meeting was held just a few months after South Africa’s successful hosting of the FIFA World Cup, where Eskom had managed to keep the lights on. The resolutions reflected a spirit of expansive optimism, covered a wide range of issues, and laid down a very clear direction for Eskom. The resolutions dealt with a host of issues, including vision, values, aspirations, strategic objectives, and organisational restructuring. There was particular focus on reducing carbon emissions, improving performance, becoming more customer-focused, developing leadership, driving a “step-change” through a delivery unit, and of course “keeping the lights on”.
While there have been tweaks, modifications, additions, and subtractions to the October resolutions, they nonetheless formed the foundation of Eskom Holdings’ comprehensive six-year Corporate Plan. Subsequent divisional and annual reports have been structured in such a way as to address the direction and priorities as outlined in the plan. The plan provides leadership with a roadmap to guide the organisation and a set of goals and aspirations against which they can measure their success. (The 2012 Annual Report even provides green and red arrows to show exactly where the organisation is letting itself down.)
The approval of the plan was somewhat delayed, as Minister of Public Enterprises Malusi Gigaba initiated a Board shake-up mid-2011. He explained that it was necessary to change the boards of Eskom and Denel “as part of President Jacob Zuma’s plea to reshape public policy and usher in a developmental state” (Moneyweb). The minister stated, “A developmental state requires the state to take a longer-term view of investment and infrastructure development”. He went on to note, “The implementation of the developmental state agenda requires a paradigm shift on the role of SOCs in the economy from trading strictly within the constraints of their balance sheets to exploring innovative ways to fund infrastructure development, including partnership or cooperation with the private sector”. He made it clear that government would, in future, get more involved and that a new shareholder management model for SOCs would see more active participation by the shareholder representative in the areas of policy, planning, strategic direction, and oversight.
So it was that, on 1 July 2011, Zola Tsotsi took over from Mpho Makwana as Chairman of Eskom. Tsotsi had headed up the boards of the Lesotho Highlands Development Authority and the Lesotho Electricity Corporation and had successfully served out his tenure as head of the Lesotho Electricity Authority. He also had extensive experience working for Eskom. From 1995 to 1997, he had served as Corporate Environmental Affairs Manager and, thanks to his pioneering work, had helped Eskom win the Industry Award for Environmental Reporting in 1996. From 1997 to 2000, he was Corporate Strategy Manager at Eskom and was primarily responsible for monitoring and analysing the performance of Eskom’s core business. From 2000 to 2004, he was a corporate consultant for Eskom and played a major role in positioning the organisation in terms of leadership in energy supply on the African continent.
In his speeches to Guardians (as employees have come to be known), Tsotsi has emphasised the importance of transforming Eskom and of aligning itself to the government’s objectives to “unlock growth, create jobs, and develop skills”. The new Board approved the Corporate Plan in September 2011.
For his part, Dames, in his public utterings, has sought to align the dual functions of Eskom 1) as high-performing, bottom-line-driven utility and 2) as a key governmental strategic instrument of growth and development. He has placed emphasis on Eskom’s extensive bursary and training programme (5 715 students in the learner pipeline) and has alluded to the 129 000 people for whom Eskom provides employment, either directly or indirectly, who, in turn, sustain some 516 000 South Africans. The CE has also noted that Eskom’s new build programme is stimulating business and industry with its R340 billion spend to 2018, which includes the building of two of the world’s largest dry-cooled, coal-fired power plants. Unsurprisingly, the major criticism of Eskom that Dames has had to face is around the issue of rising electricity prices. On this matter, the CE has been firm: the only way to secure sound financing for Eskom is by moving towards cost-reflective tariffs. He has argued that subsidising certain businesses or industries, through lowered electricity tariffs, is not part of Eskom’s mandate. Dames has pointed out that Eskom’s demand-side interventions are helping businesses and individuals decrease their electricity bills. Eskom’s Energy Efficiency and Demand-side Management (DSM) Programme began in 2003. In 2010, an Integrated Demand Management (IDM) Division was established to deal with all Eskom’s demand-side initiatives. Managing demand is a major part of Eskom’s strategy and involves, among other things, the 49M campaign, the distribution of power-reduction equipment, and the Energy Conservation Scheme, which sets energy allocations for the country’s 500 largest electricity users.
It is reckoned that, since 2005, Eskom has saved 2 997 MW through various demand-side initiatives. That equates to five units’ (of a typical power station) worth of output.
Dames and his team have remained true to their commitment to deal openly and honestly with all stakeholders, and this is borne out by a string of awards. The country and Eskom have come a long way since the days when Dr Van der Bijl and his team could get on with their business with little or no interference from the press, government, or the public. Eskom was under pressure to operate in a spirit of transparency; and Eskom chose to make the most of the challenge. Why not turn transparency into strength – a potent tool for turning around public perception, motivating employees, securing resources, and warding off risks? In 2011, Eskom won a Squirrel Award from the Investment Analysts Society (IAS), a first for a non-listed company and for a state-owned company. The award was for excellence in financial reporting and communications. As Eskom itself noted on the website, “as a state-owned entity we are ultimately owned by all South Africans – so the standards that we set ourselves for transparent and timely communication must be at least as high as those governing listed companies”. Eskom also won awards from Ernst & Young for its reporting: firstly, for excellent corporate reporting (September 2011), and then, Eskom’s Integrated Report for 2011 was placed second (behind the Bidvest Group) in the Ernst & Young Sustainability Reporting Awards (October 2011). There was also the JSE Spire Awards, where Eskom was awarded “Best Issuer” for its commitment to transparency and the sharing of information. In the beginning of 2012, Eskom was awarded the gold medal in the “Sector Excellence: Energy and Minerals Sector” category at the Public Sector Excellence Awards. The year 2012 also saw the Eskom Finance Company (along with ABSA Capital) pick up the EMEA Finance Award for its R5 billion residential mortgage-backed securitisation programme, Nqaba Finance 1 Limited.
But it was not all planning and reports; there was also the business of running Africa’s biggest power utility to worry about. Some key milestones give some indication of Eskom’s progress in that regard.
In July 2010, construction on the first 765 kV line structure between Majuba and Umfolozi was completed. On 19 November 2011, the Minister of Public Enterprises, Malusi Gigaba, and Brian Dames attended a key erection milestone for the boilers at Kusile power station. On 8 June 2012, President Zuma initiated the final phase of the pressure test on the boiler of the first unit of Medupi power station, and on 31 October, the Minister of Energy, Dipuo Peters, announced that her department had entered into 20-year agreements with 28 preferred independent power producers (IPPs) for the supply of 1 425 MW of renewable energy into the grid.
She also announced a host of ministerial determinations regarding IPPs that would, in the words of the Daily Maverick, “mitigate the risk of a single supplier (Eskom), diversify generation technologies away from the current overdependence on coal, and slow the rise of carbon emissions”.
It is difficult to ascertain exactly how well an organisation is doing at the current moment. Eskom certainly has its fair share of challenges: MYPD3, getting Medupi’s first unit online, achieving Zero Harm, and achieving operational excellence, to name but a few. But the signs are good that the organisation is poised for great things. Eskom can point to a clean sweep of ticks on key performance areas in its shareholder compact with government. It can also point to a RepTrak study, which shows that Eskom’s reputation has improved markedly since 2010. In the latest Annual Report, there are many more green arrows than red arrows, and significantly one of those arrows is for 4.2 million homes electrified since 1991. Universal access is no longer a far-off dream, but an impending reality. As for the “heart of Eskom”, the people who go into work each day and serve the organisation in whatever capacity they can are no longer referred to as “Eskomites”, but as “Guardians”. It is they who are faced with those tough little decisions each day, the decisions that collectively determine the success of the organisation.
Eskom’s success equates to South Africa’s success, and it is the Guardians who hold the future of this country in their hands. It is they who, on a daily basis, in the words of the late Bruce Crookes (Executive Director of Generation), fulfil that “bigger mission in life … and that’s powering this country day and night”.
Eskom’s research of the pebble bed modular reactor (PBMR) revealed this technology to have major safety advantages over conventional nuclear plants, and major cost benefits ontinent. UPDEA is developing a new strategic outlook for the African Electricity Supply Industry so that it can play a key role in advisinf NEPAD on infrastructure inestment in the African Energy Sector. The mandate ws to position Eskom’s leadership role and thereby create business opportunities for the Company. The operational bueget for this was approximately three million rand.
2000
In April, Mr Thulani Gcabashe was appointed as Eskom’s first black Chief Executive, taking over from Mr Allen Morgan, who retired. Eskom’s drive to become the lowest cost producer of electricity in the world hasd led to a huge improvement in generation efficiencies.
2001
In 2001 Eskom adopted the strategic intent to be the pre-eminent African energy and related services business, of global stature. In December Eskom was presented with the “Power Company of the Year” Award at the Global Energy Awards ceremony in New York.
2002
The Eskom Conversion Act was signed into law in 2002. This Act converted Eskom from a public enterprise into a public enterprise into a public company having a share capital. The Minister of Public Enterprises, Mr Jeff Radebe, announced the appointment of a Board of Directors for Eskom. The utility’s Board of Directors was appointed to preside over the affairs of Eskom Holdings Limited, the name by which the utility would now be known. The Board of Directors replaced the previous two-tier governance structure of the Electricity Council and the Management Board. Mr Reuel Khoza was appointed as Chairman of the Board of Directors.
A new Eskom corporate identity and logo, which was approved in 2001, was implemented in 2002.
President Mbeki inaugurated the Eskom-sponsored African Leadership Programme when he unveiled bronze statues of Oliver ReginaldTambo, Robert Smangaliso Sobukwe, Steve Bantu Biko and Nelson Rolihlahla Mandela at Megawatt Park in 2002. Those statues stand in the atrium at Megawatt Park and serve as a powerful reminder as to how far the country and Eskom have come in the past few decades.
Eskom’s commitment to the cause was demonstrated by co-hosting the World Summit on Sustainable Development in South Africa.
2003
From 2003 part of Megawatt Park was leased to the South African revenue Service (SARS). Eskom Holdings Limited Head Office staff members relocated to the two blocks on the south side of the building. It was clear in 2003 that South africa would indeed face an electricity shortage, and Eskom’s Board of Director’s took “a final deision” to return three power stations to service: Camde, Grootvlei and Komati. Yet the political momentum at the time was not behind beefing up generation, but in connecting more people to the grid.
Eskom celebrated 80 years of existence in 2003.
The State President, Thabo Mbeki, officially opened Majuba Power Station in September 2003 From 2003, part of Megawatt Park was leased to the South African Revenue Service. Eskom Holdings Limited Head Office staff members relocated to the two blocks on the south side of the building.
2004
In March 2004, some 7.8 million households had been connected, a massive jump from the three million households connected in 1990. Partly in recognition of this achievement, in 2004 Eskom won the Markinor Sunday Times Grand Prix Award for having done the most to uplift the lives of South Africans.
It was also identified in in the same year, by Markinor Sunday Times, as South African’s most admired brand. Eskom Enterprises was transformed into an Eskom division. By 2004 thanks to this electrification drive, millions of South Africans were enjoying better lives. This probably would have been the ideal time for the government to ease off on the electrification programme and put all its efforts into helping Eskom avert alooming generation crisis. But that is not what happened, instead the drive to achieve “universal access” to electricity continued apace. President Thabo Mbeki in his state of the Nation address stated that universal access was a policy goal to be achieved by 2012.The problem for Eskom was that, by around 2003,, most of the lowh-hanging fruit had been plucked, formal urban settlement had been electrified, and electrification efforts would focus more on rural areas. Electrification in rural areas is somewhat costlier and requires more bulk infrastructure by way of extended transmission networks and transformers: understandable the rate of electrification slowed.
The National Electricity Regulator was used as a basis to establish a broader authority for the energy industry. NERSA was founded, with a regulatory mandate that extended to the Piped-Gas and Petroleum Pipeline industries.
2005
Mr Reuel Khoza‘s term of office expired in 2005. He was succeeded by Mr Mohammed Valli Moosa as Chairman of the Board of Directors.
2006
In 2006, supply disruptions to the Cape attracted criticism of Eskom. However, Eskom’s speed of response minimised the impact to business and consumers in the region.
Power outages in 2006 and 2007 were brought about by higher than expected demand, unplanned outages, and a diminishing reserve capacity. The desired 15% reserve margin for generation capacity had shrunk to between 8% and 10%.
In a 2006 interview Dames described his management style as “no surprises, set tough targets; clear leadership-behaviour expectations, and then let leaders get on with it”. He described his personal philosophy as “treat everybody with honesty and respect”. It seems that Dames has lived by this maxim, and he took over the hot seat with the support of both major unions. Solidarity and NUM.
NERSA introduced the multi-year price deterination process (MYPD 1) applied from 1 April to 31 March 2009. Distruptions of supply to Western Cape were a fore taste of the problems to come.
2007
Gourikwa and Ankerlig open-cycle gas turbine stations, the first two new power stations conceptualised, built and commissioned by the democratic South Africa, were ready to supply power for the winter of 2007.
Between October 2007 and February 2008, emergency load shedding was implemented in order to avoid a potential overall nationwide blackout. A national electricity emergency was declared on 24 January 2008. Load shedding activities undertaken during this period – and at any other period – were a source of distress and discontent to most South Africans, causing major disruption to all sectors of the economy. Eskom focused on returning three “mothballed” power stations to service. By March 2008, six units of Camden and one unit of Grootvlei were in commercial operation adding 1 450MW to the system. The first unit of Komati Power Station was scheduled to follow in 2009.
Eskom embarked on a very large infrastructure expansion programme to align with government’s target of 6% GDP growth between 2010 and 2014.
In 2007, Eskom cautioned that the following five to eight years would require a collaborative effort by all stakeholders to minimise the likelihood of power interruptions. New base-load stations were expected to start coming online in 2013. President Thabo Mbeki made a public apology in 2007 for government not accepting Eskom’s timeous recommendation to build more generating plant to match the country’s growth rate.
In May 2007, the construction of Medupi Power Station a new 4 788MW coal-fired base load power station (located in Lephalele) started. Construction of Kusile Power Station another coal-fired power station designed to generate approx. 4 800MW (located in the Witbank area of Mpumalanga) started in August 2008.
2008
Eskom runs short of power early in 2008, which leads to the closure of South Africa’s mines for a week. Eskom outlines plans to enforce power saving from its key 138 customers mainly the mines, and projects to install capacity. The problem with the latter part of the plan is the collapse of the global debt markets, making it extremely tough for Eskom to raise the R343 billion it needs over the five years to re-commission old plants and build new ones to add to its 26 power stations, with 37,761 MW of capacity. Plans for large investments, such as the Coega aluminium smelter by Rio Tinto, are put on hold until there is sufficient power without fear of blackouts.
Mr R (Bobby) Michael Godsell was appointed Chairman of the Eskom Holdings Limited Board on 17 July 2008. He succeeded Mr Mohammed Valli Moosa when his term of office expired. Soon after his arrival he presented his vision with concerns about the situation in the organisation. On 9 November Mpho Makwana was appointed to act as chairperson with executive authority and Jacob Moroga left the organisation on 11 November.
2009
In September, Eskom receives the Golden Key Award for Public Body of the Year – fir promoting openess and compliance witthe provisions of the Promotion of Access to Information Act (PAIA).
2010
Mpho Makwana is confirmed as Eskom chairman and Brian Dames becomes chief executive. Eskom soul-searching on the part of the new team results in the Eskom Holdings six year Corporate Plan, approval of whichi s delayed as the Minister of Public Enterprises, Malusi Gigaba, had palns of his own. An Integrated Demand Management (IDM) Divisiobn was established to deal with Eskom’s demand side initiative. The first 765 kV line between Majuba and Umfolozi was completed.
2011
March saw the launch of the 49M campaign calling for partnership with all South Africans to keep the lights on. In June, Mr Zola Tsotsi was appointed as Eskom’s new Chairman. Eskom’s electrification programme connected its 4- millionth customer. The return to srvice of Grootvlei power station was fully completed. Canden power station unit 6 was commissioned with higher capacity. Komati power station unit 4 was commissioned adding 100 MW to the grid. Eskom outlined its committment to reducing carbon emissions and being less dependent on coal at the COP 17 conference.
2012
On 3 February, Komati’s unit 5 was commissioned. Its unit 6 was commissiooned on 5 March. Arnot power station’s unit 5 capacity upgraded was also commissioned, contributing to a total of 255 MW to the grid. In March NERSA approved Eskom’s request to revise the scheduled April tariff increase of 25.9% to 16%. On 18 October Eskom submitted its MYPD 3 application to NERSA, proposing a 5 year price determination periond, beginnig 1 April 2013.