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Eskom Bankrupt

Eskom ‘technically insolvent’, won’t last beyond April 2019 – committee hears

Eskom is “technically insolvent” and will cease to exist at the current trajectory by April 2019, the portfolio committee on public enterprises heard.

The department of public enterprises (DPE) briefed members of the portfolio committee on public enterprises on Wednesday, where the issues at Eskom were highlighted.

Eskom‘s R420-billion debt burden represents 15% of the sovereign’s debt. If Eskom defaults on its debt, it will threaten the economy, the DPE highlighted in a submission to the committee.

Eskom got to this point due to a number of factors, the DPE said.

Over the past 10 years, coal purchase volumes remained flat, and capacity only grew slightly. Additionally employee costs increased significantly due to the associated employee benefits, the report read.

Even though Eskom‘s revenue grew more than four times since 2007, due to tariff increases – the expenses of primary energy and employees grew faster than revenue growth. The presentation showed that employees grew from 32 000 in 2007 to 48 000 by 2018. The associated costs grew from R9.5-billion to R29.5-billion.

Growing municipal debt has also contributed to Eskom‘s woes.

Eskom also has the challenge of maintaining its operational sustainability. The average age of its generation fleet is 37 years but essential mid-life refurbishments have not been implemented. There has also been “poor quality” of maintenance, due to “poor workmanship”.

“Forty percent of plant breakdowns are due to human error,” the minister said.

The ongoing coal shortages are due to “poor management” and lack of investments in cost plus mines.

There has also been a significant loss of critical skills and low staff morale, the DPE highlighted.

Build programme

Cost overruns and poor performance from the build programme have also added to Eskom‘s burden.

“Medupi and Kusile have suffered massive delays and cost overruns due to poor planning, poor engineering designs, poor procurement practices and poor contracting and corruption,” the report read.

Costs of the plants have escalated significantly to over R300-billion. Medupi’s costs rose from R24.9-billion to R145-billion and Kusile’s costs doubled from R80.7-billion to R161.4-billion.

In terms of Eskom‘s governance – “systemic corruption, malfeasance, fraud and state capture project” compromised the credibility of the organisation and eroded investor confidence.

The effects of corruption have been passed through to consumers and the shareholder (government).

“The ongoing revelations continue to threaten the credibility of the institution,” the report read.

Eskom introduced stage 2 load shedding for the first time since December on Sunday. The power utility attributed it to plant breakdowns. By Monday, Eskom shifted load shedding to stage 4, after losing six generating units and continued to implement stage 3 load shedding on Tuesday.

The power utility will on Wednesday implement stage 3 load shedding from 08:00 to 23:00, Fin24 reported.

During the State of the Nation Address debate in Parliament on Tuesday, Gordhan said he met with Eskom‘s board on Monday to get a better understanding of the cause of the load shedding at the power utility. 

He told MPs that not all of Eskom‘s installed capacity is available, and said Medupi and Kusile power stations were “badly designed and badly constructed’ and “not performing at optimum levels”. He also assured that the unbundling did not mean that there would be privatisation.

Last week in the state of the nation address, Ramaphosa announced Eskom would be split into three entities – generation, transmission and distribution – which would fall under the company Eskom Holdings.

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Eskom Shut down

Unions threaten total Eskom shutdown

The National Union of Mineworkers (NUM) says that its members will down tools as it continues to face an impasse with Eskom.

In a statement on Tuesday (12 March), the union said that it was concerned about the potential unbundling of the power utility into three separate entities.

“The shop stewards are very angry towards the attitude so far demonstrated by the leadership in government, led by the African National Congress (ANC), who are talking in tongues about the future of workers at Eskom,” it said.

“They are unable to explain properly what the unbundling means to thousands of poor workers.”

NUM said that there had also been no guarantee to prevent retrenchments during the unbundling process.

It added that the board of Eskom has totally failed in their duties to develop a turn-around strategy towards the improvement of Eskom’s performance.

In light of this NUM has stated that:

  • Thousands of NUM Eskom members will march to the ANC’s Luthuli House on 30 March 2019;
  • All Eskom board members – led by Jabu Mabuza – should resign with immediate effect;
  • There should be an immediate cancellation of the IPPs and PPA contracts.

In addition to this march, NUM said its workers would be downing tools in the run-up to the national elections in May.

“A total shutdown will be organised as from 3 of May 2019 up to the week leading up to the national general elections on 8th of May 2019,” NUM said.

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Farm murders and attacks should be treated as priority crimes‚ says crime expert

Protesters against Farm Murders

While 62 farm murders in 2017/18 pales in comparison with the 57 South Africans murdered daily‚ some believe the nature and impact of these murders deserve special attention.

Crime expert Johan Burger said in an Institute for Security Studies (ISS) report on Tuesday that farm attacks and farm murders were like the trio crimes of house robbery‚ business robbery and carjacking.

He believes farm murders and farm attacks should be treated as priority crimes.

“The differences largely relate to the geographical location of the target. Unlike urban areas‚ farms and smallholdings are much more isolated and removed from immediate police or other security services‚ including close neighbors. This relative isolation provides attackers with more time and freedom to commit crimes against their victims‚ which are often extremely violent‚ including the gratuitous use of torture.”

According to the latest crime statistics released in Parliament on Tuesday‚ there were 62 murders‚ 33 house robberies‚ six attempted murders and two rapes on farms in 2017/18. This includes farm owners and workers.