Eskom ‘precarious’ and overstaffed, admits Mabuza

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Durban - Eskom was in a precarious financial position precipitated by a bloated staff complement, rising costs and a shrinking customer base, the power utility’s chairperson, Jabu Mabuza, conceded. However, Mabuza said it was tactically wrong of the power utility to have initially offered workers a 0% increase. Admitting that Eskom was bloated, Mabuza said: “In the last 10 years you had a situation where 36 000 people were producing 47000 megawatts. “Ten years later you have 48000 people producing 47000 megawatts.” He said the revenues had grown by an average of 12% over 10 years, yet sales had grown by 0.1%. Mabuza said a world bank study that compared Eskom with other peer power utilities had found the power utility had twice the number of heads it needed.

He said, however, that Eskom’s own assessment found that some of the utilities that it was compared with did not do all the work that it did on the sales and distribution side of the business.

Mabuza, who is also the chairperson of Business Leadership South Africa (BLSA), said Eskom’s own assessment was that it might be overweight by a third of its employees.

Labour costs and primary energy were among the major cost drivers at Eskom, he said, adding that the utility would also have to look at the point raised by the unions that the top management structure was too bloated.

Compounding the problems at Eskom was that it had run out of clients who could pay, Mabuza said. A growing number of people had become self-­reliant and were finding their own ways to generate power.

As the unions and Eskom were due back at the negotiation table this week, Mabuza said he was confident common sense would prevail, as the unions also wanted what was best for the power utility.

Mabuza had been responding to questions about South Africa’s investment climate at a gathering hosted by BLSA in Durban, where Presidential Special Envoy for Investment, Phumzile Langeni, addressed business leaders on the country’s plan to attract $100billion (R1.3 trillion) in new investments.

She called on business to support the president’s drive of restoring South Africa’s image as an investment destination and a powerhouse on the continent.

The Mercury