Minister of Public Enterprises Pravin Gordhan has given a clear indication that labour federation Cosatu’s proposal to use money managed by the Public Investment Corporation (PIC) to support Eskom is being taken seriously.

Speaking at a lunch hosted by law firm ENSafrica in Cape Town on Tuesday, he commended the trade union federation for the proposal.

“Trade union federation Cosatu has come up with its own innovation to protect jobs within the Eskom environment,” Gordhan said. “That is 16,000 people.”

Although not explicitly stated, the problem is that retrenching people from the power utility would be extremely difficult politically. The minister therefore appears prepared to consider the Cosatu proposal, which suggests that the PIC together with the Industrial Development Corporation and the Development Bank of South Africa should take over Eskom’s debt.

“Cosatu is saying: use the workers’ pension money to mitigate the debt burden that Eskom has,” said Gordhan.

“That is a great move on the part of labour to say we are part of the solution, not just antagonists to any change that is happening,” he added.

“Over the next month or two we are going to see fascinating exchanges, helping to get all the resources available in the country to save an important institution like Eskom and get it back to the levels of effectiveness and efficiency required.”

The rotters

Gordhan began his comments about the power utility by emphasising the extent to which Eskom has been hollowed out by state capture, and the size of the challenge faced in managing its recovery.

“Eskom was one of the institutions what was severely damaged by corruption,” he said. “From the outside, one often hears the narrative: replace the board and CEO, put in a few new managers and you’ll get it right.

“However, simply replacing the leadership at the utility is not enough. Expertise, processes and experience all need to be restored.

“What we’ve learnt in the last 18 months is the systemic effect of corruption is huge,” said Gordhan.

“In the case of Eskom, it breaks down the engineering disciplines – what the engineers call their engineering rhythms – and it gets the operations to decline to a point where basic disciplines are not followed any longer and need to be reintroduced.

“And in the process of corruption, the good people either leave or the good people are marginalised, and the rotters rise to the top.”

Prepare for long-term load shedding

Gordhan also indicated that part of the plan for turning Eskom around would likely involve ongoing load shedding.

“We need a clearer idea – and it’s being discussed quite intently – of what kind of rigorous maintenance plan we can put in place that is both sustainable and lasting,” the minister said.

“What we’ve had in the recent past is lots of money spent, but a decline in Eskom’s effective output.

“So who is making money out of all this maintenance work, and what kind of quality of maintenance are we actually getting?”

Part of the solution, Gordhan suggested, would be long-term load shedding to take pressure off the system.

“We are likely to go through a period when we are going to have load shedding,” he said. “But we want to be in a position where the calculations that we are making at an Eskom level are as accurate as possible, not speculative, and substantiated with proper data and statistics.

“When that is ready, a proper and formal announcement will be made so that businesses can prepare appropriately.”

The split is coming

The minister added that the process of splitting Eskom into three separate entities – generation, transmission and distribution – is underway.

“The decision has already been made and the process has already started,” he said. “The transmission entity will be a self-standing entity in one form or another within the next month or so.

“That is the beginning of the structural change that we need to undertake as far as Eskom is concerned.”

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