March 2013 19 Edition 34 Page ’s seventh decade “Electricity for all”

ESCOM’s seventh n the early 1980s, ESCOM and plant performance, ESCOM so on condition that he could be his planners were predicting management decided to seek out their own man and make his own decisions. decade was one of its most electricity demand to grow at own expert advice. A firm of American As per the recommendations of the momentous. While the 7 to 8% a year. At that rate, consultants, Ernst & Whinney, did a De Villiers Commission, the Electricity Ithanks to the nature of compounded study on ESCOM and concluded, in a Council was responsible for policy and country underwent massive growth, you have to double capacity preliminary report, that the economics planning, while the Management Board political and social change, every decade or so. To meet the of electricity supply had indeed was responsible for running ESCOM’s expected demand, ESCOM started changed, but that ESCOM ought still to “day-to-day affairs on sound business ESCOM itself was plans on three large power stations: stick to its original purpose of ensuring principles and within the guidelines, transforming, too. In fact, Matimba, Kendal, and Majuba. Even reliable supply for the country. The policy, and objectives determined by though things were slowing down in report did, however, warn that the tariff the council” (Symphony of Power, ESCOM’s leadership seemed the early 1980s, ESCOM’s Chairman increases necessary to keep supply p. 249). to anticipate the direction – Jan H Smith – saw it as temporary going were “likely to lead to extreme PW Botha did well in choosing and so carried on full steam ahead with customer discontent with resulting John Maree, a strong communicator the country was taking and building large power stations. press and government action”. As is and proven businessman, as Chairman made a very serious attempt In 1983, matters reached a low the case today, back in 1983, ESCOM of the new Electricity Council. But in point for ESCOM. Its power stations was trying to balance its commitment other matters, his judgement proved to be part of that change – in were running at an average availability to current customers with its very faulty. In August of 1985, he was effect, to change things from of 72%, and interruptions in supply commitment to the long-term security widely expected (including by his own were commonplace. Consumers were of the electricity system. However, Cabinet members) to announce the the inside. becoming increasingly impatient with economies change, technologies end of apartheid in a major policy ESCOM, which was seen as wasteful change, and environmental and social speech. Instead of “crossing the and unreliable. In May 1983, the concerns undergo a revolution. Then, Rubicon”, he warned the world (with government appointed a Commission as now, ESCOM had to take all these that wagging finger) not to “push us of Inquiry (the De Villiers Commission) matters into account in plotting its too far”. The world did not listen and into “The Supply of Electricity in the next move. instead disinvested from the country, Republic of ”. At the time, In late 1984, the government sending the rand spiralling down and ESCOM had other things to worry announced that it had received, and forcing the government to freeze about besides fending off attacks on accepted, the recommendations foreign debt repayments. its inner workings. In 1983, South of the De Villiers Commission. Not for the first time, or the last Africa was in the grip of a major ESCOM was to be run by a two-tier for the matter, ESCOM had to try drought. Power stations are thirsty structure, consisting of a board of and fix a major problem that was animals, and at the time, a unit of control and a management board. not of its own making. As a major electricity used about two-and-a-half It also revisited that old ESCOM borrower of overseas capital, it litres of water. The KwaZulu-Natal chestnut, “profit”. The commission was now under pressure to reduce power stations were affected, as were recommended that ESCOM recover, expenditure. In some ways, it was those that relied on the . Of in revenue, 5% more than expected good timing. The projected growth of particular concern was the level of the expenditure. It recommended that 8% had not materialised, and ESCOM , which supplied water the idea of undertakings be done away no longer needed all the capital to Kriel and Matla power stations. To with and that tariffs had to be more In Britain, the 1980s are equipment it had ordered. Contracts get water to Grootdraai, an emergency differentiated and cost-reflective. remembered for cheesy synth-pop were, as far as possible, delayed or plan was hatched to pump water 200 music and Margaret Thatcher. In South cancelled, and capital expenditure was km back up the from the Vaal In line with the recom- Africa, Sipho Mchunu and Johnny Clegg significantly reduced. Dam to the Grootdraai Dam. To do mendations, the Cabinet helped break down racial barriers by so, weirs were used to raise the level announced the establishment forming a band called Juluka and singing Meanwhile, John Maree of the water, and new power lines had of a board of control, which about the mysterious “Scatterlings put his much-vaunted com- to be constructed to drive the pumps. was to be known as the of Africa”. One man who was not munication skills to work by The emergency plan (a joint effort Electricity Council. It consisted listening was a certain Pieter Willem going around the country between ESCOM and the Department of 15 people and included Botha. PW Botha was South Africa’s and speaking to small groups of Water Affairs) worked, and disaster government bureaucrats, Prime Minister from 1978 to 1984 of ESCOM managers. More was averted. In October of 1983, independent experts, and and then state president from 1984 to correctly, he “listened” to the heavy rains fell throughout the country representatives of consumer 1989. For all PW Botha’s sins as leader managers. Maree, who had and broke the drought. organisations. The Electricity of a lost cause, he did at least confer started his professional life as a But still the heat remained Council would see to it that on ESCOM the wise appointment of furniture salesman, knew that on ESCOM. With the De Villiers the recommendations of John Maree. In 1985, John Maree took the best way to sell change was Commission starting to investigate the De Villiers Commission over as the Chairman of the newly to convince employees that matters relating to costs, planning, were enacted. created Electricity Council. He did they were active participants in it. His discussions revealed that morale was low and that ESCOM was out of touch with the South African public. He made it his business to change the public’s perception of ESCOM. He made Ian McRae Chief Executive, and together, the two (dubbed I&J by some) formed a formidable tag team intent on turning ESCOM’s fortunes around.

A conference of ESCOM’s top leadership (the Top 30, as it became known) resulted in a mission: “To provide the means by which customers’ electricity needs are satisfied in the most cost-effective way, subject to resource constraints and the national interest.” In all matters, ESCOM would be guided by a corporate strategy: “To develop ESCOM as a business that maximises the value of its products and services to South Africa.” John Maree was primarily a “numbers man”, a very successful businessman March 2013 19 Edition 34 Page 1983 to 1993

who had studied commerce and 1980s was to create “strategic business believed that the numbers did not lie. units” (SBUs) and separate them into He had taken up the job of leading three distinct categories: cost centres, ESCOM partly out of a sense of duty profit centres, and profitability centres. to country and partly because he loved The difference between a profit centre a challenge. To him, ESCOM could and a profitability centre is that a profit combine the best of both worlds; it centre manages revenues and costs, could drive efficiency and innovation while a profitability centre manages by following strict business guidelines, revenues, costs, and assets. In business, and it could do so in the interests of the customer is king, and ESCOM nation building and national economic started becoming more customer- development. One set of numbers focused. ESCOM’s transformation to Maree did not like was the number of a business took another leap in 1986 employees. When he took over, there when legislation was introduced to were 66 000 of them, and management scrap the “no profit, no loss” principle. had projected an increase to 72 000. In 1987, the Electricity Act was revised, Maree had a hunch (backed up by and a new “Eskom Act” was published. evidence, no doubt) that ESCOM ESCOM (EVKOM in Afrikaans) was would be no less efficient with fewer renamed Eskom, and accounting people. By the end of 1986, he had practices were brought in line with reduced the staff complement to 60 standard business procedure. Eskom, 800; and by the early 1990s, he had got with its bold new icon, was starting to it down to 50 000. look and feel like a brand.

Cutting numbers was just With all the structural one way in which Maree was changes going on, one would transforming the organisation. be forgiven for thinking that Given that the South African the offshoots of the policy nicely the core issues the organisation An Equal Opportunity Com- Eskom (as it will now be called economy was slowing rather was to displace somewhat would face for some years to come. mittee was established in in these articles) had forgotten dramatically at the time, power inefficient power generation at In February 1990, Nelson Mandela’s 1986 to “investigate and about building power stations. generation itself was not the problem, the major municipalities with long walk to freedom entered the remove discrimination” (Eskom But things were progressing on and in fact, Eskom had a surfeit of Eskom power. final bend, as he was released from publication: “Five Years On”). The that front, too. In April 1984, electricity. What it did not have was prison to negotiate a transformation organisation duly addressed the first unit of Koeberg was a robust economic environment to The policy encouraged energy- to democracy. itself to no fewer than 150 synchronised onto the grid, drive demand and take up the slack. intensive industries to flourish, most Eskom’s electrification drive, as well issues that had been identified and then Unit 2 followed suit In 1987, only 40% of the population significantly in the ferro-alloy and as its bid to boost black management, as obstacles to becoming a in 1985. Koeberg boasts the (fewer than 13 million people) had aluminium sectors. Out of this new was now more essential than ever. non-discriminatory employer. largest turbine generators access to electricity, and the vast market-driven policy came the idea With a new South Africa emerging, ESCOM committed itself to the in the southern hemisphere majority of black people were without to develop sub-brands to promote the organisation would face new education and training of black and is also the southern- power. Eskom, under the guidance of electricity use in various fields. challenges, as well as a somewhat entrants to the workforce most nuclear power station in Maree and McRae, reckoned that it Agrelek helped farmers switch to expanded mandate. and accepted the challenge of the world. could contribute to economic growth electricity; Industrelek focused on substantially increasing the and social improvement by supplying industrial applications; Elektro Wise number of black managers. Another Eskom giant, Tutuka power electricity to the homes, businesses, promoted the safe use of electricity Further, in line with the new station (near ) came on line and clinics of millions of black South in townships and squatter camps; policy of equal opportunity, all in 1985 and was fully operational in 1990. Africans. The challenge and excitement and Elektro Serve was dedicated to employees were put on unified The Palmiet pumped-storage scheme, a created by the need to meet that the service and hospitality industries. salary scales. peaking generation power station, was challenge were well summed up in UtiliMark targeted bulk retailers, a joint venture between Eskom and the the Eskom slogan “electricity for all”, including municipalities. Restructuring ESCOM along Department of Water Affairs. In 1990, it which emerged in 1989 as the rallying In 1990, Eskom could claim a business lines was (and still is) no simple added 400 MW to the grid, as well as call of an organisation that had found fair bit of success in improving its matter. The answer back in the mid- water to the City of Cape Town. renewed purpose. reputation and making itself relevant In the next decade... and appreciated by the South African The ANC comes to power; the So it was that Eskom public. In a publication from that year establishment of the National embarked on an electrification (“Five Years On”), it boasted that, since Electricity Regulator; Eskom faces process that hit full steam in 1985, it had achieved a 32% rise in non-payment issues; Maree hands over 1992 when it made 145 000 electricity sales, a 20% improvement the baton; and government calls for connections (219 000 if you in productivity per employee, a 15% cheaper electricity. include the efforts of the decline in the real price of electricity, municipalities). Electrifying more effective use of water and coal poor households was crucial for in the production of electricity, greater socio-economic upliftment, financial discipline, more recognition but it did not solve the of employees’ achievements, better problem of excess power, environmental management with particularly during off-peak emphasis on clean air, and a “no lost times. In 1987, Eskom had potential” programme that educated adopted a policy that allowed employees and encouraged them to it to use price incentives to develop. It was an impressive list of attract new sales. One of achievements and anticipated rather

Did you know!?

• In 1985, ESCOM had a total installed capacity of 25 716 MW. • Eskom published its first dictionary,Eskomwoordeboek vir Kragontwikkeling en • From 1981 to 1986, ESCOM experienced an 85% increase in the cost Verspreiding/Eskom Dictionary for Power Generation and Distribution, in 1987. of fuels. • Jan H Smith (ESCOM Chairman from 1980 to 1985) was nicknamed • In 1985, ESCOM was the sixth largest power utility in the world. Today, “Mr Kilowatt-hour” because of his uncanny ability to reduce a difficult it is the 11th largest in terms of generating capacity and the 9th in terms problem to the cost effect it had on a kilowatt-hour of electricity. of sales. • In 1989, black Eskom employees were debarred from receiving • (begun in 1983) is ESCOM’s only power station that housing loans. is not linked to a specific mine, but receives its coal from various sources. • By 1989, about 70% of Eskom’s employees belonged to a union. • In 1986, set an accident-free world record of 11 847 026 • In 1986, Eskom’s Chairman, Dr JB Maree, reduced Eskom’s staff complement man-hours – it stands to this day. from 66 000 to 60 000. In 1990, it was down to 50 000. March 2013 21 Edition 34 Page Eskom’s eighth decade “Powering transformation”

In the 1990s, the winds of hat was in 1993, the same that is, poorer black townships were everyone agreed that the industry year in which Kendal combined with wealthier (formerly) needed to be restructured to ensure change were gusting across power station was white areas to form transitional local its financial sustainability and to move the southern part of Africa, completed. Kendal was councils (TLCs). There was massive towards a fair (if not completely cost- Tthe world’s largest indirect dry-cooled political pressure for the poorer areas reflective) pricing system, consensus as the last vestige of white power station, boasting chimneys 275 m to catch up with the richer ones (in could simply not be reached. It is rule in Africa began the high. After Kendal came Majuba power terms of services), but there simply difficult to say whether this was one of station (another dry-cooled giant), which was not enough money to pay for it. As the main causes of the 2007 debacle tricky task of negotiating its first went into service in 1996 and municipalities (particularly smaller ones) when the country ran out of power, but own demise. Fortunately, was only completed in 2013. In those ran out of cash, they defaulted on their when Eskom needed to be putting up In 1986, he began attending the Eskom intervening years, as Eskom focused on Eskom bulk accounts. Eskom offered power stations, it was bogged down in Top 30 meetings, first as an observer there was enough goodwill electrifying the country and on coming to take over distribution in certain an intractable wrangle over distribution and later as a consultant. John Maree between South Africa’s two to terms with its new political masters, municipalities, but the offer was rejected, – and all in a climate of pressure to and Ian McRae saw him as a reliable and there was very little work done in the as, for municipalities, the sale of electricity electrify millions of households. credible mediator between the black main political organisations way of new generation. In 1993, it was was (and still is) a lucrative generator of It also did not help that the NER, and white worlds of a rapidly changing (the African National announced that Allen Morgan would take much-needed income. The more things which should have been making the South Africa. Perhaps it was Khoza’s love over from Ian McRae as Chief Executive. change, the more they stay the same. tough political decisions and driving of music and languages that had blessed Congress and the National Morgan is described, in “A Symphony of Eskom proposed that, at the very least, change, lost its Executive Chairman (Ian him with a finely tuned ear; he was a Party) for their respective Power”, as “a distribution man through municipalities had to de-link electricity McRae) in 1997, to be replaced by Magate good listener who was open to different and through”. He is also, in the same cost and supply from other services Sekonya, whose reign coincided with the opinions. He also placed a high value leaders to be jointly awarded book, described as “a people person” and start charging cost-reflective tariffs. rapid decline of the NER. After he was on lifelong learning and improvement. the Nobel Peace Prize “for and “a staunch advocate of Eskom’s The state of municipal distribution was got rid of, it was decided to separate the These qualities would come in handy electrification programme, which he a hornet’s nest, involving the competing positions of Chairman of the Board and over the ensuing years, as Eskom sought their work for the peaceful regards as pivotal in the developing (and sometimes intersecting) interests Chief Executive, and in 1999, Dr Enos to transform itself. termination of the apartheid society for improving the quality of life of municipalities, town councils, civic Banda became Chairman and Dr Xolani Amid many unsolved issues of and enhancing the potential for small groups, provinces, and the big mother Mkhwanazi Chief Executive. Eighteen restructuring of the industry and the regime, and for laying the business development”. ship … Eskom. Something needed to months of valuable time was lost in problems of distribution, the government foundations for a new Morgan’s thinking was certainly in line be done. the process, and still the much-needed set Eskom a range of goals: reduce the with that of the new government. With In the early 1990s, Eskom knew which restructuring did not take place – and electricity price (by 15% between 1995 democratic South Africa” – democracy came huge political pressure way the political winds were blowing and to compound it all, non-payment was and 2000), electrify 1.75 million homes as the official wording had it. to bring electricity to the people … all had begun serious discussions with the reaching crisis proportions. In 1994, (by 2000), implement a far-reaching of them. The word “power” has various ANC on the future of the electricity Eskom was owed R920 million in arrears, programme of affirmative action, and connotations – and in South Africa, it industry. It ignored protestations (and and by 1999, Eskom’s customer arrears upgrade the skills of employees. Further, was used to galvanise support against governmental decrees) not to engage the (which included individual customers as Eskom also undertook to operate the apartheid, usually in the phrase “power ANC, and talks led to the inauguration of well as municipalities) stood at R2 billion. business in a spirit of transparency and to the people”, or “Amandla – Awethu”. a National Electrification Forum (NELF) It would take some years to sort out even to consult workers in decision- in September 1993. The NELF did not the problem and help municipalities making. Those were indeed the heady In the 1990s, Eskom made have any real power to make policy, reverse the tide of non-payment. To days of democracy. a herculean effort to play its and inevitably, it became a talk shop. It this day, there is controversy around the part in bringing power to the disbanded itself in 1995, but not before distribution of electricity and the levies Eskom showed the people. In 1993, there were 300 submitting a final report to government. municipalities put on electricity charges. government that it was 000 electrifications countrywide The report argued that there were too However, currently, municipalities serious about transformation (two-thirds done by Eskom and a many distributors and proposed that the account for over 40% of Eskom’s sales by delivering on these third by various municipalities). smaller municipal undertakings had to – and Eskom works closely with them commitments. By the end By 1995, the combined (both merge with Eskom. It also proposed that on a range of issues, including payment of 1999, almost half of all Eskom and municipalities) a National Electricity Regulator (NER), arrangements and energy saving. managerial, supervisory, and number of connections was 450 with broad powers to regulate the professional staff were black, 000, and in 1997, it was half a industry, had to replace the Electricity coloured, or Indian. In 1995 million. If you assume that the Control Board and that its first task alone, the organisation created average family consists of six had to be to implement the findings of 500 small, medium, and micro people, then, every year, some the NELF. enterprises (SMMEs), and in three million South Africans 1999, it spent almost R1 billion on were being connected to the grid Eskom came up with black-empowered companies. and enjoying the improvement counterproposals on the thorny On the training front, Eskom in living standards that went issue of distribution: consensus dramatically increased the with it. on the matter was proving literacy of its workers and elusive. Less controversial supported thousands of bursars However, putting millions of poor was the idea of a National and trainees (for example, people onto the grid creates its own Electricity Regulator, which there were 480 black bursars problems; for a start, how are these was established towards the and trainees who graduated people expected to pay for the service? end of 1994. In 1995, after an in 1999). To make matters worse, in 1994 amendment to the Electricity (besides committing to electrifying 1.75 Act, it replaced the Electricity The organisation also committed million homes by 2000), Eskom had Control Board and was given itself to helping employees buy their own committed to bringing down the real sweeping powers to regulate houses; by 1999, the recently created price of electricity. What did not help the electricity industry. In 1997, John Maree retired Eskom Finance Company had loaned out matters was that Eskom’s Distribution Perhaps it was hoped that the NER as Chairman, to be replaced by R2.2 billion to home buyers. It is easy business was fractured, with wide would mediate competing interests Eskom’s first black Chairman to gloss over the figures and to bemoan disparities in cost, tariffs, and service and come up with a solution to the – Reuel Khoza. Khoza was the “lack of real change”. The fact is that levels. To think that there were over 120 distribution problem. Municipalities (and still is) many things: an people’s lives were being transformed in municipalities, each with fewer than 1 were aggrieved that Eskom’s own intellectual, a businessman, ways difficult to imagine for those used 000 customers. Many of them were in distributors paid less than they did for a linguist, a humanist, a to First-World comforts. The veteran poor financial shape, and many used the electricity. On the other hand, Eskom composer and lyricist, and an journalist and author Allister Sparks sale of electricity to raise funds. There wanted the municipalities to separate entrepreneur. In the 1980s, put a human angle on the government’s were also disparities in what customers their electricity undertakings from the he consulted to companies programme of social upliftment in his paid for electricity: for example, mines rest of their services. on issues of management book Beyond the Miracle: Inside the in got their power more In late 1994, Thabo Mbeki (Deputy development, strategy, and cheaply than those in , even President at the time) was making noises corporatisation. He was though the latter were closer to the about privatising state assets. Public perhaps one of the first power stations. In short, apartheid had enterprises and unions were required South Africans to talk about made a mess of local government and to set up committees to look into an African philosophy of service delivery, including the service “restructuring”. Nothing came of it, and management, a philosophy of electricity. nothing came of the recommendations that stressed human values With a new democratic order, local of the government’s own restructuring and, particularly, the value of government became more integrated, committee, known as ERIC. Although connectedness – or Ubuntu. March 2013 21 Edition 34 Page 1993 to 2003

New South Africa. In it, he quotes a plant efficiency was up, and there was a South Africa’s (and Eskom’s) signed into law. Eskom was now run Mrs Malala, whose life has been greatly large reduction in water usage (down to increasing integration into not as a public enterprise, but a public improved by electricity and indoor 1.25 litres a kWh). Southern Africa created various company with share capital. A Board plumbing. She has more time for leisure, opportunities. Eskom’s services of Directors was appointed by the she can refrigerate her food, and she can Reuel Khoza and Allen were in demand, and there relevant minister to replace the two-tier watch television. As Mrs Malala says, “I Morgan were showing that it were partnerships on projects governance structure of the Electricity have got time to rest and I’ve got more was possible for South Africans in Tanzania, Mozambique, Council and the Management Board. time for my church work”. to work together in a spirit Zambia, and Namibia. Reuel This Board of Directors now presided of understanding and mutual Khoza was excited by the over the affairs of Eskom Holdings As it turned out, Eskom benefit. Racism and resentment opportunity to leverage the Limited (Eskom’s new official title). reached the magic number of were dead-end streets that scale and capability of Eskom Reuel Khoza was appointed Chairman South Africa’s integration back into 1.75 million connections in 1999 would condemn the country to to help unlock Africa’s growth. of this Board. the world had its benefits, and in 2002, (a year ahead of schedule), and more strife. He wanted to position Eskom as Eskom co-hosted the World Summit it also managed to bring down the “pre-eminent African utility on Sustainable Development, which the price of electricity, so that In 1997, Eskom’s management, with global aspirations”. was held in Johannesburg. The summit the government could proudly in the spirit of national healing and brought together tens of thousands of proclaim South Africa as having nation building, and with much At around the same time, Eskom international participants drawn from the cheapest electricity in the encouragement from Reuel Khoza, was dealing with the issue of whether governments, NGOs, businesses, and world. Eskom certainly was made a submission to the Truth and to privatise certain Eskom services not other groups to focus attention and playing its part in giving hope Reconciliation Commission (TRC). The directly related to the core business action on meeting the world’s challenge to a people who were longing submission covered the years from of providing electricity, for example, IT, to improve lives and conserve natural for release from the bonds 1960 to 1994 and made it quite clear construction, aviation, and the servicing resources. Eskom had a role to play of poverty. what Eskom’s mistakes were: “Until and maintenance of equipment. In 1999, beyond simply providing electricity, the late eighties, Eskom did very little Eskom Enterprises was registered as a and the leadership of the organisation Eskom’s leadership understood to improve the plight of black people wholly owned subsidiary of Eskom and was aware that its aims and goals were that the organisation needed to put in South Africa … As an employer, its would focus on Eskom’s non-regulated aligned to those of Government. The its considerable resources to work employment practices were largely business activities in South Africa, as well idea of leadership and, particularly, in making a real difference to those discriminatory.” Eskom even went as look for opportunities to do business African leadership was a matter close living on the margins of what was an so far as to acknowledge some guilt on the rest of the continent. Reuel Meanwhile, in 2000, Thulani to the heart of Reuel Khoza, so it unequal economy. In 1998, the Eskom in the injustices of apartheid. The Khoza now had a vehicle to help Eskom Gcabashe had been chosen to was apt that Eskom should throw Development Foundation was established organisation apologised to all South make the most of the opportunity of succeed Allen Morgan, who its weight behind the new African to integrate the organisation’s various Africans for “not taking active steps South Africa’s integration with Africa. was retiring, as Chief Executive, Leadership Programme. CSI initiatives, including small business to facilitate the demise of apartheid with effect from April 2001. development and the electrification and racial discrimination. Also, for not Khoza’s vision was crystallised Gcabashe had been with Eskom In 2002, President Thabo of schools and clinics. In 1999, Reuel using its links with the government to into a strategic intent “to be since 1993 and was responsible Mbeki inaugurated this Eskom- Khoza could announce that, in the 90s, influence its thinking and apartheid- the pre-eminent African energy for the electrification pro- sponsored programme when his organisation had spent R800 million based policies”. and related services business of gramme in KwaZulu-Natal. he unveiled bronze statues of on social investments. But it was not With the advent of democracy, a global stature”. In its first year, He then ran Eskom’s London Oliver Tambo, Robert Sobukwe, all good news, for it was around this refreshing change of attitude came Eskom Enterprises exchanged office, before becoming Senior Steve Biko, and Nelson Mandela time that Eskom made submissions to to Africa. Reuel Khoza, along with business contracts with a host of General Manager for Customer at Megawatt Park. Those government that, unless there was some many other captains of industry, saw African countries and identified Services. statues stand in the atrium of rather urgent and large investment in Africa (and its lack of development) opportunities in hydropower, Megawatt Park and serve as a new power stations, the country would as a major opportunity. In 1995, mining, refurbishment of He joined the Management Board powerful reminder as to how far experience electricity shortages in 2007. the Southern African Development turbines, and the upgrading of and Electricity Council in 1999. Allen the country, and Eskom, have One of Maree’s major drives, and Community (SADC) established the power systems. Morgan left the company with a parting come in the past few decades. something continued by Khoza, was Southern African Power Pool (SAPP): gift – the publication “A Symphony of efficiency. From 1985 to 1995, the a common grid and a common market In late 1998, the government showed Power”. These articles in Eskom News ratio of gigawatt-hours (GWh) sold per for electricity in the region. The its intention to restructure the energy have relied heavily on this book, which employee rose from 1.7 to 2.7. In 2000, year 1996 saw the commissioning industry by releasing a White Paper (an was written by Jac Messerschmidt and it was up to 5.1 GWh sold per employee. of a transmission line from Matimba authoritative report that commits the Steve Conradie (both former employees In 1983, Eskom power stations had a unit power station (in Limpopo province) government to certain policies) on a of Eskom). capability factor (UCF) of 72%. The UCF to Bulawayo in Zimbabwe; the line comprehensive energy policy. The White measures a power station’s availability supplied much-needed electricity Paper answered some key questions Eskom’s efforts to electrify and gives an indication how well plant to both Botswana and Zimbabwe. around Eskom’s function and identity, the country did not go is operated and maintained. This 72% That same year, Eskom entered into namely, “Who owns Eskom?”, “Should unnoticed on the world stage, was not a good rating, and although it a partnership with Electricidade de Eskom pay taxes and dividends?”, and and in December of 2001 at In the next decade… had improved to 80% in 1993, it needed Mozambique (EdM) and the Swaziland “How should the electricity supply the Global Energy Awards Work begins on Ingula, Medupi, and to get a lot better for Eskom to achieve Electricity Board to construct two 400 industry be structured?”. The Eskom ceremony held in New York, Kusile – but it is too late to stave off its goal of world’s lowest-cost producer kV transmission lines from Arnot and Amendment Act took its cue from the Eskom was presented with the power interruptions as Eskom struggles of electricity. Under the guidance of Camden power stations to a substation White Paper and was passed at the Power Company of the Year to keep up with demand; there is a the Executive Director of Generation, near Maputo. The lines would supply end of 1998, making Eskom a limited Award. That same year, Eskom shuffling of leadership positions before Bruce Crookes, Generation set itself the Mozambique Aluminium Smelter liability company with share capital and embarked on a makeover; a things settle down; a line in the sand is the target of 90:7:3 – 90% availability, (MOZAL), which was founded in 1998 falling under the Companies Act. This new corporate identity and drawn; and the organisation restructures 7% planned outages, and 3% unplanned and is currently the second largest conversion of Eskom took effect in 2002 logo were approved in 2001 and for a shift in performance and outages. In 1998, Eskom’s UCF hit 92.7%; aluminium producer in Africa. when the Eskom Conversion Act was implemented in 2002. sustainable growth.

Did you know!?

• Majuba power station (fully operational in 2001) is the only • After the 1994 elections the government set Eskom the Power Station, thus becoming Eskom’s first female power power station in the world that combines wet and dry cooled target of electrifying 1 750 000 homes by the end of 2000. station manager. technologies. The target was reached with a year to spare. • In 1993 the Electricity Council became much more • On commissioning in 1993, became the • Reuel Khoza (Chairman from 1997 to 2005) wrote the lyrics representative of Eskom’s stakeholders when 3 members world’s largest indirect dry-cooled power station. for several songs about Eskom, which were performed by were appointed to represent the unions, and two black • In 1997, Reuel Khoza replaced John Maree as Chairman of the Eskom choristers. women were appointed: Ellen Kuzwayo and Nozizwe Majija. Electricity Council, making him Eskom’s first black Chairman. • In 1999, Eskom achieved its employment equity target of • In 1993 Dawn Mokhobo was appointed Senior General In 2002, when Eskom became a public company, Reuel Khoza 45% black staff in managerial, professional and supervisory Manager of Growth and Development – the first such senior was appointed Chairman of the Board of Directors. positions. appointment of a woman in Eskom, black or white. • In 2002, construction began on the Klipheuwel Wind Facility • In 2000, Thulani Gcabashe replaced Allen Morgan and became • Allen Morgan, who became CE of Eskom in 1994, was in the Western Cape. These were the first wind turbines in Eskom’s first Black Chief Executive. (from 1983-1985) the Western Cape Region’s Eastern sub-Saharan Africa. • Eskom published its first glossary of energy terms (English/ Distribution manager, and the Hex River Power Station • The Eskom Conversion Act was signed into law in 2002, Sesotho/Sepedi/IsiXhosa/IsiZulu) in 2001. It was authored by manager. Thus he was the only person in Eskom to hold which meant Eskom ceased being a public enterprise, and Sipho Neke, Rose Diale, Zama Bekeweni and Nto Rikhotso. the job of distribution manager and power station manager became a public company with share capital. • In 2001 Kumo Radebe was appointed to head up Matimba simultaneously. March 2013 27 Edition 34 Page Eskom’s ninth decade “Shift performance and grow sustainably”

Eskom’s final decade to n the current political climate, One of Eskom’s strategic and transformers; understandably the allocations, and a dramatic step-up in where state-owned companies objectives is “ensuring our rate of electrification slowed. In 1997, terms of capacity”. Clearly, there are date has in many ways (SOCs) are seen by the financial sustainability”. For there were half a million connections; people within Eskom and government been its most tumultuous. government as “strategic instru- that to happen, your financials in 2006, there were just over who, in the past five years, have gone Iments of industrial policy”, it is easy need to show healthy profits. It 150 000. The government’s desire for beyond the call of duty to keep Its reputation hit a new to forget that, in 2000, the talk was is not as if profits are going to universal access was also somewhat the electrification drive going. Of low, and there were serious of privatisation. In fact, government rich shareholders or are being complicated by changes in policy. Up all South Africa’s transformational actually announced its intention to splurged on inflated corpo- to 2001, Eskom paid for electrification stories, electrification is one of the concerns that South Africa’s privatise all SOCs by 2004. There rate salaries; they are being through cross-subsidies from its major most compelling. To think that, in famous power utility had was talk of creating an electricity reinvested in the company to customers. When Eskom’s price just over two decades, the provision market in South Africa to be modelled ensure that future generations compact with government expired, of electricity has gone from a service done itself irreparable harm. on something like Nord Pool Spot, of South Africans enjoy security the National Energy Regulator (NER) reserved for a privileged minority to The rolling blackouts that Europe’s leading power market. The of electricity supply. introduced a more transparent pricing an instrument of poverty alleviation market would allow for independent system, which made cross-subsidising that has improved the lives of tens of began towards the end of power producers (IPPs) to go directly One of the major pitfalls of state- unviable. Further, since Eskom started millions of South Africans. 2007 cast a gloom over the to large customers and enter into run companies is underinvestment. paying taxes in 2001 (as part of the The achievement is even more contracts with distributors. For various It is very tempting for governments corporatisation process), it was felt that extraordinary given the leadership country, and the economy reasons, the plan was deemed unviable to divert surpluses towards social government (as part of its welfare and ructions Eskom went through during took a hit, as mines were and shelved in 2004. Instead, Eskom spending, instead of investing in the development function) and not Eskom the decade. In 2005, Reuel Khoza’s was to remain at the centre of South industry. In a way, this was South should be subsidising the electrification term of office expired, and Mohammed forced to tap back on Africa’s electricity industry, with IPPs Africa’s problem in the early 2000s. programme. So, from 2001, the capital production, losing out on augmenting supply. However, there The political pressure for social cost of new connections was funded was (and continues to be) a move to spending meant that infrastructure directly from the fiscus. In 2002, the the potential gain when “corporatise” Eskom. Corporatisation spending was neglected. Jan de Beer (in Integrated National Electrification palladium and platinum is “the transformation of state the same interview) proved prescient Programme (INEP) was set up, and assets or agencies into state-owned about the effects of underinvestment in 2005, it was established within the prices hit record highs in corporations in order to introduce in South Africa’s electricity system: Department of Energy (at the time, it early 2008. Even though corporate management techniques to “Something to remember is when was the Department of Minerals and their administration” (Wikipedia). This the electricity demand exceeds the Energy). Yet, even though the budget President Thabo Mbeki is a worldwide trend and has been current overcapacity, this will require came from government and was apologised for not heeding used in New Zealand and Australia huge investment, and whether you channelled through INEP, it still fell to reform the electricity markets. In privatise or not, the electricity price on Eskom to do the bulk of the actual Eskom’s call for capital a 2000 interview, Jan de Beer, CEO will have to go up.” work of electrification. Although expansion, this did little of Eskom Enterprises, mentions that In 2003, it was clear that South municipalities played their part, Eskom “Eskom will probably be corporatised Africa would indeed face an electricity was, and continues to be, responsible to erase the perception that soon”. Many of the changes that shortage, and Eskom’s Board of for the vast majority of connections. Eskom was at fault. It have taken place at Eskom in this last Directors took “a final decision” to decade should be seen in the light of return three power stations to service: Valli Moosa succeeded him as Chairman would take a change in the drive to bring business techniques Camden, Grootvlei, and Komati – none of the Board of Directors. Khoza left Eskom’s leadership, and and imperatives to the running of too soon, as peak demand jumped from an organisation that had undergone the organisation. Furthermore, the 31 928 MW in 2003 to 34 195 MW rapid transformation during his tenure. some serious soul-searching controversy around electricity price in 2004. Yet the political momentum A respected figure, he had sought to by the organisation, to turn rises can also be seen in this context; at the time was not behind beefing up underpin his efforts with a very strong a fundamental rule of business is that generation, but in connecting more commitment to tracking results. The perceptions around and put “there is no such thing as a free lunch”, people to the grid. By 2004, thanks 2005 Annual Report ran to 400 pages the organisation back on the and in Eskom’s case, the cost of the to this electrification drive, millions and listed just about everything Eskom lunch includes the electricity it took to of South Africans were enjoying did (and did not) achieve, including front foot. make it. better lives. attendance records of directors and Interestingly, in that same interview, board meetings. While Khoza had Jan de Beer states, “if you had to sell In March 2004, some 7.8 enjoyed a high profile as Chairman, Eskom power stations today in an million households had been Moosa sought to reduce the public overcapacity situation, obviously the connected, a massive jump from visibility of his office. He felt that, as value would be different to that if you the three million households a non-executive Chairman, his most had to sell it seven years from now connected in 1990. Partly in important function was that of neutral when you would be experiencing a recognition of this achievement, In 2012, Eskom’s CE, Brian Dames, and objective oversight. His low-key shortage of power”. How right he in 2004, Eskom won the stated that, “more than 83% of South approach came under attack when, in was, and the government’s failure to Markinor Sunday Times Grand African households now have access late 2007, the country experienced finance new build has been put down Prix Award for having done the to electricity”. Clearly, President rolling blackouts, and Eskom was to the fact that it could not raise the most to uplift the lives of South Mbeki’s target of universal access by forced (in early 2008) to introduce necessary money from the private Africans. It was also identified, 2012 was not reached; however, 83% load-shedding to protect the integrity sector. In some ways, this speaks to in that same year, by Markinor is still a great achievement and is in of the grid. The quietly spoken Valli that old Eskom chestnut: “profit”. The Sunday Times, as South Africa’s line with some of the most optimistic Moosa now took flak from the media recent MYPD3 application has elicited most admired brand. predictions from earlier in the decade. for not being more visible during the some angry responses from pro-poor crisis. But he defended his stance, saying and pro-worker organisations that do This probably would have been the In 2007, academic researchers that should he need to interrogate not see why Eskom should make such ideal time for the government to ease at UCT’s Management Pro- the executive team, he could do so a handsome profit; why not forego off on the electrification programme gramme in Infrastructure Re- without a pre-ordained agenda and in that profit and use it to subsidise poor and put all its effort into helping Eskom form and Regulation wrote, in a spirit of fairness and fact seeking. He consumers? The problem with that avert a looming generation crisis. But an assessment of South Africa’s felt it was important for the executives argument is that South Africa is reliant that is not what happened; instead, the electrification programme, “it to take the lead and for the Chairman on foreign capital to fund infrastructure drive to achieve “universal access” to is difficult to underestimate the to remain independent. expansion. The government would electricity continued apace. In 2004, significance of the electrification That executive team was headed love to spend money on its own in his State of the Nation address, programme on the welfare by Jacob Maroga, who had succeeded terms, but it does not have that luxury; President Mbeki stated that universal of South Africans”. Making Thulani Gcabashe as CE in mid-2007. it needs overseas financing. But it access was a policy goal to be achieved allowances for the necessarily Valli Moosa had overseen the “rigorous costs money to borrow money, and by 2012. The problem for Eskom was constrained tone of academic process”, as he called it, involving 270 reputation counts for a lot when that, by around 2003, most of the low- papers, the endorsement rings candidates and ending in Maroga’s seeking favourable financial terms. hanging fruit had been plucked, formal loud and proud. appointment to one of the most urban settlements had been electrified, important jobs in the country. Maroga Hence, it is important that and electrification efforts would focus In that same paper, the researchers had joined Eskom as an engineer in both Eskom and the country more on rural areas. Electrification in noted that the DoE’s target of 80% 1995 and had then worked his way itself strive for good investment rural areas is somewhat costlier and electrification by 2012 would require up the ranks to become a managing ratings in order to keep the cost requires more bulk infrastructure by “strong political backing, hugely director in 2000, before landing the of borrowing as low as possible. way of extended transmission networks increased electrification budget top job. Maroga and his executive March 2013 Page 27 Edition 34 2003 to 2013

contract had expired), but not before vision for Eskom (in the form of a Human Rights Commission and the interview with the press, conducted helping Eskom move towards cost- strategy document) to txhe Board. Open Democracy Advice Centre for in October 2010, he stated, “We need reflective tariffs by devoting time and Godsell made it clear that it did not promoting openness and compliance to draw a line in the sand, leave the energy to the NERSA price application. accord with his vision for Eskom and with the provisions of the Promotion past behind, and work on building the In December 2007, there was a 14.2% presented an opposing vision, which of Access to Information Act (PAIA). organisation”. He further noted, “We increase, which was shortly followed listed “41 concerns” with the way Meanwhile, the process of settling don’t want to go back to load-shedding. by a 13.2% increase. things were going. Both documents on a new CE was delayed, while We want to keep the lights on in the had been sent (six days earlier) to the the matter surrounding Maroga’s next seven years, but it will be tight, Moosa was replaced by the Board members, who made it clear departure was mulled over by the High especially in the next two years”. At chairman of Business Unity that they preferred Godsell’s vision. Court. On 1 July 2010, Eskom finally that same meeting with the press, he South Africa (BUSA), Bobby Both Maroga and Godsell offered to put the sorry saga behind them when noted, “The key thing for the Board is Godsell. On his appointment, resign over the clash, and the matter Mpho Makwana was confirmed as that the CEO has the full backing of Godsell called for a “Team was put to the Board – who discussed Chairman and Brian Dames was made the executive committee … We now South Africa” approach to it in the absence of the two parties Chief Executive. The two wasted look forward with excitement as our the electricity crisis: “This is concerned. The Board elected to no time in charting a new direction strategy is created”. a national crisis, and we need keep Godsell and accept Maroga’s for Eskom. team (which included the likes of a national effort to respond resignation. Godsell then announced Dames and Makwana Brian Dames, Erica Johnson, and Steve to it.” to the general staff that Maroga had For Dames, becoming CE had been doing plenty of Lennon) had a lot to contend with. tendered his resignation. This was constituted the crowning groundwork to change “the In 2007, Eskom’s reserve margin had denied by Maroga, who carried on his moment in a career at Eskom smell of the place” from shrunk to between 8 and 10%, well duties as CE. that had begun in 1987 when the stifling air of leadership below Eskom’s desired 15%. Although the Eskom Board he had joined as a graduate intrigue to the fresh winds of is ultimately answerable to its in training at the age of 22. transparency and consultation. Construction had started shareholder (who is represented by Dames was born in Britstown on the Ingula pumped-storage the Minister of Public Enterprises), it in the Northern Cape and Perhaps reminiscent of John Maree scheme in 2006 and on Kusile should, according to Eskom’s corporate holds a BSc (Hons) in Physics. and Ian McRae going out to the regions and Medupi coal-fired power governance structure, function He held various positions and speaking with managers, Makwana stations in the following year, independently and without prejudice at Eskom, including Power and Dames made it their business but it would be some years in doing what is in the best interests of Station Manager, Engineering to find out what Eskomites on the before they could send power the company and of the country. On Manager, GM for Nuclear, and ground were thinking. (They also got to the grid. 9 November, Godsell resigned, saying CEO of Eskom Enterprises. input from business, organised labour, that the government did not uphold While at Eskom, he earned a customers, and other stakeholders.) Although two gas turbine plants, the Board’s decision. Hogan appointed Graduate Diploma in Utility They identified four critical concerns Ankerlig (Atlantis – near Cape Town) Management from Samford that employees had about Eskom: and Gourikwa (Mossel Bay), came into University (USA) and an MBA. keeping the lights on, safety, leadership, commercial service (first phase) in and reputation. They also identified 2007, it was not nearly enough to avert Clearly, this nuclear physicist, the behaviours employees felt were the shortfall. The stations had been Godsell called for lessons to be whose first Eskom pay check was most damaging to the organisation: designed to deal with peak demand in learnt from the failure to heed the R1 440, had been identified from the unethical behaviour, negative attitudes, the Western Cape and to use an open- warnings of a 1998 White Paper that start for a major leadership role in and negative operational behaviour. cycle gas turbine (OCGT), which ran had predicted that South Africa would the organisation. He was appointed Then, at a Management Committee off diesel – a very expensive source run short of power. But he argued that just shy of his 45th birthday, which meeting in August 2010, Eskom’s of fuel. it would be unhelpful to simply seek made him Eskom’s youngest-ever CE. leadership defined, and aligned In 2007, Eskom warned that, out scapegoats. Godsell’s appointment In a world of corporate imperatives, themselves to, a common purpose: over the next five or six years, the coincided with a global financial crisis public transparency, and the unyielding to provide sustainable electricity system would be constrained and that hit South Africa’s growth rate and bottom-line demands of jittery global solutions to grow the economy and called for a collaborative effort from led to a significant drop in demand for capital, Eskom needed a person at the improve the quality of life of people in all stakeholders to minimise the electricity. This took some pressure helm who understood not only the South Africa and the region. likelihood of power interruptions. off the country’s tight power system. science of electricity, but the exigencies On 20 and 21 October 2010, a President Mbeki helped take some Godsell, who was a former head of business. further step was taken to “define a heat off Eskom by acknowledging of AngloGold Ashanti and a former In a 2006 interview, Dames new and brighter future for Eskom”, blame for the oversight in planning. president of the Chamber of Mines, long-standing Board member, Mpho described his management style as when a strategic review was discussed On 12 December 2007, he made a had a reputation for mediating the Makwana, to act as Chairman with “no surprises, set tough targets; clear at a “Board breakaway”. From this public apology, stating “Eskom was interests of labour and capital. He was executive authority – “de facto interim leadership-behaviour expectations, meeting, various resolutions were right, government was wrong”. well regarded by the mine unions for his executive chair”. Maroga left the and then let leaders get on with it”. confirmed that would have a significant Nonetheless, it was still Eskom’s work in Anglo American’s employment organisation on 11 November, and the He described his personal philosophy impact on the direction Eskom was to problem to fix, and in order to practice policies, which began in 1974 Board immediately began searching for as “treat everybody with honesty take. The meeting was held just a few avoid repeating the mistake of when he worked as a labour relations a new CE. and respect”. It seems that Dames months after South Africa’s successful underinvestment in capital expansion, expert. His considerable negotiating But there were some highlights has lived by this maxim, and he took hosting of the FIFA World Cup, where Eskom would have to get South skills were, however, not enough to in 2009. In September of that year, over the hot seat with the support Eskom had managed to keep the lights Africans used to the idea of paying avert a nasty spat with Jacob Maroga Eskom won the Golden Key Award of both major unions, Solidarity and on. The resolutions reflected a spirit cost-reflective tariffs. Moosa left the towards the end of 2009. On 28 for Public Body of the Year – an NUM. His first move was to strike of expansive optimism, covered a organisation in July 2008 (after his October, Maroga presented his award given by the South African an open, matter-of-fact tone. In an wide range of issues, and laid down a >>> March 2013 29 Edition 34 Page Eskom’s ninth decade continued...

very clear direction for Eskom. The partnership or cooperation with the played a major role in positioning the Demand-side Management (DSM) resolutions dealt with a host of issues, private sector”. He made it clear that organisation in terms of leadership in Programme began in 2003. In 2010, including vision, values, aspirations, government would, in future, get more energy supply on the African continent. an Integrated Demand Management strategic objectives, and organisational involved and that a new shareholder (IDM) Division was established to restructuring. There was particular management model for SOCs would In his speeches to Guardians deal with all Eskom’s demand-side focus on reducing carbon emissions, see more active participation by the (as employees have come to be initiatives. Managing demand is a improving performance, becoming shareholder representative in the areas known), Tsotsi has emphasised major part of Eskom’s strategy and more customer-focused, developing of policy, planning, strategic direction, the importance of transforming involves, among other things, the 49M leadership, driving a “step-change” and oversight. Eskom and of aligning itself to campaign, the distribution of power- through a delivery unit, and of course the government’s objectives to reduction equipment, and the Energy “keeping the lights on”. “unlock growth, create jobs, Conservation Scheme, which sets While there have been tweaks, and develop skills”. The new energy allocations for the country’s modifications, additions, and Board approved the Corporate 500 largest electricity users. subtractions to the October Plan in September 2011. resolutions, they nonetheless formed It is reckoned that, since 2005, the foundation of Eskom Holdings’ For his part, Dames, in his Eskom has saved 2 997 MW comprehensive six-year Corporate public utterings, has sought to align through various demand-side Plan. Subsequent divisional and annual the dual functions of Eskom 1) as initiatives. That equates to reports have been structured in such high-performing, bottom-line-driven five units’ (of a typical power a way as to address the direction utility and 2) as a key governmental station) worth of output. and priorities as outlined in the plan. strategic instrument of growth and The plan provides leadership with a development. He has placed emphasis Dames and his team have roadmap to guide the organisation on Eskom’s extensive bursary and remained true to their commitment and a set of goals and aspirations training programme (5 715 students in to deal openly and honestly with all against which they can measure their the learner pipeline) and has alluded to stakeholders, and this is borne out success. (The 2012 Annual Report the 129 000 people for whom Eskom by a string of awards. The country even provides green and red arrows to provides employment, either directly and Eskom have come a long way show exactly where the organisation is So it was that, on 1 July 2011, or indirectly, who, in turn, sustain some since the days when Dr Van der Bijl letting itself down.) Zola Tsotsi took over from Mpho 516 000 South Africans. The CE has and his team could get on with their The approval of the plan was Makwana as Chairman of Eskom. also noted that Eskom’s new build business with little or no interference somewhat delayed, as Minister of Tsotsi had headed up the boards of programme is stimulating business and from the press, government, or the Public Enterprises Malusi Gigaba the Lesotho Highlands Development industry with its R340 billion spend to public. Eskom was under pressure to initiated a Board shake-up mid-2011. Authority and the Lesotho Electricity 2018, which includes the building of two operate in a spirit of transparency; and He explained that it was necessary to Corporation and had successfully of the world’s largest dry-cooled, coal- Eskom chose to make the most of the change the boards of Eskom and served out his tenure as head of the fired power plants. Unsurprisingly, the challenge. Why not turn transparency “as part of President Jacob Zuma’s plea Lesotho Electricity Authority. He also major criticism of Eskom that Dames into strength – a potent tool for to reshape public policy and usher in had extensive experience working for has had to face is around the issue of turning around public perception, a developmental state” (Moneyweb). Eskom. From 1995 to 1997, he had rising electricity prices. On this matter, motivating employees, securing The minister stated, “A developmental served as Corporate Environmental the CE has been firm: the only way to resources, and warding off risks? In state requires the state to take a Affairs Manager and, thanks to his secure sound financing for Eskom is by 2011, Eskom won a Squirrel Award longer-term view of investment and pioneering work, had helped Eskom win moving towards cost-reflective tariffs. from the Investment Analysts Society infrastructure development”. He went the Industry Award for Environmental He has argued that subsidising certain (IAS), a first for a non-listed company on to note, “The implementation of the Reporting in 1996. From 1997 to 2000, businesses or industries, through and for a state-owned company. The developmental state agenda requires a he was Corporate Strategy Manager at lowered electricity tariffs, is not part award was for excellence in financial paradigm shift on the role of SOCs in Eskom and was primarily responsible of Eskom’s mandate. Dames has reporting and communications. As the economy from trading strictly within for monitoring and analysing the pointed out that Eskom’s demand-side Eskom itself noted on the website, “as the constraints of their balance sheets performance of Eskom’s core interventions are helping businesses a state-owned entity we are ultimately to exploring innovative ways to fund business. From 2000 to 2004, he was and individuals decrease their electricity owned by all South Africans – so the infrastructure development, including a corporate consultant for Eskom and bills. Eskom’s Energy Efficiency and standards that we set ourselves for March 2013 29 Edition 34 Page 2003 to 2013

transparent and timely communication Daily Maverick, “mitigate the risk of must be at least as high as those a single supplier (Eskom), diversify governing listed companies”. Eskom generation technologies away from the also won awards from Ernst & Young current overdependence on coal, and for its reporting: firstly, for excellent slow the rise of carbon emissions”. corporate reporting (September 2011), It is difficult to ascertain exactly and then, Eskom’s Integrated Report how well an organisation is doing at for 2011 was placed second (behind the current moment. Eskom certainly the Bidvest Group) in the Ernst & has its fair share of challenges: MYPD3, Young Sustainability Reporting Awards getting Medupi’s first unit online, (October 2011). There was also achieving Zero Harm, and achieving the JSE Spire Awards, where Eskom operational excellence, to name but a was awarded “Best Issuer” for its few. But the signs are good that the commitment to transparency and the organisation is poised for great things. sharing of information. In the beginning Eskom can point to a clean sweep of of 2012, Eskom was awarded the gold ticks on key performance areas in its medal in the “Sector Excellence: Energy shareholder compact with government. and Minerals Sector” category at the It can also point to a RepTrak study, Public Sector Excellence Awards. The which shows that Eskom’s reputation year 2012 also saw the Eskom Finance has improved markedly since 2010. In Company (along with ABSA Capital) the latest Annual Report, there are many pick up the EMEA Finance Award for its more green arrows than red arrows, R5 billion residential mortgage-backed and significantly one of those arrows is securitisation programme, Nqaba for 4.2 million homes electrified since Finance 1 Limited. 1991. Universal access is no longer a But it was not all planning and far-off dream, but an impending reality. reports; there was also the business of As for the “heart of Eskom”, the people running Africa’s biggest power utility to who go into work each day and serve worry about. Some key milestones give the organisation in whatever capacity some indication of Eskom’s progress in they can are no longer referred to as that regard. “Eskomites”, but as “Guardians”. It is they who are faced with those tough In July 2010, construction little decisions each day, the decisions on the first 765 kV line that collectively determine the success structure between Majuba of the organisation. Eskom’s success and Umfolozi was completed. equates to South Africa’s success, and On 19 November 2011, the it is the Guardians who hold the future Minister of Public Enterprises, of this country in their hands. It is they Malusi Gigaba, and Brian who, on a daily basis, in the words of Dames attended a key erection the late Bruce Crookes (Executive milestone for the boilers at Director of Generation), fulfil that Kusile power station. On “bigger mission in life … and that’s 8 June 2012, President Zuma powering this country day and night”. 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

Did you know!?

• Eskom uses over 90 million tons of coal per year. identified Eskom as South Africa’s most admired brand. That • On the evening of 31 March 2012, millions of South Africans • Eskom relies on coal-fired power stations to produce same year, Markinor/Sunday Times also presented Eskom with observed Earth Hour by switching off lights and electrical approximately 90% of its electricity. the Grand Prix Award for the company that had done the appliances. Eskom ascertained that the initiative saved 402 • The cost of coal mining in Europe is almost four times what it most to uplift the lives of South Africans. MW – enough electricity to power Mangaung (Bloemfontein). is in South Africa. • The USA is the biggest consumer of electricity in the world • Gariep, Vanderkloof, Palmiet, and Drakensberg hydropower • On completion, Medupi will be the world’s biggest dry-cooled at 3.8 trillion MWh per year, compared to South Africa at stations are peaking power stations and can come online power station. 241 million MWh. That means that America consumes within three minutes, making them ideal for rapid reaction to • All six of Medupi’s units will be retrofitted with flue gas almost 16 times as much electricity as we do. Its per capita emergency demand. desulphurisation (FGD) technology, which will result in a 90% consumption is around five times higher than South Africa’s. • Eskom generates about 45% of the electricity consumed reduction in sulphur dioxide emissions. • The Ingula pumped-storage scheme (near Ladysmith in in Africa. • It is estimated that the waterways of Southern African could, if KwaZulu-Natal) was begun in 2006 and is being constructed • In 2009, Eskom’s revenue was lower than its operating properly harnessed, produce as much as 80 000 MW – enough entirely underground – 150 m below the surface. costs; the last three years have seen that situation reverse, to power the region for some years to come. • In 2009, Eskom won the Golden Key Award for Best National and in 2011/2012, Eskom reported a profit of R13.2 billion • The Eskom Dictionary for the Electricity Supply Industry/ Department. This award, given by the South African Human – much-needed revenue that can go into financing the new Eskomwoordeboek vir die Elektrisiteitsvoorsieningsbedryf Rights Centre and the Open Democracy Advice Centre, build programme. (JD Posthumus, revised by S de Wet (1998), and commissioned recognised Eskom for its transparency and openness in terms • Eskom provides direct and indirect employment to around by Zama Bekeweni) won an ATKV Award in August 2006. of complying with the Promotion of Access to Information Act. 129 000 people, and it is estimated that 516 000 South Africans • In 2004, the Markinor/Sunday Times Top Brands Survey • From 1991 to 2013, Eskom electrified 4.2 million households. are directly or indirectly supported by Eskom.