Eskom starts internal overhaul

…..July 7 article…..

De Ruyter keeps his cards close 

When asked by parliamentarians if Eskom would be calling upon retirees and ex-employees to assist with the Eskom recovery plan, CEO André de Ruyter told a joint Public Enterprises meeting called to hear progress on the Eskom unbundling, that at this stage it had not been necessary to rely on consultants.  “For the exercise in hand, money has to be saved.  We have plenty of expertise internally but once things get really complicated, this cannot be ruled out”, he said.

At the moment, he said, things were going well with existing internal sources and Eskom was busy with unbundling, divisionalisation and restructuring, de Ruyter said.   It had re-allocated nearly 9,000 employees to the divisions, of which 6 500 from its head office in Sunnyside, Sandton had moved to ‘hands-on” functions and “moved into operating divisions”.

In place

Most important and in time to meet the human resources plan implementation date, Eskom had appointed its new team of divisional managing directors.  The word “managing” had been incorporated into titles to reflect a clear responsibility in terms of revised job criteria. All had been appointed from existing resources and that had been additional cost in the process. Many existing  employee within the Eskom structure, de Ruyter said, were simply taking on more responsibilities.

MPs from the joint meeting comprised of public enterprises MPs from both the NA and the NCOP were told that critical vacancies were now filled and that all power stations had fully substantiated general manager vacancies. 1,384 learner plant operators had been hired and trained and had filled their positions by April 2020, he said.

Breaking up is hard

In answer to questions from MPs on unbundling  question of divisional unbundling, de Ruyter said that the intention was to divisionalise production into transmission, generation and distribution.    For this it had set up a divisional financial reporting programme design; had already in place power purchasing and electricity supply agreements between divisions; and had commenced the internal trading of energy within Eskom.

De Ruyter reported that a power purchasing and energy supply agreement was in place between a transmission entity named “SA Energy” to handle energy from the 27 different power output stations.    De Ruyter told MPs that it would take some time for the legal separation of all three divisions to take place, the end state being three businesses operating as subsidiaries under Eskom Holdings.

“We have also established a market operator and a central purchasing agency to allow the transmission business to act as the buying agent for electricity and I hope to see considerable private sector investment in generation”, he said.

Much of the old

He warned that Eskom had to retain certain shared services to maximise cost saving opportunities by “leveraging economies of skill and scale.”  For example, Eskom would still only have one IT system, the extremely expensive but highly effective SAP system, and appropriate segregation of equipment and separation  “programming would be installed to give adequate comfort to investors that their commercial information would be adequately protected.”

He said he had rejected the idea of three IT systems, one for each division, purely on the factor of cost. As a result, Eskom would only have one payroll and would maximise certain scarce resources, for example tax and financial resources.  He concluded that the divisionalisation process was aimed at streamlining and driving down accountability, but this had to be “to the right level within the organisation in order to manage cost, bearing in mind that the final arbiter was the cost of electricity to the consumer.”

Big boss

With Minister Gordon Pravin present as a contributor to the speaker panel but who said very little, the only time that the urbane André de Ruyter looked slightly ruffled was when one MP, asking about future load shedding, said that she was tired of hearing “the same old story of broken-down plant that had not been maintained”.

De Ruyter said that the problem was very real and continued to play the major part in the continuity of power supplied to industry and the SA public.

A winter’s tale

“Whilst the Covid 19 lockdown period, de Ruyter said, has led to a direct decline in electricity usage in the country there has been a clear increase in electricity usage since the move to level 4 lockdown and this will obvious change massively and suddenly as we go in lockdown 3 with winter having arrived”.

“Lockdown also provided Eskom with an opportunity to conduct maintenance on its plants, with the power utility’s new base scenario shifting from a possible 31 days of stage 1 load shedding during the winter period to just 3 days,”, he said adding that the unreliability and unpredictability of the system we have has a built-in risk of load shedding.  “That’s how it is, and the situation remains. This will be the reality until after the 18 months of reliability maintenance, which will last until August 2021.”

Small business again

He concluded that large industrial customers are unlikely to be impacted and that any planned load shedding would likely only be required during the evening peak with load shedding schedules being staggered so that customers were not impacted on consecutive days.


Submit a Comment

Your email address will not be published.

Recent Archives