AfrElec: South African business leaders back besieged Eskom management after power cuts

A powerful business chamber in South Africa has dismissed calls that state-owned power utility Eskom’s management should step down in the face of severe power outages in the country last week. 

Business Leadership South Africa (BLSA) says it disagreed with those calling for the resignation of Eskom CEO André de Ruyter and his management team as South Africa suffered under a devastating round of power cuts to stabilise its grid.

The outages were suspended over the weekend, as Eskom stabilised power supply from its fleet of coal-fired power plants. But at the same time, the power utility warned that the risk of power outages had not passed. 

BLSA, who had the weight of several of South Africa’s most prominent businesses and businesspeople behind it, labelled the calls foolhardy. In a statement, BLSA said Eskom needed stability now more than ever as it tried to overcome the power crisis. 

It noted that the state-owned utility had had ten CEOs in ten years, creating instability that “only served to make a bad situation worse”.

“We simply cannot afford to again lose the momentum built by this leadership team over the last 20 months, bearing in mind the extremely difficult circumstances they inherited and under which they are operating.

“Causing a renewed leadership crisis would set us further back in the challenging task of securing the country’s power supply,” BLSA said.

At a press conference last week De Ruyter himself dismissed calls to step down, saying stability in management was more important than ever in handling the current crisis. 

BLSA's vote of confidence comes as apex business organisation Business Unity South Africa (BUSA), also pointed out that De Ruyter and his team were trying to manage a crisis that was not of their own making to their best of his ability. Likewise, the Minerals Council South Africa labelled the resignation calls as “unhelpful”.

Eskom needs to implement the scheduled outages because its ageing fleet is not providing adequate power for the needs of South Africa, and if the system were to be overloaded South Africa would face a total blackout that could last for weeks. 

Managing this ageing fleet to prevent this devastating blackout means instituting a planned maintenance programme which involves removing units from the grid for longer periods. But unplanned breakdown was very much a reality in Eskom’s fleet. 

The calls for Eskom's management team to resign was initially led by the Black Business Council, which described the Eskom leadership as “completely overwhelmed, inept and out of its depth”.

The resignation call also found support among various labour unions, including the National Union of Mineworkers (NUM). But NUM’s trade affiliation partner, the powerful Congress of South Africa Trade Unions (COSATU) has been silent on Eskom’s management. 

In its statement BLSA expressed concern about the negative economic and social effects of load-shedding, which it attributed to “massive underinvestment in maintenance over an extended period of time compounded by years of maladministration and outright corruption at Eskom during the State capture era”.

“More than ZAR6bn [$387mn] was stolen from Eskom alone, according to figures before the State capture commission,” BLSA said.

It also said Eskom had to add new generation capacity into the system, a shortfall that Eskom currently estimates to be between 4,000 MW and 6,000 MW.

It encouraged the government to expedite the expansion of its renewable energy programme to help with the shortfall.

Eskom’s 8-GW renewables project pipeline, unveiled as part of its just energy transition strategy, should also be fast-tracked, with private sector involvement.

BLSA also noted that the $8.5bn financing package secured during the recent COP26 summit would give a major fillip to this plan.

“BLSA supports the steps being taken by the current management and its stated strategy and encourages the leadership team not to deviate from the focus on restoring the stability of the grid.”