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Ramaphosa moves to share war room developments with business

Photo by Duane Daws
Deputy President Cyril Ramaphosa and the Eskom Advisory Panel
Photo by Duane Daws
Deputy President Cyril Ramaphosa

20th March 2015

By: Terence Creamer
Creamer Media Editor


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Deputy President Cyril Ramaphosa and his team of high-powered advisers have at last started to take steps to communicate developments at the hitherto opaque electricity ‘war room’.

Ramaphosa met with members of Business Leadership South Africa (BLSA) at the Union Buildings on Friday to brief them on interventions being taken to turnaround Eskom, which had been thrown into an even deeper crisis a week earlier by a board decision to suspend CEO Tshediso Matona and three other senior executives.


The Deputy President indicated that the meeting with BLSA was part of a series of engagements planned with key social partners on the country's electricity supply constraints.

Prior to the meeting, Standard & Poor’s lowered its long-term ratings on Eskom to BB+ from BBB-; a move that it attributed to a lowering in its confidence in the utility’s corporate governance arrangements, as well as in its standalone credit profile.


“The negative outlook reflects our opinion that material execution risk remains associated with the government’s support plan, and that Eskom’s operating performance has not yet stabilised due to rising costs and the very tight generation capacity margin in South Africa,” the ratings agency said.

The Union Buildings meeting was attended by various Ministers and technical experts associated with the war room, as well as members of Ramaphosa’s Eskom Advisory Panel, which included Professor Anton Eberhard, Dolly Mokgatle, Sy Gourah, Smunda Mokoena, Derick Elbrecht and Bobby Godsell.

No briefing was held following the interaction, which was set up as an exchange of ideas on the current crisis.

In fact, the war room has not yet had a formal public briefing since its establishment on December 10, with the one planned for Wednesday, March 11 “postponed”, presumably because of the Eskom board’s decision to suspend four executives and institute a three-month fact-finding inquiry.

Ramaphosa had reportedly urged the war room to press ahead with its work notwithstanding the suspension – a business-as-usual approach that was underlined in the official notice for the meeting with business leaders, which emphasised the need for all sectors of society to be mobilised behind the government programme to deal with the power challenges.

The statement also offered a glimpse into the current mindset within the war room, stressing that there could be “no short-cuts to the challenges facing Eskom”.

“Accordingly there is a need to develop short-, medium- and long-term solutions that are independently verifiable by people with expert knowledge in the energy sector,” the statement read.

This was in line with the growing convergence of opinion between government, Eskom and key stakeholders that had started to emerge ahead of the shock suspensions.

There was a greater, albeit grudging, acceptance that Eskom should abandon it ‘keeping the lights on’ strategy in favour of a policy that focused primarily on restoring the coal-fired fleet to long-term operational health; a development that would require a diligent adherence to preventative maintenance practices.

Therefore, the war room, which is merely an instrument of facilitation and coordination and had no legal standing, was particularly seized with monitoring interventions being taken by Eskom to arrest the steep decline in the performance of the coal-fired fleet, where the energy availability factor had fallen precipitously since 2010.

In parallel, it was seeking to support the utility in signing extensions, before their expiry on March 31, to existing cogeneration deals for about 800 MW, while guiding government in its issuance of a tender for a further 800 MW of near-term cogeneration capacity.

There were also medium- and longer-term objectives, as outlined in Cabinet’s five-point plan, dealing with the galvanising of near-term supply- and demand-side projects and the transitioning of the diesel-sapping plants in the Western Cape to gas.

However, the war room also became acutely aware from the start that the majority of the utility’s problems were strongly associated with its financial crisis. For this reason, attention was also being given to dealing with the financial gaps that would not be closed by the R23-billion government injection already announced.

The message to business was that even if all supply- and demand-side levers were pulled in the coming months, the system would remain vulnerable to load-shedding for at least 18 months.

For this reason, much of the attention was given to how the private sector could support government and Eskom, particularly in the areas of demand reduction and cogeneration.

For its part, BLSA used its meeting with the Deputy President and his advisers to underscore Eskom's strategic importance to the economy and call for a resolution to the challenges confronting the utility.

BLSA expressed a willingness to work with government to restore public and business confidence in Eskom and in the economy at large.


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