Let’s start with some of the main issues and challenges in South Africa’s energy sector that became apparent in the course of last year?
- The surplus electricity in the system was growing, exacerbated by the 14% decline in demand. This surplus could grow to over 100% of demand – with SA having to pay for double the capacity it requires by 2022.
- Electricity prices were still set to increase by manifold the rate of inflation, despite the recent Nersa ruling of capping increases at 5.3% as Eskom is allowed to claim back for past excessive costs amounting to over R60 billion (between 2013 and 2017).
- Despite an over 500% increase in electricity tariffs, Eskom remains insolvent as the thievery grows faster than tariff increases, and Eskom is projecting a “requirement” for an additional R500 billion in additional revenue or loans to 2022.
What in your view were the most worrying about these?
The most worrying fact is that Eskom, SA’s largest company, was de facto rudderless as the whole Board and most senior Eskom executives were fingered for corruption. This corruption appears to have mushroomed up to the office of the President, with no sign of being stopped.
Recently it was announced that Eskom has reinstated Matshela Koko following a disciplinary hearing, although not as CEO. Your response?
Koko is a national disgrace and it is clear that Eskom remains captured. Koko has been exposed in several instances of lying and unethical behaviour, including publically on Carte Blanche. He belongs in jail, not at the head of SA’s most vulnerable SOE.
What do you think of the role of Parliament in addressing the perceived corruption at Eskom?
The Energy Parliamentary subcommittee investigation is a refreshing attempt to decipher what has gone wrong at Eskom since it was “commercialised” in 2001. However, any results will only highlight that prosecution and clean-ups are long overdue, as the committee is powerless to take punitive action against wrongdoers.
Civil society became very active in the energy sphere last year. This included testimony in Parliament during the Eskom hearings. What in your view were the main accomplishments and what will be your main focus this year?
My main accomplishments included conducting forensic reviews on the Medupi, Ingula and Kusile power station contracts, but that work is far from complete and dramatically short of resources. Another milestone is the completion of the legal preparatory work to have the first Tegeta coal supply agreement terminated, but again the action has been suspended for unknown reasons. The other two Tegeta coal supply agreements should also be terminated, but it seems South Africans do not have the political staying power to exercise their rights, with the result that Tegeta has managed to get Eskom to further increase coal supply prices, beyond the already outrageous prices- which eventually feed into new higher electricity prices. So while we appear to be winning on the “small stage”, we are falling further behind on the “Big Stage”.
What do you see happening in terms of the nuclear deal?
I am convinced that the nuclear deal will be pushed through the moment SA citizens take their ‘eye off the ball’. Zuma’s government has already confirmed that it is beholden to the Russian deal, and their delivery of those contracts to Russia is allegedly behind. So expect renewed vigour from Eskom and the Department of Energy to bulldoze these through.
You are returning as a headline speaker at African Utility Week in Cape Town in May, how important is this event on the energy calendar?
AUW is one of the keystone African events where representatives from the continent gather. From an industry perspective, this is a very important event as it provides a rare opportunity to benchmark and engage with our peers.
Anything you would like to add?
South Africa and the world is at the precipice of revolutionary developments in energy generation and distribution, and the next 5 -10 years will render such dramatic changes that today’s energy supply chain will not be recognisable, especially with the advent of distributed generation, which in many instances will kill off centralised “bulk” generation and distribution. I believe this move will slice electricity costs by up to 90% for the average household, and be a boom industry for participants in the energy revolution, with concomitant radical improvements in standards of living.