HomeIndustry SectorsBusiness and marketsEskom retrenchments not an option to reduce operational expenditure

Eskom retrenchments not an option to reduce operational expenditure

South Africa’s state-owned power utility Eskom is weighting up its options to reduce its staff complement by 4.2% to 31,675 employees for 2018/19.

However, according Khulu Phasiwe, the company’s spokesperson, the option of Eskom retrenchments are not on the table.

“That is not on the cards at all,” Phasiwe stated, explaining that Eskom’s priority was to improve its operational performance and reduce primary energy costs.

He was responding to reports that Eskom chairperson Jabu Mabuza said the utility would appoint a permanent chief executive by the end of next month to begin the process of reforming the ailing utility, which might include reducing job numbers.

Subsequently, the National Union of Mineworkers’ Energy Sector Co-ordinator Paris Mashego responded that the union expected to be fully consulted before any decisions were taken about any retrenchments.

“Eskom’s problem is poor leadership and financial mismanagement. They must fix that first before rushing to cut jobs,” said Mashego.

Eskom retrenchments not an option

According to Nersa, the average cost per Eskom employee was R643,000 for 2016/17, R675,000 for 2017/18 and R708,000 for 2018/19. “There is an increase of 5% based on the average cost per employee, which is an inflation increase,” the regulatory body said.

“The reduction in the employee headcount is not due to restructuring by Eskom, but through natural attrition and employees leaving for various reasons, such as voluntary retirement,” explained Nersa.

In 2007, the regulator said the power utility was able to produce 239,109GWh with 32,954 employees, which resulted in 7.26GWh per employee. In its latest application to the regulator, Eskom applied to produce 216,771GWh with 39,186 employees, which translated to 5.3GWh per employee.

“This means that Eskom is producing less GWh with more employees and higher employee costs. The excess employees based on this analysis amount to 6,232,” Nersa said. It said the cost of excess employees amounted to approximately R3.8 billion.

On the other hand, OUTA believes that Eskom’s high costs of operation over the past decade are due largely to its “capture and political meddling by people connected to the Guptas and the previous state president”.

However, the non-profit organisation is more concerned about Nersa’s lack of action “as the regulator in challenging the gross developments of rising primary energy costs, runaway capital expenditure projects, staff headcount and other operational inefficiencies”.

Nicolette Pombo-van Zyl
As the Editor of ESI Africa, my passion is on sustainability and placing African countries on the international stage. I take a keen interest in the trends shaping the power & water utility market along with the projects and local innovations making headline news. Watch my short weekly video on our YouTube channel ESIAfricaTV and speak with me on what has your attention.