<\/p>\n
Congratulations to Eskom for a full year without load-shedding. That is a remarkable turnaround from only three years ago when we experienced 300 days of load shedding with devastating impact on the economy.<\/p>\n
While there are many contributors to this achievement, I want to congratulate in particular CEO Dan Marokane and his leadership team at Eskom. Through his leadership, the utility has implemented its Generation Recovery Plan, which has successfully improved plant performance.<\/p>\n
The energy availability factor is up and unplanned maintenance is down. We are seeing the benefit of the aggressive pre-emptive maintenance done over the last three years.<\/p>\n
Read:
Eskom has 13 675MW \u2013 nearly three Medupis \u2013 in cold reserve
Eskom keeps the lights on for 231 straight days<\/p>\n
Credit must also go to Energy and Electricity Minister Kgosientsho Ramokgopa who has fostered a conducive policy environment. Eskom\u2019s recovery has come at the same time as important reforms to the electricity sector overall, on our path to a fundamentally transformed electricity market.<\/p>\n
While there are still critical reforms ahead of us to realise that vision, we are far down the path.<\/p>\n
Private energy generation contributes to end of load shedding<\/p>\n
The end of load shedding was also facilitated by the growth in private sector energy generation. The National Energy Regulator of South Africa (Nersa) has now registered over 2 300 private sector generating facilities which collectively have over 18GW of capacity, representing over R360 billion in investment.<\/p>\n
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Rooftop solar installations have also surged and now account for an estimated 10% of total electricity production.<\/p>\n
That investment will continue, including into expanding the grid. But key reforms are critical, including the independent transmission system operator (TSO) which urgently needs to be delivered. The April deadline for its introduction was missed, and we still don\u2019t have a firm timetable for the reform.<\/p>\n
The independent TSO is essential for a competitive electricity market. It will manage grid access neutrally, ensuring private generators can connect and compete fairly. Without it, Eskom controls both generation and transmission \u2013 the equivalent of letting one airline also control the airports.<\/p>\n
Read\/Listen:
Business backs Ramaphosa reforms but urges implementation
Ramaphosa overrules Eskom revised breakup plan
Eskom unbundling faces fresh hurdles as energy reform drags on
Moment of truth for South Africa\u2019s electricity reform
Ramaphosa and SA\u2019s stabilising electricity system<\/p>\n
These reforms are complex and negotiations have been taking place with lenders regarding the separation. President Cyril Ramaphosa gave a clear signal in the February State of the Nation address that full unbundling would go ahead and that a dedicated team would iron out the details. We need to see the results of those efforts.<\/p>\n
That is the only way we will turn the current positive outlook by Moody\u2019s into an upgrade.<\/p>\n
Every month without the TSO is another month where the promise of competition remains just that \u2013 a promise. Minister Ramokgopa must provide a clear timeline and ensure institutional resistance doesn\u2019t derail this critical reform. We cannot have structural reform drift or backpedalling.<\/p>\n
Ultimately, South Africans will be able to choose from multiple electricity providers and the benefits of competition will bring downward pressure on prices. The minister has a critical role to play in staying on course toward that vision. If we do not, then Eskom\u2019s achievement will fade as demand again outstrips supply and costs continue to balloon.<\/p>\n
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Read: Positive move: Moody\u2019s \u2018upgrades\u2019 South Africa\u2019s outlook<\/p>\n
Eskom\u2019s financial health is critical<\/p>\n
The improvement at Eskom will contribute to its financial health. For one thing, improved plant performance has meant a R9 billion saving from not using diesel in the open gas cycle turbines. Revenue will improve too as Eskom has more electricity to sell. But one major unresolved challenge for Eskom is the huge amount owed to it by local government.<\/p>\n
Johannesburg was in the headlines last week after Eskom threatened to cut off the metro over the R5.2 billion it owes the utility.<\/p>\n
It is among the biggest defaulters but the total debt owed by municipalities exceeds R130 billion. This is the biggest financial risk facing the utility and the biggest barrier to Eskom\u2019s full financial recovery.<\/p>\n
Read:
Crisis committee plan for Eskom\u2019s municipal debt \u2018stalled\u2019
Eskom projects no load shedding this winter, warns of lingering risks<\/p>\n
Which brings me to Johannesburg. The city\u2019s debt to the utility is a symptom of the wider crisis facing the metro. Yet it was deeply disappointing \u00a0last week to hear Mayor Dada Morero in his state of the city address proclaim Johannesburg was a city on the rise.<\/p>\n
This is out of touch with the reality facing citizens who must cope with regular water interruptions, electricity failures, robots and street lights that don\u2019t work, and a financial crisis that National Treasury has sounded alarm bells about.<\/p>\n
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The mismanagement of South Africa\u2019s economic heartland is a considerable constraint on the economy of the whole country. Yet the mayor could not level with the people that city management is failing or be honest about the root causes.<\/p>\n
Business needs the city to work. It remains the home for many of our biggest companies and it needs to become the world class city it aspires to be, where businesses can grow into global champions.<\/p>\n
That can\u2019t happen when our businesses must install backup water systems and generators, maintain private security, and navigate deteriorating roads \u2013 costs that magnify the burden of doing business and undermine competitiveness.<\/p>\n
Read:
CoJ faces renewed power cuts threat as Eskom debt dispute resurfaces
Crisis committee plan for Eskom\u2019s municipal debt \u2018stalled\u2019
Eskom warns of power cuts to \u2018defaulting\u2019 City of Johannesburg
\u2018Absolute governance collapse\u2019: Joburg\u2019s electricity chaos exposes years of mismanagement<\/p>\n
BLSA is supporting municipal reforms through Operation Vulindlela to ensure that the challenges facing local government receive the much-needed attention. But ultimately, Johannesburg\u2019s turnaround requires political leadership willing to acknowledge the crisis honestly and act decisively.<\/p>\n
The mayor\u2019s denial won\u2019t fix broken infrastructure or restore financial health. South Africa cannot afford for its economic heartland to continue failing.<\/p>\n
Busi Mavuso is CEO Business Leadership South Africa.<\/p>\n
#Eskoms #recovery #real #R130bn #municipal #debt #puts #risk<\/p>\n","protected":false},"excerpt":{"rendered":"
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