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Debt-laden power utility Eskom is "technically insolvent" and is facing a three-pronged crisis related to its structure, finances and operations, members of Parliament heard earlier in the week.
(The Department of Public Enterprises later walked back the statement, saying the more correct term was "facing liquidity challenges".)
The department was on Wednesday briefing the oversight committee on the crisis at Eskom, where it highlighted that the power utility was not generating sufficient revenues to service debt and operational costs. It is now reliant on borrowing to cover shortfalls.
Public Enterprises Minister Pravin Gordhan also addressed the committee, explaining that part of the solution to Eskom's problems included addressing its structure through unbundling, financial support from government – the details of which will be revealed in the National Budget next week – and operationally.
In terms of the latter, Eskom is sourcing external expertise to get to the cause of the technical issues at power stations which led to the recent load shedding.
The committee was also updated on Eskom's nine-point plan, which involves addressing technical issues. These are:
1. Fixing new plants (Medupi, Kusile and Ingula)
This involves addressing known design errors through an expert team, to guide the recovery. Gordhan told the committee that there had been changes to the Medupi design midway its construction, and that there are still investigations as to who was responsible and why it happened.
Medupi and Kusile's costs have overrun to more than R300bn.
2. Fixing full load losses and trips
This involves improving "planning, execution and effectiveness" of maintenance, including training and optimising procurement processes to "enable swifter purchases when required", the plan reads. Gordhan explained that maintenance of power stations had been neglected. Power stations, on average, are 37 years old.
He likened power stations to a car which required "deep maintenance" and not just a regular oil change.
3. Fixing units on long-term forced outages
The utility also plans to fix units in "long-term forced outages" to reduce incidents of unplanned plant breakdowns.
4. Partial Losses and boiler tube leaks
The plan is to reduce partial load losses and "re-energise" a programme to reduce boiler tube leaks.
5. Fixing outage duration and slips
According to the plan, the incidents of planned maintenance outages could be improved through better outage planning.
6. Fixing human capital
"Make appointments in critical positions, train key staff and relink centre functions to the stations," the plan read.
Gordhan said that good people had been "forced out" or have left Eskom because they did not want to work in a "toxic environment" or in an "uncertain environment".
Gordhan noted that effort had been made to track down former Eskom engineers who are now sharing the expertise they learnt at Eskom in countries like the Philippines and Indonesia.
"The loss of senior skills at Eskom is not a small matter," he said. Gordhan said it was important to train young engineers.
7. Prepare for increased Open Cycle Gas Turbine usage
Eskom will ensure that the Open Cycle Gas Turbine plant is able to run when required.
"Contracts to be put in place with suppliers for diesel, and logistical challenges to be addressed."
8. Prepare for rain
"Implement measures to reduce the impact of the rainy season by driving compliance with the various power stations Wet Coal Handling Procedures."
Eskom has previously said that rain has impacted the quality or availability of coal.
9. Fixing coal stock piles
Eskom will work on recovering coal stock piles to "appropriate levels". Part of Eskom's problems have resulted in a lack of investment in coal plus mines. Over the past 10 years, coal purchase volumes remained flat, the committee heard.
Gordhan said that the coal shortage was at the "heart" of the capture process.
Government will meet with mining CEOs to bring more stability in terms of coal supply, he said.
