A Spectacle @ESKOM

A Public Briefing was made 14 December 2022 regarding the resignation of ESKOM CEO Mr André de Ruyter. This is an unusual event that I can only term a spectacle. I listened to it twice and put together a transcript of sorts to keep the details brought up current in my mind as I reflect on all the issues at this event and the much more that come to mind. The day before a journalist called me for my technical thoughts when the news had broken; I had not picked up my daily paper so it all came as a surprise; but that pre-warning made this briefing on the next day something of keen interest to include in my technical reflections.

Transcript of a an on-line press briefing on-demand at https://www.youtube.com/watch?v=_cyfLppDLo8

Makwana, the Chair of New Board (since 31st Sept 2022):

After 85 days 34 mtgs 8 Board 8 Risk&Audit 4 Operation 4 Governance & Strategy 3 Human Capital 4 Investment & Finance 3 Social Ethics

Engaged Board - fully engaged with Executive; Actively involved

Motto - Notion of Make Eskom Great Again (MEGA)

Future-proofing: Keep lights on while turn-around on challenges of generation and other areas

Retain talent and enhance.

Mathebula, Chief Executive for Generation Division departed and now needs search replacement in a 'talent acquisition strategy'

Undo legacy of 'capture'

Replace De Ruyter end of March

Eskom vital to economy

De Ruyter's statement:

Privileged to be given opportunity to work with enormous challenges

1. Operational
2. Financial
3. Societal issues - crime corruption and delivering of un-bundling
4. Am also dependent on the broader political economy, critical to success of Eskom which I failed to achieve.

My Position in that regard is now not tenable, so am stepping back. Not abandoning ship staying on beyond notice period to allow hand-over.

Thanks to the Employees Eskom. Dedicated, Competent keeping generation going within constraints of new plant which is outside Eskom's remit

Will take time off and re-acquaint with Family who have not had attention in last 3 years.

Minister for Public Enterprises Pravin Gordan: States - It's an important Milestone. De Ruyter departing after 3 years.

10 Key points: None of the 10 programmes (of the past 2 years) shall be diverted

1. State Capture shall not come back, current Syndicates shall be stopped; Corruption reversal such as global company ABB refunds to Eskom of 1.5b ZAR plus a payment of 2.5b ZAR to a penance fund
2. Since 2020 Eskom Road Map (un-bundling / re-structuring) of (a) Transmission Company. The Transmission Company Board search continues - after first poor submission; and of (b) Other unit un-bundling to follow suite
3. Current Generation Plant / Plan(?) New Engineers on the Board + the Convocation of Retirees and Alumni of Eskom gathering (implement radical changes to restore output); Hoping that Load shed shall be ended as per Presidential pronouncement
4. Increase Mega-Watt output capacity increase Minerals Dept and NERSA to cut red tape (400-600MW shortfall identified 2020): New plants of all kinds of power are needed to improve energy security
5. Treasury / Finance has commitment to write off Eskom debt from its books to be passed on to national Fiscus (sovereign balance sheet). This guarantees creditors and investor funds (300b ZAR) shall remain safe. Also a hotline for concerned creditors is available either to Minister or to the Board;
6. Country commitment / with Eskom Nationally Contribution COP26/27 Just Energy Transition. Komati Power Station flagship project shall continue. South African government has also given commitment
7. The People Factor within is key. More skills are needed; better integrity required; Work to one national common purpose. There are 'termites' that need to be eliminated by using more effective law enforcement. Skills need improvement.
8. Reintroduce the Engineering Discipline(??) in the Power Stations. Right discipline to overcome the lackadaisical approaches that have developed
9. Pay tribute to De Ruyter's sacrifice
10. To employees: Now is the time to Stand against Corruption and against temptation.

Q&A

1. Will there be an Independent Transmission Company before end of 2022?
2. Is Coal Fired fleet fixable and is the EAF goal feasible
3. Who stopped Diesel?
4. Is De Ruyter a traitor for failing to stop load shedding
5. Chair - you could have defened the CEO have failed to. Are you strong enough to defend Eskom from Mantashe
6. Mantashe is quoted to claim that Eskom is agitating for state overthrow
7. There was a fire at Matla generation plant, whats the status? (De Ruyter's answer: Yes there was a fire at Unit 6 of the Power station, outside Boiler next to Fuel Oil Dispensing system Power Station? Damage is to Cabling and adjacent units are unaffected)

NB: Q4-Q7 came from two press reporters you may get their credentials in the YouTube clip where they identify themselves during the Q&A ending session.

PS: Sunday Papers in Aftermath of Above Press Briefing:

City Press (18-12-2022):

On Page 6, features Small Business 'Rages' against Eskom. Most are struggling to stay afloat with operating challenges and added costs to conduct business between black outs or through them. One statistic CPress did publish (credited to EskomSePush App) is that By Friday 16-12-2022 there had been 143 days of Load Shedding to that date.

Also of technical interest was that the availability of the "Eskom Fleet" of power stations reached a new low of 51.55% in the week to December 11; that is the week prior to the resignation. City Press also added that "The goal is 75% to 80% fleet availability.". This is an interesting specification that I shall consider later. At this point it is not clear whether the specification is a 'design' goal or merely an 'operational' goal. Again more on that topic later in a separate technical critique.

Sunday Times (18-12-2022):

Unlike City Press Sunday Times took the more Inquisitor Investigative Reporting stance on the Goings on at the Newly Appointed Board and its dealings with outgoing CEO De Ruyter.

Front Page, side heading is "De Ruyter probed for 'irregularity' at Eskom.". In the opening paragraph they clarify it is 'procurement irregularities'. So the headline is a bit unfair to him. The gist of it is that De Ruyter, coming private sector did not follow the procedures required in a public entity such as Eskom that requires strict adherence to the Public Finance Management Act (PFMA) and proceded right from initial appointment to expedite his hiring preferences a la private sector management style.

Sunday Times gives a blow-by-blow in this fashion. The new Board member tasked with Audit and Risk (which had met 8 times by Makwana's figures), and led by Fatima Gany spotted irregularity in the appointment of one Stephen Meijers as COO of Rotek Industries, an Eskom subsidiary. From this enquiry a member of De Ruyter's team Nida Gafoor stepped down over "uncomfortabe probes" over it. Ironically she had also been fast track appointed into Eskom by De Ruyter, and more ironically into the executive (GM) portfolio for Audit and Risk.

At the centre of the PFMA compliance probes was an executive recruiting agency named "Woodburn Mann Equity Partners" whose Managing Director Andrew Woodburn was adamant his company had been supplying executive talent to Eskom for the past 30 years, had been audited twice internally and externaly and was not found to be lacking in any way. The new Board's problem was that Woodburn Mann was not on Eskom's official panel for staff placement services.

To crown it all Woodburn Mann was directly responsible for placing a string of executives into Eskom - former CEO Phakamani Hadebe, COO Jan Oberholzer, CFO Caleb Cassim and also resigning CEO De Ruyter himself. Things got stuck in the mud when Woodburn Mann submitted an invoice of ZAR 680,000 for services rendered. The entire deck of cards began to collapse when a PFMA Compliance officer, one Dale Sicard raised a PFMA tick-box issue that led to this domino effect that has seemingly felled De Ruyter. But Mr Sicard has since clammed up and has no more comment to make to Sunday Times.

One Week is a very very long time at Eskom. But let us look back to De Ruyter's entire three years, at least to the portions that did make press and that I can still remember reading. So:

My (MT Khomo) Personal Impressions:

1. He (De Ruyter) apparently was headhunted from Nampak, or perhaps that was his most qualifying experience that landed him the Eskom gig. He had apparently also worked with some of the Eskom team members he recruited from SASOL where he once was, but perhaps in a lesser role than at Nampak.
2. I find it hard to fathom how a Nampak stewardship can ever garner the promotion to Admiralty to the behemoth Armada 'Fleet' called Eskom. But the Sunday Times inquisition seems to point to Woodburn Mann magic headhunting tricks.
3. Now Woodburn's pedigree of 30 years as Eskom's executive talent supplier which puts them at epicentre of what I shall call Old Order employment practice which had been enshrined into the law of the land circa the 1911 Mines Act, predating full blown Apartheid by four decades. And De Ruyter is then simply Woodburn Mann currency by association. Which might augur with his own admission at time of resignation that his height of form was beneath the depth of function required for Admiral of Fleet.
4. Besides the Woodburn distraction (it does not really tie to Eskom Load shedding problems - Minister Gordan indicates the problem is actually decades old) there are other things to note in the conduct of his stewardship. When he took the helm a first controversy involved a Diesel contract which had been one BEE supplier's golden goose for almost two decades. Just around then load shed spiked to Stage VIII and I believe De Ruyter tried to wrest that contract away from the BEE supplier for direct supply from KZN refiners - most likely SAPREF.
5. Diesel is the last ditch effort at keeping the lights on when the coal fleet has faltered. It is very expensive because it involves dollar purchase of oil at high seas prices. It has to be hauled by rail from coastal tank farms to wherever the failed generating plant is. Usually Mpumalanga, but sometimes Natal, and conversely to wherever the open cycle turbine generators are located on the affected grid section. Haulage takes five days and so it means the effort requires an emergency mini-plan at the end of which the entire train load is burned within five hours of generation. Eskom is not very good at emergency mini-planning and Stage VIII embarrased the Presidency into cutting short a foreign trip.
6. Department of Minerals and Energy decided to outsource Emergency Power Production to Private Power Producers right at the time De Ruyter took helm and began an Expression of Interest call for IPP bids. I happen to have been asked to respond so got into its gory details. I am a trained, and licensed engineer and more, and so can read requirements and immediately extract their practical import so here was my understanding of the Emergency IPP requirements.
7. The IPP was to be on standby, be ready for on-demand switching for around 19 hours of any 24 hour cycle, and had to be able to run up to 5 hours uninterrupted; and had to meet any and all Eskom operational needs. I do not think De Ruyter can have been that conceited. The requirements were drawn up by what Minister calls the 'Convocation' of what I personally call Old Order Eskom.
8. My immediate interpretation was that the tender could only be satisfied by coastal oil tank farms with on-site open cycle turbines. No more 5 days of Diesel haulage. Now this was the same time that the battle between the BEE diesel contractor and De Ruyter was raging. The readers may connect the dots as they prefer to; in any event the tender was awarded to Karpower (sic), a Turkish floating oil tanker solution with on-board open cycle generators. Often times 'Turkey' is a front for either Germany or Russia. Take your pick.
9. Enter the environmentalists who immediately sought to interdict near-shore oil fired electricity generators that had not even received Environmental Impact Assessment 'letters' for neither air, sea nor coastal seabed. And they succeeded in stopping the implementation of the Emergency Power IPP tender as awarded to Karpower by Department of Minerals and Energy.
10. In the midst of all that SAPREF declares it is itself no longer sustainable and decides to start shutting down its Durban refining operations. Perhaps the Diesel contract might have been a lifeline? (But it is all water under the bridge. SAPREF is a consortium refinery of oil companies. The former Caltex has also decided to discontinue refining in the Western Cape. SASOL has discontinued its participation in construction of a natural gas pipeline from Mozambique to Mpumalanga.) The near-term fossil energy outlook is bleak for whoever becomes Minerals and Energy minister post the Nasrec Ruling Party elective conference now running.

So to me, all contributors to the de Ruyter press briefing, including the QnAyers give impetus to some of my above Minister-like list of 10 recollections. There are many more forgotten details, but I think these are those that are directly linked to The de Ruyter Spectacle @Eskom.