It should be evident to everybody that State-owned electricity utility Eskom is in the following condition:

(a) The road transport coal supply contractors have for years been ripping off the system – the trucks get loaded with good-quality coal, which is driven to an export depot. They then pick up poor-quality coal and take it to the power station where a fellow crook certifies it as being coal suited for a power station. The coal is fed into a boiler, which (as happened at Duhva), sooner or later, blows up, owing to overpressurisation caused by the consumption of poor-quality coal.

(b) Many contracts have been awarded to organisations that have no ability to execute them.

(c) Eskom salaries are way high. An electrical engineer with 30 years’ experience in industry will be paid about R85 000 a month. A similar engineer working for Eskom will get about R130 000 a month.

(d) While the renewable-energy investors state that they produce the cheapest energy in the business, at about 72c/kWh, in point of fact, Eskom can produce power from older coal-fired stations at about 30c/kWh. Eskom has to buy renewable energy and, at current tariffs, loses 15c/kWh on these purchases. Bearing in mind that wind power is only available for 30% of the time, when the wind drops in a short period, the load has to be supplied by gas turbines at a massive cost of R4/kWh. Thus, this represents an unrecoverable loss for Eskom.

(e) Eskom is top heavy with staff in many sectors.

If Eskom is to survive, surgery is necessary. It happens that Eskom’s transmission and distribution businesses are in good order. It is the high level and generation sector that are in trouble.

A quick and easy solution is to hive off the distribution sector from Eskom (all systems supplying power at 132 kV and below) and sell it. It can be sold in chunks to provinces or the private sector. Their business model will be then to buy power in bulk and sell it in distributed form. They will operate by a system known as the ‘day ahead auction’, whereby they predict the load for the following day and ask energy generators (connected to the transmission system) to quote for supplying a block of power for a given period at a given price. This sets the bar level for all and will not penalise anybody relating to renewable energy; for example, let us say the wind turbine operators know that the South Easter is predicted to blow for three days at a given speed. Then they can contract to sell their power for that period with a 80% availability at a good rate. The distributor can thus avoid contracting the gas turbine people, which reduces costs. I am sure you get the picture.

The power station issue is more difficult. There has been much talk of Eskom’s ‘ageing fleet’ of coal-fired power stations, but a 30-year-old power station is really not very old. There is no ‘built-in obsolescence’. One hardly builds a power station and scraps it after 30 years. The power stations are, by and large, all in good order, the biggest damage thus far is from incompetent operations or poor fuel.

An obvious solution is to sell the stations to whoever wants to buy them. A good idea would be for a group of mines to buy some of them and then ‘wheel’ the power from the point of generation (at the power station) to the point of consumption (at the mine) by using the transmission system and paying a transmission charge for using the system.

Or something else. But what we have here cannot go on. Corrupt bosses. Overpaid staff. It’s got to give.