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Medupi, Kusile already need R8 billion in repairs

Eskom general manager for group technical Titus Mathe has told Moneyweb that Medupi and Kusile already need R8 billion in repairs in order to correct design defects.

Mathe said that the utility would try and recover the cost from the contractor who built the stations – though this isn’t exactly easy to do.

Eskom CEO Phakamani Hadebe said fixing the stations should cost R1.5 billion in November, and last week Eskom told Bloomberg it would cost R2 billion.

According to Mathe the power stations may take years to fix.

Medupi has tripped 66 times since April last year, and unit 6 had to be taken offline in August after its unplanned outages topped 40%.

Meanwhile Kusile, which has only got one unit operating, has had 18 trips and has energy availability of under 50%.

A big chunk of the problem is bad coal, but also the fact that Eskom didn’t have enough time to properly test the designs back in 2006/7 because the national power supply had become a bit of a crisis at that point.

Meanwhile according to EWN Corruption Watch has started court proceedings to declare the former Eskom board delinquent.

The people being accused of gross negligence and violating their fiduciary duties include Anoj Singh, Brian Molefe, and former Public Enterprises Minister, Lynne Brown.

In November of last year, Business LIVE reported that Eskom had slashed its maintenance budget by almost 50% over the past four years.

My Take

With Eskom what we have is the ANC’s legacy of failure.

According to My Broadband in 2015, government had been warned in 1998 that South Africa risked running out of power if we didn’t build more power plants.

This was near the end of Nelson Mandela’s term in office. When Thabo Mbeki took the reigns, he also failed to do anything about this – and in fact in 2006 he was telling investors that there was no power crisis according to the Mail and Guardian.

Jacob Zuma, when he took office, had to frantically build power plants due to load shedding, but Zuma’s administration was riddled with corruption.

Part of the state capture saga is the case of Tegeta’s Optimum Coal Mine. The mine had been supplying substandard coal for a long time.

In fact in 2016, Fin24 reported that Eskom expected the mine to pay a R2 billion fine for the poor quality of its coal.

In 2018 IOL revealed that Eskom had been paying the mine over R1 billion a year for coal Eskom hadn’t even received.

So basically if you were a coal mine and you supplied Eskom stuff that was actively damaging their power plants, not only would you get to keep the contract, they’d still be paying you two years later for stuff you hadn’t even delivered, or stuff that was still pretty shoddy,

Preventing any of this is not rocket science. If someone sells you substandard goods – stop buying their goods. If someone doesn’t deliver the goods, don’t pay them. It isn’t difficult, unless you’ve got massive corruption going on.

And the net effect of that corruption is that we have a repair bill for two brand new stations that has gone from R1.5 billion to R8 billion in a matter of months.

The kickbacks involved in all of this probably cost millions of rand for those giving them, the cost to country meanwhile is already in the billions.

I’m thinking about who I’m going to vote for this year, and part of what I think we’ve got to consider as a country is the stuff that isn’t manifesto material – stuff like whether the parties involved have the basic administrative ability to do the job.

I look at this issue right now – and the way it became an issue through multiple presidents, and I’m not seeing that basic ability from the ANC.

They’ve had two and half decades to demonstrate that they can run the country well, and that’s not what I’ve seen. I’ve seen their biggest failures not in the big vision stuff, but in the day-to-day running of the country.

For four years they cut costs on maintenance by 50%, now we’re stuck with the bill for all the stuff that broke. We’ve got to take our pound of cure, for every ounce of prevention that we knew we needed – because all the money that was getting stolen had to come from somewhere.

This is just Eskom, all of our state-owned enterprises are failing, and the same thing is probably happening across all government departments.

It isn’t some big visions or grand promises that I’m looking for right now in a ruling party, it is just someone to get the basic administration right. Someone whose focus isn’t on some huge vision, but just getting the basics working so that when it comes time to do the big stuff, the systems are in place to make it work.

This is the thing I’ve got against parties of the “revolutionary” stripe – they’re all about these big changes, and big ideas, but they aren’t looking at the basic groundwork needed, they want to build a skyscraper without laying down the foundations.

We don’t need revolutionaries right now, we just need administrators to get things working.

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