Andre de Ruyter says ‘Eskom is not fixable’


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Former Eskom CEO Andre de Ruyter said Eskom is unfixable, and while it may still be around for years to come, the utility will never be restored to its former glory.

De Ruyter was the keynote speaker at the recent PSG Financial Services Annual Conference, which started on 8 May 2024.

At the event, De Ruyter was asked about his tenure at Eskom, during which the utility suffered massive losses and load-shedding reached record levels.

Eskom’s net annual losses after tax during De Ruyter’s tenure totalled R60.8 billion — R19.2 billion more than the power utility’s next-biggest “losers”, Phakamani Hadebe and Jabu Mabuza.

Data from the Council for Scientific and Industrial Research (CSIR) revealed that load-shedding under former Eskom CEO Andre de Ruyter was much worse than under his predecessors.

The CSIR’s statistics of utility-scale power generation in South Africa revealed that the country experienced 11,529 GWh of load-shedding in 2022.

It was numerous times higher than in previous years, with the duration and intensity of power cuts increasing.

De Ruyter explained that Eskom was not “in robust health” when he first joined, and it soon became clear to him that the utility was “a patient just about in terminal decline”.

As CEO, he encountered numerous operational and financial issues like non-paying customers, including municipalities that refused to pay.

“All of those things conspired to make this a difficult challenge,” he said.

De Ruyter said that despite giving his “best shot” as CEO, he could not fix the utility.

This is partly because, according to De Ruyter, Eskom is not fixable in its current form, and the utility cannot be resurrected to the monolith of the past that won the global utility of the year 2001.

De Ruyter made similar comments earlier this year when he told Nuuspod that South Africans must abandon their nostalgia for when the country had cheap power produced by Eskom that was available 24/7. 

“That time is gone. I don’t think we’ll see it again,” he said.

He said the only logical outcome of Eskom’s reform and restructuring is that the company will be unbundled into three divisions – generation, transmission and distribution.

The utility will continue to generate electricity for a considerable time. However, he said it will inevitably become smaller as coal power stations reach the end of their lifespan and are decommissioned. 

“Mechanical equipment has a limited lifespan, and the new generation capacity will increasingly be provided by the private sector – that is a well-established fact,” he said.

However, De Ruyter said Eskom’s transmission business would continue to handle the high-voltage supply between power generation and consumption points for many years.

He recommended that the cheap financing the country gets from the EU and the US should primarily be used for expanding South Africa’s transmission network because it is a natural monopoly and should mostly be owned by the state.

He added that the role of distribution will increasingly be fulfilled by local authorities like municipalities.

source:https://dailyinvestor.com/energy/51029/andre-de-ruyter-says-eskom-is-not-fixable/



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