Pravin Gordhan Eskom Plan

Photo: Department of Public Enterprises / Twitter

Eskom: Pravin Gordhan’s rescue plan in six simple steps

Pravin Gordhan is the man with a plan. But is it any good? His suggested interventions for Eskom were laid bare on Tuesday, and we’ve picked them apart.

Pravin Gordhan Eskom Plan

Photo: Department of Public Enterprises / Twitter

How do you solve a problem like Eskom? Earlier this month, acting CEO Jabu Mabuza claimed he never asked for the job during a tense press conference at the height of our recent load shedding schedule. Those trying to save the utility are daunted by the scale of the task – but Pravin Gordhan can’t run away from it.

On Tuesday, the Public Enterprises Minister explained how Eskom would “get back on track” over the next few years, after working with several different departments on a rescue plan. However, it would seem Mr Gordhan has only begun to scratch the surface, and that any tangible benefits are still some time away.

The Eskom recovery plan

The cabinet member suggested his plan could take “between 5-10 years” before we feel its positive effects. Nonetheless, this is the first time we’ve been given a road-map to lead Eskom out of the dark – and we’re expecting Finance Minister Tito Mboweni to reveal more about debt recovery during Wednesday’s Mid-Term Budget Speech.

We’ve broken Pravin’s press conference into six chunks, explaining each step of the planned recovery process:

Pravin Gordhan’s rescue plan for Eskom:

Breaking up the departments

Distribution and Transmission will be separated. Around 6 000 people are responsible for getting electricity from power stations to our homes. Breaking up the firm is seen as a necessary step to help manage some of the “bigger” issues. This shall be done by 31 March 2020.

Group Eskom’s power plants into “three big clusters”

There is a plan to generate competition within Eskom. Gordhan says the ANC will divide all 16 of SA’s power stations into three groups who independently provide energy. Each cluster must produce “the most cost-effective and efficient” electricity. He believes this competition could drive-down electricity prices.

“Expect new appointments soon” – Pravin Gordhan

Getting the right people in is now crucial. Pravin Gordhan told the media briefing a new CEO will be appointed “next week”, and there are several shake-ups coming to the board as well. The minister blamed “state capture” for chasing away skilled engineers at the company.

Pravin Gordhan wants to keep the creditors happy

Without giving too much away, Pravin gave us a bit of the obvious. He said that the R450 billion debt black-hole consuming Eskom has to be dealt with – Gordhan believes that investors and creditors can see the new direction the utility is heading in, and says this will help bring the debt down over the next ten years.

Recover Eskom’s lost funds from “extravagant” contracts

Gordhan stated that Eskom are looking to renegotiate coal and diesel contracts for cost-saving. He says “at least seven companies” are making more than 100% profit based on their contracts with the utility.

An overview in Pravin Gordhan’s own words:

“Eskom can’t remain as it is. We need a reliable source of energy for South Africans. We must resolve operational issues and shift towards a new model. It’s a case of reducing the debt, breaking plants into clusters and hiring the right people… We must reassess our leadership, but I’m optimistic that a turnaround is possible.”

Pravin Gordhan