Eskom COO Jan Oberholzer says he sees some light at the end of the Eskom tunnel as long as the utility gets financial assistance from government.

He told delegates attending the 5th Annual Southern Africa Power Summit, in Cape Town, that Eskom has excellent engineers and specialists but was struggling with debt that could reach R500-billion by the end of the year.

Power Eskom South Africa Vale Media Group VMGB2B Gas Renewables Energy Generation Transmission Distribution
Eskom’s COO, Jan Oberzholer, at the 5th Annual Southern Africa Power Summit 2019

“We will owe half a trillion by the end of the year,” Oberholzer said, adding that the mounting debt was continuing to weigh heavily on the utility.

He also called for far greater political will to urge people to pay municipalities for the electricity they use. Municipal debt has ballooned by R3-billion over the past two months alone, he pointed out.

“We have people who don’t believe they need to pay for the things they get. There has been no political will in helping the situation.” He said “a couple of handfuls” of municipalities weren’t paying up, including Soweto.

Power Eskom South Africa Vale Media Group VMGB2B Gas Renewables Energy Generation Transmission Distribution

“We need desperate help from government to assist us in helping people to believe they need to pay for what they get.”

Oberholzer said Eskom planned to save R77-billion in operating expenses and to double its earnings before interest, taxes, depreciation and amortisation (Ebitda)

“We are definitely determined to double our Ebitda but that unfortunately won’t assist our financial situation. We will still need the assistance on the debt.”

Oberholzer said he was working with the Special Investigating Unit to uncover corruption that was “a sickness within Eskom” but that revelations continued to emerge.

“On Kusile, we have identified five contractors who we believe were overpaid by R4-billion. How do you overpay a contractor R4-billion because somebody would have needed to generate an invoice and verify the work had been done, and someone had to sign it off?’

Oberholzer said he hoped people would be brought to book, and receive prison sentences.

‘Hopefully soon, we will see some of our ex-colleagues and contractors and suppliers of goods and services in orange jackets. I am working closely with the SIU and I promise you – there are some people who need to be very nervous.”

The budget for the Kusile power plant has nearly doubled to around R160-billion, while the budget for the Medupi power station had also doubled from R78-billion to R145-billion.

Significant latent defects in the new plants, particularly boilers that were too short, were also causing a headache and leading to damage downstream. However, he said there would be a solution to this.

“Between Mitsubishi and ourselves, we have decided to stop blaming each other. We’ve agreed to fix it and have a commercial process. I am leaving for Yokohama in two weeks time to conclude these agreements,” Oberholzer told delegates at the summit.

Despite severe problems, he added that there was some light. Costs were being tracked, managers were being accountable and accountability was no longer centred solely at Eskom’s headquarters.

“For the last ten years, accountability has been centred at Megawatt Park, so whenever there was a problem such as too little fuel or coal, then people would just blame Megawatt Park, and Megawatt Park would say ‘Nobody told us’. This is changing.”  

Oberholzer said the latest bout of load-shedding had come following 206 days of no load-shedding. Excellent technical people had worked hard to resolve the situation.

“We have exceptional people working for Eskom. I believe we have the best technology and people in the world working for Eskom.”

He said it was fortunate that Eskom had been able to survive this past winter without load-shedding, but that urgent maintenance work had to be done.  Despite all the challenges, he said Eskom was moving along the right track, albeit slowly.

“Leaders of Eskom fully understand and fully accept accountability and responsibility for a reliable and sustainable product for this country to generate the growth that is required. We sincerely believe that we have started the path of recovery.”

Source: Engineering News