Eskom 2022/23 Annual Report; with Deputy Minister

Meeting report

The Chairperson welcomed the Members, Deputy Minister, Eskom’s board, and executive to the meeting.

He said the Committee would be receiving a briefing on Eskom’s annual report and financial statements for 2022/23. Last week, the Committee engaged with the Minister of Electricity on the efforts to improve generation capacity. Members welcomed the Minister's efforts to improve Eskom’s capacity to deliver electricity and move down from stages 4, 5 and 6, to stages 1 and 2. The ultimate goal was to completely move away from load-shedding. The Committee appreciated the little improvement, because it was indicative of progress. He was concerned that celebrating the little improvement was being constrained by entering stage 4 on the morning of the meeting.

The Chairperson said the Committee was interested in seeing a well-governed Eskom that was performing optimally to meet the demands of the public in terms of the provision of reliable electricity to the country. The Committee appreciated that the electricity issues contributed to the problems experienced in the economy. Electricity was the oxygen of the economy, and the economy was struggling. A collaborative effort was needed to overcome this. He was hopeful that the movement to stage 4 would be reversed.

Eskom's 2022/23 annual report

Deputy Minister’s opening remarks
 
Despite it being late, Mr Obed Bapela, Deputy Minister of Public Enterprises (DPE), was satisfied that the annual report and financial statements had been tabled. He thanked the Committee for allowing Eskom the opportunity to present. The delay in tabling the report had been due to issues outside of Eskom’s control – the Auditor-General of South Africa (AGSA) and Eskom’s auditors had been busy reviewing information to conclude the audit. The Minister had informed the Speaker of the delay.

He agreed that the energy availability factor (EAF) and load-shedding were worrying issues. Eskom had been warned that these issues were likely to be brought up in the meeting, despite the meeting being focused on the annual report. Eskom would answer questions regarding the end of load-shedding.

Eskom Chairperson’s remarks

Dr Mteto Nyati, Chairperson, Eskom Board, indicated that it was his first appearance before the Committee as the Chairperson of the Eskom board. He gave an assurance that the board was committed to providing the necessary oversight in addressing the issues within Eskom. It was aware of the enormity of this task but believed in the ability of Eskom employees to change their circumstances through conscious efforts. Eskom employees had demonstrated that when properly led, they could work to accomplish a turnaround of the entity.

The board’s top priority was to stabilise Eskom’s leadership. He was happy to report that the Eskom board had provided the Minister of Public Enterprises with three appointable candidates for the Group Chief Executive Officer (CEO) role. The Minister was driving government processes to finalise the appointment of the CEO by the end of 2023.

Dr Nyati said that in March 2023, the Eskom board had approved the generation recovery plan. This turnaround plan detailed a roadmap for achieving a 65% EAF by March 2024, and 70% by March 2025. Many plans of this nature normally gathered dust due to lack of implementation, so the board had appointed Mr Bheki Nxumalo as the Group Executive for Generation, whose task was to lead the effort of turning generation around. Mr Nxumalo was a seasoned Eskom executive with a track record of getting things done. He was known for surrounding himself with capable leaders. His team was steadily but surely leading Eskom out of the issue of load-shedding. It had successfully brought back Koeberg 1 after a year-long outage, and had built temporary stacks at Kusile 1, 2 and 3 in record time. It had stabilised Tutuka units that the previous management had written off. Mr Nxumalo and his team were working hard to turn things around and were making progress.

Dr Nyati said that the board was prioritising consequence management for matters linked to corruption. After a competitive bid process, Eskom management selected and was onboarding an independent forensic company that would accelerate investigations into corruption and criminality within and outside of Eskom. The board expected the new group CEO would lead this initiative from the front. This initiative was part of creating a culture of controls and compliance in Eskom. The board expected the entire leadership team to set the right tone from the get-go. It was optimistic that the recent improvements in planned performance and the measures being taken to root out corruption would continue to yield positive results.

He said the Committee would be briefed on Eskom’s annual report and financial statements for 2022/23. Eskom was not proud of these results, which showed a net loss of R24 billion, a low EAF of 56%, and 280 days of load-shedding. Due to these poor results, Eskom had set out in March to come up with a generation recovery plan that would take it out of these issues. The big driver behind the record financial loss was the continued use of open-cycle gas turbines (OCGT) to supplement generation capacity. The only way to limit the OCGT use in the short term was to improve the reliability and performance of the coal fleet. Implementing the generation recovery plan was key to Eskom’s financial sustainability.

The other driver behind the losses was the huge municipal debt. Eskom was encouraged by the distribution initiative introduced by Eskom and National Treasury targeting the delinquent municipalities. The Eskom Debt Relief Act by Treasury would improve Eskom’s balance sheet, and set Eskom on a path of financial sustainability.

Dr Nyati said that while Eskom’s results were disappointing, Eskom's management and board were working hard to ensure that it improved and achieved better results in the future.

Annual report presentation

Mr Caleb Cassim, Acting Group CEO, Eskom, presented Eskom’s 2022/23 annual report, and said it had
experienced a deterioration in the EAF from 62.02% in 2022, to 56.03%. As a result, there were 280 days of load-shedding. Eskom had developed a generation recovery plan to address this issue. The implementation of load-shedding in 280 days was due to generation supply constraints, and a shortfall from Independent Power Producer (IPP) programmes.

Eskom received a qualified audit opinion in 2022/23, based on the completeness and accuracy of the Public Finance Management Act (PFMA) information disclosed. To address this, it was working to enhance its systems, controls, resources, policies, procedures and reporting structures.

Eskom’s financial indicators had declined due to a challenging operating environment and generation capacity shortages. Earnings before interest, tax depreciation and amortisation (EBITDA), and operating cash flows, had been negatively affected by primary energy cost pressures. Eskom’s favourable revenue growth was offset by a decline in sales volume. Eskom’s cash flow had not been adequate to meet debt servicing requirements.

Primary energy costs had increased by 17% due to reliance on more expensive Eskom and IPP OGCTs to alleviate supply constraints. Coal plants were impacted by frequent breakdowns, resulting in an increased need to use diesel and fuel oil.

Mr Cassim said that government’s debt relief solution would significantly assist in addressing the entity’s debt and interest payments. The Eskom Debt Relief Act, promulgated in July, indicated a relief provision of R254 billion to Eskom’s debt servicing costs. It predicted that its gross debt securities and borrowings balance would reduce by 40% over the next five years.

Arrear municipal debt had increased by 31% to R58.5 billion. Treasury had implemented a municipal debt relief programme, and 28 municipalities had been approved for the debt relief programme so far, amounting to R26.7 billion, or 46% of the total municipal arrear debt balance.

Several key areas were highlighted as focus areas over the next 12 to 18 months to turn Eskom around.  

See attached for further details

Discussion

Mr S Gumede (ANC) said Eskom was lucky that it was presenting at a time when the Committee was overloaded with work. The questions asked by the Committee would be limited. The Committee and the Eskom board understood what they wanted to achieve. The Committee had its own target, but it seemed that time was against it in terms of achieving it. The Committee had approximately five months left in the term, and he was hopeful that they could engage further before the five months concluded. He noted that some progress had been made, pointing out that due to the progress made by some entities, the Committee could focus on other entities needing more assistance.

Mr Gumede indicated that the Committee had previously met with Transnet, which was competing with Eskom for support. For almost 20 years, Transnet had not received any financial assistance from government. However, it was recently indicated that it may be approaching the government for financial assistance. Transnet had indicated that within six months, it would have finalised its views and strategy to address its issues. Eskom was on par with Transnet, so either or both entities could be included as part of the Committee’s success. This would be a big achievement for the Committee, because it would reflect that four entities could operate with minimal oversight.

He was satisfied with the target of meeting the 65% EAF in March 2024. Eskom faced two challenges: the energy factor and the load losses. If the energy factor was addressed, Eskom would be okay, but he was uncertain if the load losses could be addressed. The issue of load losses was unpredictable and unplanned. At times, even the IPPs supplied less than what was expected. In March, the Committee would be in a position to assess Eskom’s progress.

Mr Gumede said that when the Committee met with the Minister of Electricity, he had largely shared the sentiments of Eskom. How had Eskom incorporated the Minister’s plan into its own plan? It improved the plan if it was guaranteed that people would apply force to the situation if necessary, and if it was not, the plan would become shaky.

Referring to Eskom’s qualified audit outcome, he felt it had made a very simple statement when it said this had been due to issues that were not properly addressed in terms of the PFMA information and completeness. He requested further clarity and details on these issues. Why were these issues not addressed at the time? If they had been addressed, the audit outcome could have been different.

He said that sometimes strategic decisions had been taken, but these could have repercussions. It was good for the Minister to announce that the R58 billion would be written off for the municipalities. The municipal debt relief programme would run for three years. However, he was concerned that nothing had been said about how Eskom would be compensated for this.

Mr Gumede said that 280 days of load-shedding equated to nine months. When considering Eskom’s 2024 outlook, there was not much difference. He was hopeful that the situation of increased load losses could be mitigated to reduce the amount of load-shedding.

He concluded by asking the board where they wanted to see Eskom in ten years' time.

Dr M Gondwe (DA) highlighted the ramping up of load-shedding to stage 4 until further notice because four generation units had failed to return to service. Could Eskom provide an indication of when these units were expected to return to service? Members of the public wanted to know when they would be back in service. The Minister of Electricity had indicated that the units would return to service the following Monday. Would Christmas and New Year be celebrated in the dark?

Dr Gondwe suggested that Eskom should present its report in layman’s terms. She felt that it had presented in very technical terms, and she was concerned that ordinary citizens were not able to understand what was being presented or shared by Eskom. The public wanted to know what was going on at Eskom, and what was being done about load-shedding, but this had been presented in technical terms that made it difficult to understand. Eskom should stop overcomplicating explanations, be upfront with the information being shared, and try to explain it in a way that people understand. These meetings were for the benefit of the public, and it was important for Eskom to ensure an understanding of their presentation.

She said that AGSA had stated that its auditors had experienced significant delays with access to critical investigations that had a material impact on the audit conclusions. AGSA had also indicated that there were possible write-downs on assets identified late, and management was still calculating the value of these assets. AGSA anticipated that the audit conclusion of Eskom would be done by the end of November 2023. What were the causes of these delays? Which critical investigation reports were AGSA referring to? Why were there possible write-downs on assets identified late?

Dr Gondwe highlighted that Eskom had recorded a net loss of R23.9 billion. This was a massive loss. Could Eskom mitigate losses of this nature in the face of constant load-shedding and the current liquidity issues the entity was experiencing? This was a lot of money to lose, especially considering that the economy was in a dire state and was not growing as fast as one would like.

She asked if Eskom was commercially insolvent. It was experiencing low levels of income and had just experienced a huge loss. She requested that Eskom be honest in answering this question -- she was convinced that Eskom was insolvent.

She said the total electricity receivables from customers amounted to R64.3 billion, and municipalities accounted for 91% of this amount, and Soweto accounted for 3.5%. How much of this R64.3 billion was Eskom likely to recover?

Had Eskom dealt with the criminality associated with state capture? The Standing Committee on Public Accounts (SCOPA) had recently engaged with Brigadier Burger, who had emphasised that state capture was still prevalent at Eskom. Was it still prevalent?

Dr Gondwe commented that Eskom had incurred fruitless and wasteful expenditure of R105 million. This amount could be understated due to the challenges related to identifying, reviewing and finalising instances of fruitless and wasteful expenditure. Could Eskom elaborate on these challenges, and indicate if there had been consequence management regarding the fruitless and wasteful expenditure? If there had not been consequence management, why not? She highlighted the losses incurred due to criminal conduct amounting to R6 billion. Could further details be provided on the criminal conduct? How many people were implicated in the criminal conduct, and had criminal proceedings been brought against the implicated persons?

She referred to the establishment of an Eskom investigative unit that had brought together security, forensics and loss control functions, and asked how much it would cost Eskom to establish this unit. How many people were expected to work in this unit?

She asked when the purchase of electricity from neighbouring countries such as Mozambique would happen. Some neighbouring countries had indicated that they could sell South Africa electricity, and agreements had been concluded. Why was Eskom not making this happen? What were the challenges? She had asked the Minister of Electricity this question, and he had indicated that he had signed the agreement, and the ball was in Eskom’s court.

Dr Gondwe asked if Eskom was going ahead with the tender which had closed at 10am on 2 November, to procure a new logo and a new corporate identity. What was the cost of this tender? Who at Eskom had approved the decision for the tender for the design of a new logo and corporate identity? On what basis had the decision been taken and approved? If Eskom was still going ahead with this tender, was this the ideal time for it? Was this a priority -- did it not have other matters to focus on? Eskom’s main priority was to end load-shedding, so why would it put out a tender for a new logo in the middle of an electricity crisis?

She asked when Unit Two would be back online at Koeberg nuclear power station. Would it be back online before the operating licence of the power station expires on 21 July 2024? Had the National Nuclear Regulator (NNR) approved Eskom’s application for a separate expiry date for Units One and Two? Would the Koeberg life extension project meet the NNR’s criteria for a new licence to be issued for long-term operation? How much would all of this cost Eskom?

Ms N Mhlongo (EFF) referred to Eskom's financial losses, which the report had stated were due to significant increases in primary energy costs and a reliance on expensive OCGTs. This was combined with the 5% drop in sales value due to load-shedding, load curtailment and economic decline. Why did Eskom rely on costly OCGTs? It needed to quantify daily OCGT use for transparency, in contrast to load-shedding and IPP consumption losses. Was there any strategy to stop this phenomenon of the net loss? It was basic logic that sales would be lost if products were not sold. The 5% reduction was a lot when considering the size of Eskom’s customer base. Could Eskom quantify this 5% reduction in terms of rands and conserved energy?

She commented that 280 days of load-shedding was a lot. Many South Africans had been left in the dark, including schools, clinics, hospitals and police stations. Was there any plan to exempt these government facilities from load-shedding? In the previous year, there had been 65 days of load-shedding, and the increase to 280 days represented a 550% increase. This reflected the failure of Eskom and the government to deliver reliable electricity to the country. What were the maintenance plans for the power stations to avoid load-shedding? Did power stations have a maintenance plan and schedule? If yes, had that plan been followed through? If the plans had not been followed accordingly, what were the reasons for this?

Ms Mhlongo said that Eskom’s liquidity remained an issue and a priority of the Committee. It was contradictory to increase savings while sacrificing plant maintenance at the fleet of coal-fired power units. Eskom needed to specifically report on the differences between the net loss and cost reductions. An additional discrepancy spotted in the report was the assertion that only a liquid company should be called ‘solvent.’

Was Eskom aggressively phasing out coal-fired power facilities in accordance with the Just Energy Transition (JET) investment plan? Was the operating budget for OCGTs funded by capital expenditure (capex), and if this was the case, did the PFMA permit such a transition? Eskom’s report needed to provide the net savings for the year under review.

Ms Mhlongo believed that Eskom should be professionalised. There was a need to capacitate its operations, eliminate dependency on tenders, and review the long-term agreements and greenfield contracts.

Referring to debt relief, she said that relying on debt relief and bailouts could exacerbate financial misrepresentation and gross mismanagement. Corruption was a symptom of mismanagement. What was Eskom doing to address this? Was there any quantifiable key performance indicator (KPI) or key performance area (KPA) and consequence management, to control this phenomenon? Were the bailouts and debt relief being monitored? Would Eskom monitor them?

Ms Mhlongo proposed that a stringent credit control mechanism be used at Eskom. This was currently being done in Ekurhuleni. There was a campaign whereby big corporations and government entities were targeted to collect revenue from them. This campaign cut off the electricity supply to the big corporations that owed Eskom money. It was expected that big corporations, municipalities and government entities would be able to pay Eskom on time, but this was not the case.

In 2023, the National Electricity Distribution Company of South Africa was created in preparation for the formal separation of the distribution division. Was due diligence performed, and what was the end result of this? Had there been any consultation with stakeholders? Was government planning to depreciate Eskom so that it could sell at a low cost? Was Parliament approached for approval of this process, or did Eskom register the company before the results of the due diligence or parliamentary consultations had taken place?

Ms Mhlongo said that if EAF was correlated to efficiency, Eskom’s 56% EAF meant that it was ineffective. This translated to approximately 44% of unserved energy for customers. According to this example, Eskom was not liquid and hence insolvent. It needed to explain the 75% international best practice and how it related to due diligence. Was this report accurate, or was this a process of devolving Eskom in preparation to sell it?

She highlighted the issue of renewable IPPs which had produced less than the set target. What were the reasons for this? What plans were in place to ensure that the set targets were met? IPPs were advertised from window periods one to six, so how many megawatts had gone into the grid? How many appointed companies had been completed and plugged into the grid? Were there any companies that had been awarded but not implemented? If so, how did Eskom plan to resolve this situation? What were the penalties or consequences for failing to meet the targets or deadlines in place for those companies?

The National Energy Regulator of South Africa (NERSA) regulated the tariffs. Were these tariffs universally applied? Thorough research had been conducted, which revealed that some Eskom customers were signed to be on a lower tariff, particularly the greenfield contracts. Eskom needed to clarify this and provide categories of clients accordingly.

Ms Mhlongo asked what the current Kendal air quality imaging standards were. What were the future plans for Kendal to comply with air quality standards?

She said Eskom had received a qualified audit opinion based on the completeness and accuracy of PFMA information disclosed. This was similar to prior qualifications. This audit opinion was very bad for the entity, and implied high levels of incompetence when dealing with financial issues. Non-disclosure of information could mean many things, but what did it mean in this case? For example, it could mean the hiding of corruption. She requested that Eskom clarify this issue. The audit recommendation given to Eskom in previous years had been to develop an audit action plan with internal controls to avoid bad future outcomes. Was the audit plan done? Why did Eskom still have the same problem if it had been done?

Ms Mhlongo highlighted the irregular expenditure, 80% of which was based on non-compliance. Were there any consequences implemented as a result of this? 0.61% of irregular expenditure was condoned in 2022 and 0.25% in 2023. How many irregular, fruitless and wasteful expenditure transactions did Eskom have in its register? When were they reported, and how long did it take for Eskom to conclude a case? Of the 81 cases of fraud and corruption, how many were successfully prosecuted?

Ms C Phiri (ANC) expressed her concern regarding the gender makeup of the Eskom delegation -12 men and three women. The delegation was composed largely of male leadership, which was a serious problem.

She said reference to Eskom’s operational issues and plans could not be avoided, but she did not want a response that stated that ‘the Minister of Electricity would respond.’ The Minister had been appointed only within the last year, whereas Eskom and the Department had dealt with this issue for a while. The Department had an oversight role over the entity, and should have answers. The Committee needed answers to their questions.

She said that South Africans were interested in when load-shedding would be ended.

She addressed the Deputy Minister regarding the appointment of the CEO. It had been indicated that the Minister was pushing to appoint the CEO before the end of the year. The Committee did not want excuses in this regard. The Committee was becoming impatient with the entity and wanted the proper systems in place. She was concerned that the CEO would be appointed only by the end of the financial year, which could mean 31 March, and this did not sit well with the Committee. How far was the process of appointment?

She said that in 2019/20, the former Chief Operating Officer (COO), Mr Jan Oberholzer, had been paid money that was not due to him. Had this money been recovered, or how far was the recovery process?
An overpayment issue has also been highlighted in the presentation. Could Eskom clarify what had happened?

Ms Phiri said that the 5% increase in revenue was a good sign, as it meant there was potential to make more revenue. What were the lessons Eskom would continue to use to ensure that a revenue increase of more than 5% was made in the 2023/24 financial year? How did the 5% increase come about? Eskom may be in a position where a bailout is no longer necessary and would be able to assist itself in terms of the debt relief conditional grant. The presentation had indicated that the debt relief conditional grant may not be viable currently -- did Eskom actually need it?

She agreed that the presentation had very technical language that made it confusing for people to understand. She felt the presentation fluctuated between giving the Committee hope and spiking concern. The presentation was like a rollercoaster. South Africans wanted to understand what was going on with Eskom. This was not a case of Parliament versus Eskom -- it was a case of the citizens wanting and needing services.

On the issue of municipal debts, Treasury published two circulars detailing the application process and conditions for municipal debt relief for defaulting municipalities. The plan would see a municipality’s debts written off over the next three financial years and subject to compliance and conditions. The conditions had been communicated to the municipalities, but the public was unaware of them. Some municipalities had electricity reduction, based on their debts. Sometimes, community members were told that because the municipality owed Eskom money, the electricity would be cut at particular times, while simultaneously experiencing load-shedding. How much was Eskom compensated for writing off the debts? If Eskom was compensated, would municipalities still be forced to do electricity reduction and load-shedding?

Ms Phiri said that the operational readiness of the National Transmission Company of South Africa (NTCSA) had not been achieved as planned due to several external dependencies. When did Eskom anticipate that the Department of Mineral Resources and Energy (DMRE) would finalise the designation of the NTCSA as a buyer? Eskom had completed all lender engagements and had submitted all the required documentation for the operationalisation of the NTCSA. It was awaiting the approval of various lenders, which was dependent on their internal processes. What would happen if the relevant lenders rejected the formal request for consent?

She told the Deputy Minister that over the national voter registration weekend, there had been many cases where citizens were trying to register but this had been hindered by load-shedding. For the upcoming registration weekends, would load-shedding be experienced? While there was an online registration platform, there were areas where many people still believed in going to the voting stations to register, and were not familiar with technology. Many deep, rural areas were disadvantaged due to load-shedding, and people had had to be turned away because of this. The Minister of Electricity was responsible for energy generation. How did the Minister of Electricity and the Ministry of Public Enterprises plan to not have load-shedding during the upcoming registration weekends, and during the election itself?

Mr F Essack (DA) noted that the impact of load-shedding on various industries and the economy had been widely discussed and indicated that he would focus his questions on the annual report so as not to be repetitive.

Overall, the annual report depicted a very disappointing state of affairs. Common sense had to prevail when considering that the EAF had worsened and net loss after tax had increased. These factors were a big worry to Treasury, the Committee, the economy and the public.

He highlighted the issue of municipal debt, and indicated that this had been an ongoing issue. He said that politics played a big role in this issue, but ultimately Eskom had to bear the brunt of the arrears in municipal debt.

He referred to slide 3 which stated, “Distribution network performance remained resilient with frequency and duration of supply interruptions well within target, although energy losses remain too high.” Why should this be?

Mr Essack said there were many different thoughts on Kusile, and he struggled with the Budgetary Review and Recommendations Report's (BRRR's) reference to this power station. There had been an indication that Kusile was due to come online in May 2024. Was this on track?

Slide 6 stated, “...relates to existing multi-year contracts that would continue to track irregular expenditure until condoned or expired.” He asked for this statement to be clarified in simple terms. What was meant by condoning irregular expenditure?

He asked for an explanation of what was meant by "technical losses were inherent to the process."

Mr Essack referred to slide 7, which indicated that Eskom had a net loss after tax of R23.9 billion. This was double the previous year’s loss. How was this going to be mitigated? If this was not addressed, Eskom and the country would be headed for huge problems.

Slide 8 highlighted a R3 billion increase in repairs and maintenance, and higher plant operating costs due to poor plant performance. If Eskom was running a business, why were there continuously ridiculous losses in terms of maintenance and repairs, if there were quality people and first-world systems? Money was being spent on poor quality investments. He was grateful for the transparency. He was hopeful that with the next annual report, Eskom did not present a more damning picture.

Slide 12 indicated interest payments of R33 billion. This equated to R2.8 billion per month in interest payments – was this correct? He highlighted that the debt in foreign-denominated currencies had grown due to the weakening rand, and repayments had exceeded the debt raised for the year. How did Eskom plan to mitigate this? Was there a plan, or was it not controllable due to the fluctuating exchange rate?

Mr Essack asked if Eskom was comfortable that procurement was based on best value for money. What was the current situation in Eskom’s supply chain management (SCM)? How much control did Eskom have over this? Was there a strong likelihood that this would be improved by the end of 2023/24?

He referred to the issue of shareholder dividends, but said that this was probably a non-discussable matter.

He requested an update on the National Electricity Distribution Company of South Africa.

Mr N Dlamini (ANC) said the report created more stress than relief. There was a problem between what Eskom generated in revenue and what it spent. Having to borrow money to service debt was a recipe for disaster. Taking out a loan to pay off another loan created further debt. This was a very strange way of thinking. He felt that the financial decisions being made were sinking Eskom into debt.

Mr Dlamini felt that the Committee should not confine itself to this report when interrogating the problems at Eskom. The census report highlighted a population of 62 million, compared to 48 million ten years ago. What did this mean for Eskom? While Eskom was experiencing the first rounds of load-shedding in 2007/08, the population was significantly less than the current number, and it had yet to present proper solutions to address the issue of load-shedding. Eskom now had to service 62 million people, and it had been unable to service 48 million people. An ordinary person may suggest that Eskom needed to work to build more power plants, but then there was the condition that if Eskom were to get more money, they should not take on new projects. Treasury had to be cautious, considering the financial decisions made by Eskom.

Mr Dlamini said the report had indicated that renewables were not a solution. Electricity would be generated if the elements were there, but if the elements were not there, there would be no electricity. South Africa faced a constant electricity problem, and renewables offered only an ‘as and when’ solution.

The report highlighted the effect of load-shedding on Eskom’s financial status. It was selling less. It needed more money than it was making, and as a result, it had resorted to borrowing more than what the entity could pay. If the entity could not pay this money and was borrowing to pay off debt, this would create a cycle where Eskom had to continue to borrow money to pay off debt. He was very concerned about this issue. His understanding of the report was that other entities owed Eskom money but kept giving it to other entities. Why was this happening? Eskom was swinging from one problem to another without moving towards a solution.

Mr Dlamini acknowledged the effects of global warming and climate change. A large amount was being invested in renewables without the necessary information on what impact global warming would have on the country. He noted that there was already a change in the weather patterns, where some regions were experiencing conditions that were outside of the norm. What did this mean for the reliance and investment in IPPs? If this trajectory was continued, Eskom would have more problems than solutions.

He suggested that maybe it was time to aggressively discuss the option of nuclear power. He acknowledged that nuclear power was expensive, and it was unlikely that it would be affordable at this point in time. However, the current situation is not sustainable or affordable. If Transnet owed Eskom R500 million, and Transnet was still not efficient, no money would be recovered and there would be no growth of the economy. For investors to come and invest, there needed to be electricity, and for Eskom to provide electricity, money was needed. No one would invest as long as Eskom failed to provide electricity. Proper solutions were necessary to move forward.

He commented on the maintenance that was needed due to ageing infrastructure. There had been some acknowledgement by Eskom that ageing infrastructure was not being adequately maintained, and therefore load-shedding had become a necessity.

The statement that there were 280 days of load-shedding, did not mean there had been 280 days of load-shedding, but rather that for 280 days, some level of load-shedding was experienced. If this was not rectified, it could lead to the assumption that South Africa was headed for a total grid collapse, which was not true.

He was concerned about how Eskom was planning to recover the debt that it was owed and requested that Eskom make a presentation on this matter. It was borrowing money to pay its debts while there was money owed to the entity that should be recovered.
 
Ms J Mkhwanazi (ANC) agreed that the Committee’s main goal and focus was to see a well-governed Eskom and improved performance to assist with the economic development of South Africa.

She said the Chairperson of Eskom had indicated that three candidates had been given to the Minister to be considered for the position of CEO. She asked the Deputy Minister to provide clarity on the timeframe for this process. The stability of Eskom and its leadership was a key concern of the Committee.

Ms Mkhwanazi referred to slide 2, which highlighted the headcount reduction of 820, and the 523 youth employment services. One of the core mandates of the state-owned entities (SOEs) was to create employment. Was Eskom happy with this? If the board was not happy with this, what was its plan moving forward?

She referred to page 16 of the presentation, which spoke about the municipal debt arrears that continued to escalate, and the unsustainability of this. She highlighted the conditions imposed by Treasury on the debt relief. If Treasury paid the full current bill, this would go towards Eskom’s revenue. What was the board’s role in this? Had it engaged with any other stakeholders to inform the municipalities of the benefits to them and to Eskom?

She also sought clarity on Eskom's branding proposals in relation to its financial state.

She referred to the acquisition of licences from NERSA and the progress of the legal separation, and asked for clarity in relation to the process that the DMRE was engaged in. What would happen if the policy process did not favour the ongoing implementation?

Ms Mkhwanazi asked how Eskom would control its costs to balance the need to improve its financial position while protecting poor consumers against the high electricity tariff.

She referred to the South African Revenue Service (SARS) and Eskom’s request for a refund of fuel levies from the Road Accident Fund (RAF). Had Eskom sought alternative measures to resolve this issue, outside of court.

She also wanted to know how effective Eskom’s saving programme was in terms of minimising the cost of coal.

The Chairperson appreciated the commitment made to appoint a new Group CEO, noting that the process was in its final stages and that the names of candidates had been sent to the Minister. There had been questions about the previous CEO’s grounding for an engineering-oriented company like Eskom. He was hopeful that the candidates that had been handed over to the Minister had appropriate experience within the engineering industry. The previous CEO was criticised for not having such experience. The Committee wanted to avoid this issue in the future.

He referred to an allegation made to the previous CEO by the National Union of Mineworkers (NUM) at Koeberg. It had made an allegation that a company had been paid billions of rands, but it was not performing and this had been the reason for the delays in the steam generators' replacement project. Unfortunately, the CEO had never had a full session with the Committee during oversight. There had been no proper briefing from Eskom on the NUM allegation. The Committee had received requests from NUM to provide a status update. The project manager had been suspended. The Committee was owed this information.

He said the head of generation, or chief of nuclear, at Koeberg, reported directly to the Chief Operating Officer (COO) instead of to the Group Executive for Generation. He requested clarity on this.

The Chairperson said that the electricity crisis in South Africa needed a collaborative effort between the Committee, the board, the executive, and the Department. This same kind of relationship was needed at a plant level between workers and the executive. The Committee found that there was a lack of engagement between the executive and the workers. There had been a complaint that workers had no opportunity to engage with the executive. This was a serious problem. Was this still an issue with the current executive? This issue had been exacerbated during Mr Andre de Ruyter’s regime at Eskom. Had this issue been resolved? A relationship between workers and the executive was necessary for positive results.

The Chairperson highlighted the court outcomes that had been received the previous day. The court case against Mr Matshela Koko had been struck from the roll. What did this mean for Eskom? Was this a worry to Eskom’s leadership? The judge had indicated that the case had been delayed too much and that this was due to a lack of information or evidence. What were the implications of this? The delays were propelled by non-preparedness.

Eskom's responses

Appointment of Group CEO
Dr Nyati said that the board’s priority was to ensure leadership stability. A permanent CEO was crucial to achieving this. Currently, there are many acting officials. Appointing a permanent CEO would mean the board could hold them accountable for appointing other officials. In terms of the process of selecting the new CEO, the board had been appointed for approximately one year, which allowed it to understand what was required and what type of leader the entity needed in order to address the challenges it faced. For the board, it was important that the new CEO had a good understanding of Eskom and the industry, and had technical knowledge. The CEO also needed to be able to work as a team, and therefore the ability to lead and be a part of a team was a key criterion. The CEO needed to be someone with high levels of integrity and an appreciation of governance, who would be able to lead from the front in terms of good governance. These factors were all considered when the board reviewed candidates for the CEO position. He was confident that the three candidates given to the Minister met these criteria. He was comfortable that any of the three candidates would be able to lead the entity and address the challenges being faced. The Deputy Minister would need to respond as to when the appointment would be made. Eskom had a good working relationship with the Department, and had been kept in the loop throughout the process of appointment.

Relationship with the Minister of Electricity
Dr Nyati said that Eskom’s recovery plan was the same as the recovery plan of the Minister of Electricity. The Eskom employees were the ones turning the entity around. The reports of Eskom and the Minister  were a combined report that used shared information. The Minister worked very closely with Eskom’s Head of Generation. The Minister and Eskom had one generation recovery plan approved by the board. This plan would take Eskom to 65% EAF at the end of March 2024, and 70% EAF in 2025. Eskom was aligned with the Minister of Electricity. Recently, Eskom and the Minister agreed on another way to strengthen the interface between him and the board.

Generation Recovery Plan
The generation recovery plan was the mechanism that would take Eskom out of the challenges it was being faced with. The board was aware that it had to communicate a plan to the country that was doable, and realistic and that Eskom had the capacity to execute. The board should resist trying to create the impression that things would happen at a particular time, when, in reality, they would not. The board felt that the generation recovery plan was a realistic plan that had been properly funded, and there was no shortage of resources to ensure its implementation.

Dr Nyati said that the board had been faced with the challenge of whether it had the people to implement the plan. Mr Nxumalo had surrounded himself with capable leaders and was able to attract people in the different power stations responsible for making the plan come to life. He and the power station general managers were responsible for bringing the plan to life. When considering this team, he was comfortable that Eskom was making the proper progress.

He said an EAF of 60%, reached in October, resulted in eight days of no load-shedding. He was trying to explain what the EAF meant in simple terms, because it was important for people to understand. The push toward 65% depicted a huge improvement from 60%, and would mean a reduction in load-shedding. Kusile 2 and 5 would return by the end of December 2024. This was a huge addition in terms of capacity. This would mean that by the end of December, South Africans would experience a significant change from their current situation. The generation team had been working to identify struggling units, take them offline, service them, and bring them back. This required time. The load-shedding times had allowed Eskom to get to a place where a sufficient base of reliable units was operating effectively. As more units were repaired, the base would get bigger and more stable. The board was confident about the plan. He said the executive team was ahead of its commitment – Kusile 1 and 3 had come on earlier than planned.

Dr Nyati said the board had established a business operations performance committee to support and guide management. When management needed anything, the committee informed the board.

Mr Cassim said that Mr Dlamini had been correct. The statement regarding 280 days of load-shedding would be corrected.

He said that Eskom’s current leadership had worked transparently with the leadership of the unions. There would be a session on Friday with labour on the strategic engagement. The problems at Eskom could not be solved without the staff, and therefore the leadership took the unions very seriously. A lot of harm had been done in the past and it would not be solved overnight, but there was a great effort to overcome this.

Eskom engaged with SARS through the alternate dispute resolution mechanism regarding the diesel rebate. They would not approach the courts; they believed they could reach an agreement with SARS.

Mr Cassim responded to the concerns that Eskom was insolvent. When considering Eskom’s balance sheet, Eskom’s assets exceeded its liabilities. It did need support to meet its service commitments. Over the next three years, the debt relief package gave Eskom the headroom to focus on other issues, such as capital expenditure and operations. The question arose as to whether Eskom was generating enough revenue to cover operating costs. The fiscus would not be able to continually service Eskom’s debt – it needed to be able to pay its own debts. He confirmed that Eskom had been in a situation where one credit card was being used to pay another which was unsustainable. It had to charge the tariff for revenue that covered its efficient costs and serviced the costs of the debt. Even when Eskom billed customers, the customers needed to pay Eskom. This was one of the challenges, as could be seen by the municipal debt and other non-paying customers.

He said Eskom had not built in any improvement in municipal debt payment rates, because introducing the mechanism on municipal debt was new. It had noticed some early improvements, which added to its liquidity moving forward.

Electricity tariffs
Mr Cassim said that Eskom could only charge tariffs that the Regulator approved. Even in the special agreements with certain customers, this was in line with the policy framework of the DMRE in terms of short-term or long-term negotiated pricing agreements. The requests came to Eskom from the customer, and Eskom assessed if they fell within the framework. If Eskom agreed, the request was submitted to the Regulator. Thereafter, the Regulator did its own process. The Regulator approved every tariff, special agreement or standard tariff.

Mr Cassim said that Eskom’s view was that it was charging the correct price, based on the formula and what was allowed in terms of the electricity pricing policy. As a country, it was important that when a customer category needed to be protected, the mechanisms should be made clear and transparent so that everyone understood where the cross-subsidies were coming from. Eskom needed to avoid not charging the correct price in an effort to protect a certain customer base. The correct price should rather be charged, along with a distinct, clear and transparent mechanism was needed to protect the particular categories.

Mr Cassim said that from a transmission perspective, the work done so far with the licences and discussions with the DMRE regarding the Electricity Regulation Act (ERA), Eskom did not believe that it was going to significantly impact the work done, or the implementation of the NTCSA operationalisation.

Generation
Mr Nxumalo said that the strategy spoke about the stations that needed to be protected in terms of not allowing them to deteriorate, and those that had to be recovered. This came against the ambitious backdrop that Eskom had expected of seeing major investment. In the past five years, Eskom had considered taking off some of the operating plants. He said it was better to make decisions when the situation had improved, not in anticipation of improvement.

He conveyed his disappointment over the units that had failed and contributed to the current stage 4 load-shedding. Three of the four units were currently being returned, and were expected to be back online by later this evening or in the early hours of the next morning. Lethabo was one of the best-performing plants, and the issue had been picked up the previous evening, which had resulted in a need to cool down the turbines. The plan was for Lethabo to return online by Sunday. It was expected that the high levels of load-shedding would drop over the weekend.

Koeberg power station
Mr Nxumalo said he was pleased that as part of the journey for the long-term operations of Koeberg, the first outage of unit 1 had been completed. Eskom would apply any lessons it had learnt to the outage of unit 2. Unit 1 returned in the past week and was currently conducting a commissioning test. He expected it to return to full load by the end of next week. Unit 2 had been operating very well and there was no risk to it. Eskom tried to minimise the impact, and would wait until unit 1 was fully stabilised before taking unit 2 off.

Mr Nxumalo said that Eskom had made a submission to the NNR in terms of separating the units. The NNR was currently doing its own processes and had requested additional information, which Eskom had provided. Eskom was engaging with the NNR, and was willing to provide any clarification requested by the Regulator.

Most of Koeberg's long-term operations cost went to the steam generators. There were many other projects as part of the safety case for the long-term operation of Koeberg. The total cost of extending Koeberg’s lifespan was approximately R21 billion.

He said that Koeberg’s Chief Nuclear Officer reported directly to him. The board had decided to do away with the COO position.

Kusile Power Station
Mr Nxumalo said that one of the key issues that had caused the EAF to reduce was the loss of three units at Kusile by October 2022. This had brought the total loss of units at Kusile to four. Three units at 800 megawatts meant 2400 megawatts, which were approximately two and a half stages of load-shedding. Unit 5 had been part of the construction. For this year, at least three stages of load-shedding could be attributed to Kusile alone. The plan had been to return the units by the end of December, and two had already been returned. The lessons Eskom had learnt from Medupi, which was now operating exceptionally well, were being applied at Kusile. Since the two units were returned online at Kusile, Eskom has noticed good performance. Combined, the two units were providing over 90% energy availability. The third unit was currently being commissioned, and he was hopeful that by the end of next week, it would be brought online. He indicated that Unit 5 would be brought online between December and January.

Maintenance
Mr Nxumalo responded to the concerns regarding the increased maintenance costs. When Eskom decided to shut down some of the older plants, it resolved to run the stations. This required a reinvestment, because the plants would not be shut down and would continue to operate. He felt that this was the correct decision until new capacity was available. Maintenance on the plants would not be stopped.

Allegations levelled at Koeberg
Mr Nxumalo said that the steam generators had been replaced, which had been done by the same contractor against whom allegations had been made. Eskom had a contractual relationship with the contractor. In a project of this size, there would always be issues between the employer and the contractors. The contractor was still on site and was waiting to start on Unit 2. Ultimately, the obligation was to ensure Koeberg’s long-term generation and that the steam generators were replaced. Eskom would deal with the issue of the suspension.

There were structures within Eskom to ensure engagement. There were divisional structures that enabled engagement between organised labour and the entity. At a group level, there was a group forum where the stations were represented. He agreed that engagement with the employees was critical.

Distribution
Mr Monde Bala, Group Executive: Distribution, Eskom, responded to the question regarding the due diligence of the distribution entity. Eskom was still working through the due diligence process. Part of the two issues identified as a threat to the distribution entity was the municipal debt and the losses largely resulting from electricity theft.

He said that Eskom supplied 238 municipalities, of which 127 were not in arrears, meaning that they serviced their monthly accounts. Eskom collected approximately 90% of what it should be collecting from municipalities on a monthly basis. Within the 10% balance, a number of municipalities were struggling to service their monthly accounts. These municipalities had been targeted for the municipal debt relief programme. Of these municipalities, 36 had applied and been successful in their application for the programme. An additional 35 applications were currently under consideration. Ten municipalities had not applied. Eskom was hopeful that this would aid the turnaround it needed.

Of the municipalities that had been approved, there was a one to two months' track-record of their adherence to the conditions. Approximately half were fully compliant, and others were still finding their feet, but Eskom was hopeful that they would become compliant soon. After 12 months, Eskom would review the compliance of these municipalities.

Mr Bala responded on how Eskom would recover the arrears debt. The arrear debt would be written off if the municipalities adhered to the conditions.

He said that Eskom did perform credit controls. The way they managed their creditors was that they had to pay or they would be disconnected. Unfortunately, when it came to municipalities, Eskom had court orders that compelled it not to do this. It was exploring how to stop this challenge. The structural issues that made municipalities unable to service their monthly accounts had to be addressed.

He said Eskom had communicated the conditions to the public to the best of its ability, but acknowledged that more could definitely be done.

Mr Bala said that additional electricity restrictions were not Eskom’s intention. It had a particular contract with customers to provide a certain amount of units. If the contract was for Eskom to supply ten units, the entity would supply this. How the municipalities dealt with that was in their own jurisdiction. Eskom complied fully with its contractual obligations.

He responded to the concerns about the impact of load-shedding on critical infrastructure such as clinics, schools, etc. In terms of the regulations, Eskom was compelled to ensure that critical infrastructures were exempted from load-shedding where it was technically possible and feasible. Unfortunately, many critical infrastructures were within municipal boundaries, and were therefore outside of Eskom’s jurisdiction. Eskom did collaborate with municipalities to ensure that municipalities excluded or found ways to mitigate load-shedding for those critical infrastructures. This determination was done on a case-by-case basis.

Eskom had an established relationship with the Independent Electoral Commission (IEC) to identify areas that could face challenges. This structure had been in place before the registration weekend. A plan was in place to deal with voter registration weekends and the actual elections. Contingency plans were in place for specific areas. Eskom was working closely with municipalities to ensure that any issues that arose were addressed.

Responding to the questions about Transnet, Mr Bala said Eskom classified the different types of accounts, and there were the municipalities and the large power users, such as Transnet. The payment level of large power users was above 100%, because some users had pre-payment arrangements, where payments were made before electricity was consumed. Regarding the R500 million owed by Transnet, there was currently a long-standing amount in dispute. Eskom and Transnet were currently going through arbitration. He was hopeful that the dispute would be settled within the next two months. For the amount not in dispute, Transnet was in line with their current accounts.

Concerning Eskom’s engagement with other stakeholders in terms of the municipal debt, as part of the process, Eskom was obliged to follow the governmental dispute resolution mechanisms. Eskom was in constant communication with SALGA and the Department of Cooperative Governance and Traditional Affairs (CoGTA) on the issue of municipal debt. It was considering how to deal with the electricity distribution industry (EDI) structure to ensure that the municipalities were in a position to service their current accounts.

Mr Bala responded to the question of the tariffs and how Eskom cushioned the poor. There was free basic electricity as a policy that the country was making available to indigent households. There were better ways to implement this. Eskom was considering increasing the amount made available for the free basic electricity. The tariffs were structured so that there were cross-subsidies at the lower end of the tariffs to ensure that the poor were cushioned.

He responded on the issue of line losses. When considering energy losses, Eskom looked at how much energy came into the system through generation, and how much energy was sold. The difference between these two amounts equated to energy losses. Energy losses were made up of two components. In the electrical system, there was an inherent loss due to the design of the system – when electricity was passed through the system, heat was generated and this heat was the technical loss. Additionally, the balance was referred to as non-technical losses, which were billing errors and electricity theft. In the past, 70% had been measured as technical losses, and 30% as non-technical losses. These figures had now been switched around. Eskom was trying to deal with the non-technical losses involving how illegal connections, meter tampering, etc, were managed.

Mr Martin Buys, Acting Chief Financial Officer (CFO), addressed the questions involving the PFMA. In the past, Eskom had done a lot in terms of cleaning up the process around the PFMA. It had a proper recording system in place, but there were accuracy issues resulting from not every incident of irregular expenditure being reported in the system. The auditors would then find that there were unrecorded irregular expenses.

In 2023, there was expenditure for new incidents of R2.5 billion. Two of the incidents amounted to R2.4 billion, so there was just over R100 million in irregular expenditure for the rest of the expenses. The trend was coming down, but it would take some time for Eskom to clear it completely.

Mr Buys said that the "completeness" issue related to the fact that the auditors had indicated that in the past Eskom, had not declared everything, and there was hesitancy to rely on the numbers provided by Eskom.

He responded to the question regarding multi-year contracts. For example, if a contract was made with a supplier three years ago, and was a contract for ten years, at the point in time that the contract was placed with the supplier, Eskom may not have checked whether the supplier was in good standing with SARS, but afterwards it had been checked. This did not mean that the contract was invalid -- it meant that the contract was irregular, because all the boxes were not ticked. Eskom could not stop the contract with the supplier because the supplier had not done anything wrong. Until such time as the contract expires or a condonement is made, it would have to be reported as irregular expenditure.

Regarding overpayments, if Eskom thought there was an overpayment, they would try and recover the overpaid amount. In the 2023 financial year, R1.6 billion had been written off due to overpayments. Eskom was trying to recover this from the suppliers. In terms of the PFMA, it first had to perform an investigation to confirm the values.

Mr Buys responded to the question of whether Eskom was getting compensated for the municipal debt, and said it would not get any compensation -- the benefit to Eskom was that as long as the municipalities kept on paying their current bills, Eskom would have a better liquidity position.

He highlighted the increase in the gross debt. Slide 14 indicated an asset of approximately R25 billion, which was the benefit of Eskom taking out forward cover on its foreign debt. If this forward cover had not been taken out, it would have meant that the net debt would not have been reduced. A mitigation strategy was in place.

To achieve savings on the cost of coal, Eskom is currently implementing a plan to try and manage the coal from the source to the stockpile through a tracking mechanism. This was still in the beginning stage, but a lot of work was being done, and many benefits were being seen. There were cases where people had been found guilty of tampering with coal, or not delivering coal.

He highlighted the issue of OCGTs. For this financial year, Eskom had made an assumption that they would use OCGTs for a 12% load factor. This would be reduced over a period of time to an acceptable level of under 3%. The OCGTs would always be needed during peak periods.

He said Eskom had a savings target of R21 billion, and had managed to save more than that. Targets were set annually for savings, and Eskom worked to ensure that the targets were met.

Procurement
Ms Jainthree Sankar, Chief Procurement Officer, referred to the issue of the logo tender. In light of the DPE roadmap for the reformed electricity supply, the legal separation of transmission, distribution and generation was a key priority. Among the milestones was developing a brand and corporate identity for the new subsidiaries. Transmission would be done first and be legally separated under Eskom Holdings. A new brand and corporate identity was needed and it had to look separate and independent from Eskom in the market, locally and internationally. The logo and design updates could be done in-house. Certain activities could be used as and when required to augment Eskom's internal resources to assist with this matter. These design elements would be within the approved budget.

Ms Sankar said that the tender would not be cancelled. At this point, Eskom could not provide a budget amount because the evaluation of the responses received was underway.

She stressed the procurement objective of obtaining value for money. Eskom was committed to ensuring that procurement and the procurement systems were fair, equitable, transparent, cost-effective, and implemented in a way that dealt with historical issues. It had a procurement roadmap that highlighted the appointment of an analytical service provider that would help in terms of analysing procurement data and provide exceptions to focus on in the future. It had put in additional controls, including increasing the amount of catalogued items to stop using pretexts to purchase. With the catalogued items, Eskom uploaded market prices and had price exception reports to highlight to the procurement managers and people on site if thresholds were exceeded.

Ms Sankar said one of the biggest changes was reducing the instances of informal tendering, because that seemed to be the procurement mechanism that was of the greatest concern. Eskom was upscaling its stock in conjunction with Treasury and other organs of state, to get people competent to do the work. It had enhanced its procedures and control frameworks to ensure that the instances and ability to identify them was done sooner.

Mr Segomoco Scheepers, Group Executive for Transmission, responded to the question regarding power from Mozambique. It was important to highlight that Eskom currently had arrangements through the Southern African Power Pool to import power from the region. This was an established mechanism and this was being used whenever there was an opportunity. Additionally, in terms of the supply constraints experienced, Eskom had received various unsolicited offers from different countries and IPPs.

This had become a complex matter, given the different technologies, regulations and legislation that applied. Eskom had to ensure that they obtained the necessary regulatory approvals in South Africa, and this was largely related to PFMA approvals from the DPE and Treasury. Part of the conditions for these approvals was to ensure that the necessary ministerial determinations were received from the DMRE, and this had been done. Eskom also needed to ensure they had the appropriate approvals from the Regulator. The Regulator needed to concur with the determination made by the DMRE and had to confirm that Eskom would be able to secure a cost recovery for the power that was imported, and this had been done. The final approvals came from NERSA at the end of July.

Eskom had launched a standard offer where it considered the price benchmark, looking to the avoided costs of generation, to ensure that value for money was received. This programme had been launched and the various potential suppliers would make offers that Eskom could consider. This was to ensure that Eskom could provide a transparent approach and would ensure that value for money was received. The standard offer was launched in October, and Eskom was waiting to see which suppliers would be able to come forward.

Mr Scheepers commented on the situation regarding IPPs. At a high level, 117 projects had been signed off with a total contracted capacity of 9 421MW. Of the 117 projects, 92 were in commercial operation, with an available capacity of 7 186MW. 13 projects were still under construction with an installed capacity of 1 259MW. Twelve projects were still awaiting a financial close and their contribution was 95MW. The projects were all at different stages of operation, construction and financial closure. As the projects came online, Eskom would be able to clearly monitor them to ensure that they performed. A significant number of these were renewable, and therefore the weather became a big variable regarding what could be produced.

Mr Cassim said that Eskom would respond in writing regarding the allegations on Framatome, and the single investigations unit in Eskom.

Deputy Minister Bapela confirmed that the names of the candidates for CEO had been submitted. The Minister had considered the names, and the process had progressed to the level of Cabinet. As the matter was with Cabinet, it was no longer under the Minister’s control. The Cabinet would conduct its compliance mechanism and make an announcement once the appointment was approved. He noted that the Minister had indicated that the process would be concluded by the end of 2023. If there were any delays, the appointment would be made before the end of the 2023/24 financial year.

He had noted the concerns regarding Eskom's gender parity. In terms of the board, Eskom was almost there, but unfortunately, the whole board was not in attendance, as there were women on the board. At the management level, there would be an opportunity for the new CEO to address gender parity when filling vacancies. Gender would always be a consideration. The balance was likely to be achieved.

The Deputy Minister highlighted that load-shedding would be reduced as the EAF increased. He acknowledged the challenges created by load-shedding, and highlighted the commitment to end load-shedding.

He referred to the talk about unbundling Eskom for potential sale. There was no intention to sell any parts of Eskom. It would remain 100% state-owned. The effort was to modernise the entity and adopt international benchmarks to improve its performance and aid the country’s developmental journey.

Further discussion

Mr Gumede said there had been a suggestion that Eskom had had to co-sign something and write a letter to the unions. The company was still working on this and it had done the work. However, the unions were not happy with the process.

He added that there was an expectation that there would be no load-shedding in December.

Ms Phiri asked about the former COO. She thought the Deputy Minister would speak to the recovery issue.

Ms Mhlongo asked for a further explanation on the issue of 5 557 hours of load-shedding. This equated to 231 days. Could this be explained in simple terms? Did this mean that it was dark for 5 557 hours?

Eskom's response

Mr Cassim responded to the question regarding the hours of load-shedding. He highlighted that the different stages meant that everyone experienced load-shedding differently. Depending on the stage, some people could have two hours on a given day, while others may not. The hours' amount provided did not mean that each customer experienced 280 days of load-shedding.

He said the investigation report was the Framatome one that the board would respond to in writing.

Eskom could not promise that there would be no load-shedding in December. Its priority was to protect the grid, but it would endeavour not to have load-shedding.

Mr Buys responded to the question regarding 280 days of load-shedding. Sometimes during the day, load-shedding was done for only a certain time, and not the full day. This was why the total hours could not be divided by 24.

The Chairperson thanked Members for their contribution to the engagement. He thanked the Eskom board and executive for their engagement and responses.

The meeting was adjourned.