Confidence or arrogance

As loadshedding wanes, Eskom’s confidence is growing. This is not a bad thing, as South Africa needs its State-owned companies to be places of delivery and, eventually, even centres of excellence.

When self-confidence is earned, as it arguably has been at Eskom, albeit with outside assistance, State companies will again be able to attract the country’s best talent – an impossible task in a context where they are perpetually on the back foot operationally, financially and ethically and when working for a State entity presents a genuine risk to one’s reputation and career prospects.

There is a difference, however, between being confident as a corporate and gratuitous muscle flexing. And there are some worrying signs that Eskom is ready to use its newfound favour within government and society to reassert its dominance in a way that could prove detrimental.

I have previously raised concern about the opacity surrounding the decision to grant Eskom the right to continue to operate five aged coal stations until 2030 while in breach of minimum emission standards that are already lax by world benchmarks. This concession is understandable, given the slow pace at which South Africa has been adding reliable alternatives to the coal fleet, but it was provided without the transparency that must accompany such a consequential decision.

Such opacity has since been replicated in Eskom’s refusal to identify the five transformer suppliers selected to compete under a framework agreement for 101 large-scale transformer contracts over the next ten years.

This disregard for transparency is arguably an early sign that Eskom is on a slippery slope from self-confidence to monopoly arrogance; a shift that is now also becoming evident in some of its attempts to leverage that monopoly power.

One early signpost came in its application to the National Energy Regulator of South Africa (Nersa) for the right to reserve grid capacity for public procurement.

Again, such an application is not a problem in itself. The lack of grid capacity in South Africa is real, and a framework for managing allocations fairly is required, given that independent power producers are able to build projects based on private deals where the rules of engagement are far more flexible than they are during public bid windows. However, Eskom’s submission included no spatial, timing or capacity limits for such reservation, which is surely dangerous.

Far more worrying is Eskom’s recent objection to the issuance of licences to private traders in areas where its distribution entity holds a licence, arguing that the current Nersa rules prohibit two or more licensees supplying the same area. That may be the case, but those rules were drafted for an electricity supply industry framed by vertical integration rather than the competitive market model envisaged in pending legislation.

While it was on the backfoot, Eskom has mostly played a constructive role in helping to shepherd in reforms needed for the transition. Whether this will be the case now that it is no longer a national pariah is an open question.