The Energy Intensive Users Group (EIUG) welcomes the appointment of Andre de Ruyter as the new Eskom CEO and looks forward to engaging him on the many challenges facing the South African electricity supply industry.
Urgent Priorities
From an industry perspective, the most urgent priority is to stabilise Eskom’s operational performance and ensure adequate supply to meet national demand. Plant availability within the generation fleet must be improved drastically to remove the persistent threat of load shedding. The energy availability factor has dropped to levels as low as 66% in recent weeks. The impact of load shedding on industry extends beyond safety risks and production losses, to business sustainability risks which reduce investor confidence. Eskom requires strong technical leadership, adequate skills and expertise, swift action and intervention to improve staff morale in order to resolve the pressing supply challenges.
Electricity Supply Industry restructuring and retaining Large Power Users
Whilst concurrently addressing the immediate challenge of stabilising the performance of the generation fleet, Eskom and Government should focus on the accelerated restructuring of the electricity supply industry towards financial sustainability. Specifically, Eskom’s status as a going concern must be retained in order to restore confidence without further accelerating the utility death spiral. It is critical that Eskom retains and supports large power users (LPUs) that not only contribute significantly to Eskom’s revenue through consistent base-load demand, but also support the South African economy and provide large-scale employment. Several industries, such as the ferroalloys, cannot survive further above inflation increases without threatening their sustainability. It is essential that engagements between Eskom, Government and industry continue to find sustainable solutions. The development of Industrial Tariffs for LPUs and long-term negotiated pricing agreements is a key step towards supplying affordable electricity at cost reflective tariffs. This is vital for large industries to survive and protect jobs.
Just Transition
Against the background of the global energy transition, we call for all stakeholders to adopt a shared vision of the future. The challenge will be to achieve a Just Transition, without triggering further de-industrialisation of the economy. We will need the collective wisdom of all role players to achieve this, and Eskom’s role in re-inventing itself will be crucial.
Conclusion
With Andre’s proven leadership track record, we see him as the right man for the job and are confident he will take swift action to rectify both the operational, financial and leadership issues plaguing Eskom. The EIUG, as a significant customer and stakeholder, is committed to working with Eskom and Government to achieve our shared objective of growing the South African economy. We look forward to further engagement in this regard.