Supplying coal to Eskom power stations in the 1980s with Amcoal, the emphasis was on cost containment.
At cost-plus collieries like Arnot and Kriel the coal was delivered to the power stations via conveyor belt. Even the giant Terex trucks moving raw coal from Arnot’s opencast operations to the feeder breakers were electrically powered from overhead cables to save diesel.
I recently received a Whatsapp video showing almost 7km of coal-truck traffic jammed on a public road to offload at a power station. The cost differential between delivering coal by conveyor and road is horrendous. Revitalising the cost-plus model, if it is still an option, will cost billions Eskom doesn’t have. Eliminating road deliveries would anger an important elite who have invested heavily in hauling coal.
Slashing the bloated labour force is not politically possible. Even Phakamani Hadebe’s 2018 planned zero-salary increase was transformed into an inflation-linked 7.5%. Prosecution of saboteurs was discouraged. Further electricity price increases will force a solar migration among those who pay their bills, and illegal connections and increased nonpayment among those who don’t. Cutting off municipalities will cause civil unrest.
According to UCT energy expert Anton Eberhard, Eskom has entered a “death spiral”, paying off maturing loans with new more expensive junk bonds. Total debt is now at about R500bn and increasing at R50bn-R100bn a year. Something decisive must be done, and fast.
Ace Magashule’s recent comments about widening the mandate of the SA Reserve Bank to include “quantity easing” are the product of ANC panic over Eskom’s finances, rather than a Machiavellian plan to unseat President Cyril Ramaphosa.
The Government Employees Pension Fund is already overinvested at R100bn. Chinese banks are unlikely to extend further loan tranches after the April debacle. Persuading the Reserve Bank to print money is still preferable, and quicker to accomplish, than forced private pension fund investments or the mea culpa of an IMF loan.
While I applaud Tito Mboweni and Lesetja Kganyago for defending their hallowed institution, I am not convinced, given the overwhelming odds, that they will emerge victorious.