Engineering Dissent: NECOM and the Multiple-Minister Dilemma is the Root Cause of Load Shedding
Article for Independent Online
Originally published in Independent Online.
NECOM and the Multiple-Minister Dilemma is the Root Cause of Load Shedding
With the publication of the VGBE Energy Report highlighting the deteriorating status of the coal fleet and the start of Mr Dan Marokane as Eskom's new CEO on 1 March 2024, South Africans can understand Eskom better by employing the '5 Whys' approach to root cause analysis. The '5 Whys' technique was introduced by Toyota under the leadership of the industrialist Taiichi Ohno, who played a key role in turning it into an international success story.
Why didn't the receptionist call her phone? She was at lunch.
Why was she at lunch? Because the receptionists eat lunch together at 12 pm.
Why did all the receptionists eat lunch together at 12 pm? Because there is no schedule for the different receptionists.
Why isn't there a schedule? There is no policy to rotate receptionists.
Why didn't the management implement such a policy? When asked the question, the managers were confused and didn’t know that there should be such a policy.
As demonstrated in the above example, by the fifth 'why,' the underlying truth and necessary corrective action is apparent. Even in seemingly simplistic issues, like a receptionist not answering her phone promptly, the root cause lies not with the receptionists, but rather within the decision-making structure within the management. This identification helps pinpoint where corrective action is most needed.
The VGBE Energy Report clearly used root cause analysis techniques in their findings of the status of Eskom’s coal fleet where on page 60 it correctly identifies the reason for the lack of energy availability (EAF).
The main root cause for the low EAF is the dysfunctional management system of Eskom. It is characterized by inefficient processes – especially in procurement –, a lack of authority and an opaque decision-making structure.
In my perspective, this constitutes the 4th 'why.' The crucial step now is to ask the 5th: Why is there a lack of authority and an opaque decision-making structure? The turnover rate at Eskom, with 1 CEO per year, raises questions. Not every CEO could be the root cause.
As revealed in the VGBE Energy Report's section titled 'Government Oversight and Governance,' there are too many cooks at the top of Eskom.
The National Energy Crisis Committee (NECOM) notably consists of representatives from:
The Department of Forestries and Fisheries
Department of Public Enterprises
National Treasury,
The Presidency of the Republic of South Africa,
The National Energy Regulator of South Africa (NERSA)
In addition to the above, South Africa has a Minister of Electricity with a poorly defined portfolio.
In what world can the following setup work?
The Minister of Public Enterprises appoints Eskom’s board.
The Minister of Minerals and Energy shapes Eskom’s policies, determining South Africa’s electricity mix through the Integrated Resources Plan. Furthermore, they influence tenders, raising concerns about potential connections to politically affiliated oligarchs—regardless of whether these decisions align with business interests.
The Minister of Electricity handles press conferences and oversees the planning of unbankable investments such as the new transmission lines.
The National Treasury establishes procurement policies, notably the challenging Preferential Procurement Policy Framework Act (PPPFA) and Treasury note 3.
The Presidential Climate Commission, staffed with conflicted environmental lobbyists and notably anti-nuclear activists—lacking serious engineering representation—shapes the decarbonization policy.
NERSA appropriately oversees the industry, yet its tariff on Eskom is not cost-reflective.
Several licensing mechanisms impede the timely integration of new capacity into the grid. The prescription of the DMRE section 34 determination additionally restricts Eskom from incorporating necessary new capacity.
With this setup, we should not be surprised that there are union rebellions at Eskom, that there is a lack of decision making in the structure and that maintenance and operations have been in decline.
My proposal for corrective action after asking the “5th why” would be:
Streamline operations by closing down the Department of Public Enterprises. Pravin Gordan has been a disaster for South Africa.
Establish a single Minister of Minerals and Energy with the sole authority to appoint the board and set policy.
Dissolve Necom and any other conflicted lobbyists associated with the Presidential Climate Commission.
Suspend the various policies around Eskom’s neck such as Tresaury note 3, the PPPFA and mandatory localisation.
All functions, including the Integrated Resource Plan (IRP) and the tender processes, should emanate from Eskom's executive - they should not be the function of a ministry.
South Africa’s policy priorities should be structured in the following order:
a) Energy security
b) Electricity cost and equity
c) Decarbonisation and other environmental concerns.
In the short term the technical solutions should, in my view, be:
Address the issues with the coal fleet and Koeberg, backed by a legal commitment to start an overhaul, funded by treasury.
Eskom should come into compliance with ISO9000 and other quality control standards. This includes stabilizing the coal supply even if it means renegotiating the contracts.
Revitalize abandoned coal power stations such as Duvha 3, Grootvlei, Hendrina, Pretoria West and Rooiwal.
Renegotiate the expensive diesel contracts with PetroSA (that costs 3 Rand more per liter than you can get at the petrol pump!)
Procure LNG, preferably at Matola, to safeguard heavy industry from collapsing.
Implement an ambitious Rooftop Solar Scheme (targeting 10GW by Christmas).
Procure coal by railway and not truck (saving SA up to R70 000 per truck).
NERSA should also reform and ideally add capacity charges to prevent richer homes from offsetting their integration costs and backup onto the poorer households.
Refrain from constructing new generation and new transmission lines facilities; opt for procurement under Power Purchase Agreements (PPAs) with Independent Power Producers (IPPs)
Discontinue Broad-Based Black Economic Empowerment (BEE) purchasing (the root cause of corruption)
Reconstruct the Executive Team, eliminating the COO position
Appoint a new board that consists of a handful of highly qualified engineers.
All appointments should exclusively be based on merit. Transformation should not be a Key Performance Indicator in the shareholder compact.
Eskom is currently bankrupt, and a financially troubled utility should refrain from undertaking new projects such as the ridiculous amount of R 400 billion for the 14 000 km long transmission lines that the Minister of Electricity wants to build. We don’t have the money for it.
Mr Marokane is a highly competent and qualified man, but without political reform, he simply will be another Andre de Ruyter. To allow him to do his job, the first step should be to eliminate the government departments and streamline the process.
Eskom is a failure of policy, it is a failure of governance, it is a consequence of executive overreach. Unless the political economy works towards reform, then load shedding will unfortunately remain with South Africa.
Corrective action is now needed, South Africa doesn’t need more paralysis in analysis.