Eskom was destroyed by the National Party – former Eskom CEO

Former Eskom CEO, Jacob Maroga, says that Eskom’s decline, which led to widespread loadshedding, began long before 1994. 

Maroga was CEO of Eskom between 2007 and 2008, during the years when national loadshedding started and electricity prices began to rise.

Speaking to Dr Mbuyiseni Ndlozi on an episode of the African Renaissance Project, Maroga gave his version of what went wrong in the state-owned entity that led to the electricity crisis. 

The collapse of Eskom that led to loadshedding is often blamed on aging infrastructure, delays in new power stations like Medupi and Kusile, and issues of state capture and corruption during former President Jacob Zuma’s tenure. 

However, Maroga claimed that Eskom’s decline began as far back as 1987, when the National Party scrapped provisions for new-build power stations. 

Eskom was established in 1923 and was a world-class state utility at the time, Maroga said. Its power stations innovatively used low-grade coal, and for many decades, the utility was extremely effective. 

“In the mid-1980s, Eskom had its first crisis,” Maroga explained. “In the height of apartheid in the 1960s and 1970s, during the gold boom, Eskom built up its capacity.”

“In the 80s, the economy tanked due to sanctions, so then Eskom had a lot of capacity, and low economic growth, so low demand, low revenue.”

Maroga explained that following this, a commission and an intervention were held in 1983 to investigate how Eskom should operate. 

The Commission of Inquiry into the Supply of Electricity in the Republic of South Africa, known as the De Villiers Commission, recommended a restructuring of the entity. 

Eskom was facing widespread criticism due to low power station availability and frequent supply interruptions. 

It was recommended that Eskom recover 5% more than its expected expenditure so that tariffs become more cost-reflective. A few years later, the entity changed its approach to planning for future capacity as well.

“The financial framework to prepare for a big build, which was used during the big builds of the 70s and 80s, was scrapped in 1987,” he said. 

Eskom stopped building new power stations long before 1994

“What used to happen is Eskom, in preparation for a big build, would put a portion in the tariff for capital funds to build a kitty, so that when you build a new power station, you can draw from it,” he said. 

In 1994, when the ANC took power, Eskom’s focus was shifted to electrification as it took on the ambitious task of electrifying 90% of the country, starting from 30%, allocating most resources to this effort.

After the Kendal power station was completed in 2003, efforts were dedicated to electrification. This led to a problem: demand was growing rapidly, while Eskom had not planned for future supply past 1994.

In 2007, when infrastructure began to age, Maroga said Eskom was forced to drive up the price of electricity to build new capacity, after inheriting a company with no spare capital for this.

“This is why you see in 2007, 2008, electricity prices started to go up to compensate for the new capital we needed to build,” he said. 

To make matters worse, Maroga said, because South Africa had not built new power stations since the late 70s, the country lost the necessary skills for it and fell behind on technology. 

“In hindsight, when you look at the challenges we had as Eskom, since the late 70s we had not been building any power stations,” he said. This led to Eskom outsourcing the contracting for the new stations to international companies.

However, in the 1980s and early 1990s were the last big wave of power station construction in South Africa.

Eskom added roughly 20,000 MW of new capacity in that era, including Lethaba, Matimba, Kendal and Majuba alone.

Eskom’s history, as per its website, does confirm that there was a general lack of focus on generation from the 1990s.

The utility made submissions to the government around 1998, warning that if there were no urgent and large investments made into new power stations, the country would experience electricity shortages in 2007.

Even so, after the early 2000s, almost no new base-load capacity was built until Medupi and Kusile, started in 2007.

However, Maroga added, it is concerning that despite employing 32 of some of the best international companies to build Eskom’s new stations , they failed to build the stations in the allotted time, under the expected budget. 

“The issue of whether there was a nefarious agenda to compromise the build is coming out in the open. These entities that have done similar things all over the world, but in South Africa things just escalated in terms of time and cost.”

“Eskom announced recently that the last Kusile unit is now operational, which is 15 years later. Why did it take so long?” he said. “I think this is really a question that should be investigated.”

The power stations cost R467 billion, exceeding original budget estimates of R233 billion, and have been notoriously unreliable. Maroga finds this suspicious. 

Maroga said that when it comes to Eskom’s decline, sabotage cannot be ruled out. “The power system is critical to the new democracy, and to any country.”

“Sabotage of Eskom would destroy the country and compromise the new political situation,” he said.