It is very difficult to find evidence supporting the conclusion that André de Ruyter’s three-year tenure as Eskom CEO has stabilised and improved the power utility.
In fact, De Ruyter’s tenure has seen Eskom deteriorating further into the abyss despite a number of opportunities he was presented with to salvage the crisis.
So, in order to measure his performance at the helm of Eskom, let us go down the rabbit hole and look how De Ruyter fared in 10 key metrics, in no particular order.
1. Leadership
Though he was punted as a “turnaround strategist” due to a career spanning more than 30 years in senior management roles, it quickly became evident that he was out of his depth at Eskom. Apathetic behaviour by some management has exacerbated the situation of the ageing generation fleet. The culture of weak consequence management at Eskom is as pervasive as it was before he arrived, if not worse.
2. Load shedding
When De Ruyter took charge of Eskom in January 2020, load shedding had been implemented for 46 days during the previous year. De Ruyter proudly declared in his first media briefing that he needed just 18 months to end rotational power cuts. However, by the end of December 2022 load shedding had increased four-fold to 200 days.
3. Energy Availability Factor (EAF)
According to international standards, power utilities’ EAF - the amount of time to produce electricity over a certain time minus planned and unplanned outages - should optimally be at 75% or above. The EAF of Eskom’s generating plant has deteriorated from 66.6% in 2020 to 56.6%, a whole 10 percentage points decline under De Ruyter’s leadership. At the moment, Eskom says the recovery of its coal fleet will take at least two years to improve the EAF from the current level to 70%.
4. Maintenance
According to Eskom’s own integrated annual reports, the lockdown resulted in a significant reduction in demand, which led to excess capacity and allowed for more short-term maintenance during levels 5 and 4 of the lockdown to address partial load losses. You would think this would have been an opportune moment for Eskom to ramp up the reliable maintenance of its coal fleet while demand was low. However, no long duration outages were embarked on during this period to limit the risk of Covid-19 to employees and contractors. Duh!
5. Unbundling
One of the main reasons De Ruyter bagged the CEO job at Eskom was to oversee and fast-track the unbundling process. Alas, there has not been a single entity that has been successfully unbundled from Eskom. De Ruyter says they have done everything in their power to enable the legal separation of the transmission business.
6. Corruption
By his own admission, Fe Ruyter has tried but completely failed to deal with corruption at Eskom, especially in supply chains. De Ruyter is on record saying that corruption has been “normalised” in Eskom procurement. Last year, De Ruyter told a story of how Eskom paid R80 000 for a knee-guard, which must be worn when welding when it actually retails for about R80 or R90. In spite of his promises that Eskom was fighting against these shenanigans, his has remained a losing battle.
7. Financials
Performance Eskom’s financial health has been deteriorating over the past few years. Eskom’s net loss after tax for 2020 was R20.5 billion, as primary energy costs increased to R112.1bn. Though the loss narrowed to R12.3bn in the financial year ended 31 March 2022, Eskom still expects to report a net loss of R20bn in 2023.
8. Debt
One thing that De Ruyter will be credited for is managing to shave off more of Eskom’s debt by almost R100bn in his 3 years. The utility’s gross debt at 31 March 2020 was R488bn, but that had declined to R396.3bn for the year ended 31 March 2022. And the only reason why Eskom has managed to reduce its gross debt is the help of government equity and the rand strength.
9. Municipal Debt
However, Eskom has completely failed to recoup monies owed to it by various municipalities. The municipal arrears debt has risen to R57bn from R28bn in 2020. This is even after de Ruyter introduced a novel idea called “load reduction” to restrict electricity to defaulting municipalities. De Ruyter’s municipal debt management strategy has seen debt continuing to increase nonetheless.
10. Diesel
In 2020, Eskom spent a total of R7.5bn on diesel-generated power to avoid or minimise load shedding. But expenditure on diesel for the open-cycle gas turbines doubled to R14.7bn in 2022. This does not even account for more than R5bn already spent since November to purchase an additional 150 million litres of diesel from PetroSA.
In the end, as much as we would like to look past De Ruyter’s record at Eskom as one that might potentially be a catalyst for a change that is yet to come, we cannot credit De Ruyter for having turned Eskom around. Like the man for who he is because he may be charming or something else, but do not be mistaken that he left Eskom in a better shape than where he found it.
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