YOU have to laugh sometimes. According to the front-page lead in Business Day on Thursday, Finance Minister Nhlanhla Nene has suddenly found the money to make a new R6.5bn loan guarantee to South African Airways (SAA). That is in addition to a R5bn guarantee that is already in place and was extended last month.
SAA has, of course, been shifted from the Department of Public Enterprises to the Treasury, and Nene said that the move was "changing the culture at SAA". Wow, you can change the culture of a large, 80-year-old company that quickly?
Perhaps the minister means its culture of no financial accountability. There’s little the Treasury mandarins, nor anyone else for that matter, can do about spoilt pilots, (often) surly crew and profligate managers.
When Khaya Ngqula ran SAA he brought in Canadian consultants who literally sat in a room and ruled on every single expense. You couldn’t get a cup of coffee on the company. For all his reputational weaknesses, SAA had R3bn in the bank when he left.
But the remark about corporate culture is important and it got me thinking, again, about the hill Eskom CEO Tshediso Matona has to climb in his still brand new job.
His performance last week, |I thought, was not that convincing. Admitting that your company has not being doing its public duty by maintaining its kit properly might have sounded sincere, but it could also have been naive.
If I were Eskom’s insurer, I’d now either be raising my premiums or avoiding it altogether. The new news is that there is still dirt in the (Hitachi) pipes at the number 6 unit at Medupi, which is due to come on stream in a few months. Dirt can foul or break the turbines, but Eskom insists it is going to commission the unit anyway. Sounds courageous, but imagine what the insurance is going to be on that unit now.
Matona used automobile analogies throughout his speech, so here’s another. What would your insurer say if you admitted you’d been texting when you wrote off your new Beemer? They surely wouldn’t pay.
Perhaps it would have been better to keep quiet. SAA, for instance, dare not tell the truth about the Helderberg for fear of bankrupting itself in a flood of insurance suits.
Or maybe Matona was being more calculating, overdramatising a situation so that when the worst doesn’t happen, we’ll all be grateful. After all, load shedding, while saying a lot about the state of the group and its shareholder, has not been a big problem since 2008.
But the new CEO’s biggest difficulty is, as Nene said about SAA, cultural. He is not an engineer. He is a (fine) bureaucrat with a degree in development economics and has no engineers of any repute on his board. How, then, is he to interrogate what the Eskom engineers tell him?
They’ve obviously told him they were forced to keep the lights on for the World Cup and various elections. But did that really stop them doing their work? There would still have been plenty of time to upgrade or fiddle with the machinery of electricity, at least until they forgot to check a coal silo at Majuba (I wonder if the insurer’s going to pay for that now the maintenance truth is out?) before it collapsed last year.
I heard someone call into John Robbie on Radio 702 the other morning with a story about how his brother and his colleagues, Eskom staffers, were basically being bribed with watches and other gifts just to come to work. If it’s true, it’s unlikely anyone will have told the CEO.
Deep institutional knowledge is critical to running a business as complex as Eskom and with the best will in the world, Matona can’t possibly have it. Not for nothing are Eskom’s power stations called a "fleet". He may be the admiral but his ships are laws unto themselves. Unless you’ve done time in minesweepers, frigates, destroyers and cruisers, you’re never going to be able to really see inside them and control them. Of course, it’s too late now to find another leader. Who would want the job?
It is all very well big business forming a crisis committee with the utility, but the devil in Eskom is in the detail, in the "culture". It is engineers and managers set in their ways, never asking for help, too proud (or arrogant) to outsource.
I wish I knew more about procurement, but how do we know the parts Eskom uses to replace original equipment are good enough or bought at the right prices by people with only the public good in mind? It’s the people, always the people.
Someone wrote a good letter to the paper on Thursday, making an old point about why even great CEOs fail. It isn’t the strategy. It’s failure to implement the strategy. That needs the appropriate knowledge and experience, and if the engineers now tasked with eight years of maintenance catch-up don’t start doing their jobs a lot better than they’ve been doing them up to now, we’re in big trouble.
...
NEEDLESS to say, my household, along with the rest of the middle classes, is looking for alternatives. We’re getting quotes on solar and, as we live in the right area (we use municipal gas to cook and heat water), gas-powered generators. How independent of Eskom can we make ourselves?
The prices are scary, but some of this may help you.
For instance, assuming you’re not going to be running the washing machine, pool motor or dishwasher in a blackout, we’re being quoted well north of R160,000 for 3kW of solar. That’s about 12 panels, feeding into deep-cycle batteries and an inverter that kicks in when Eskom goes down. You get about 24 hours of backup power.
Replace all your lights with warm white LED lamps and you make a big gain. Fewer batteries perhaps, or fewer panels. But a single LED 40W candle can cost up to R80, so it is also a big expense once you count all your light bulbs.
You can fiddle around. Use fewer panels and batteries and be a little parsimonious when the lights go out, but any stored solar on a three or four-bedroom house is going to cost you close to R100,000. For our current electricity bill, that would take more than 90 months to recoup.
The gas generators are new and also pricey. The cheapest and smallest installed quote we have thus far (for LED bulb installation) is R74,000 for about 5kVA. Gas not included, obviously. And the tricky thing is that alternative power changes so fast. We keep being told it’s getting cheaper, but it isn’t. Innovation keeps prices high.
Maybe the John Robbie option is the right one. Buy a R7,000 petrol generator and, when the lights go off, switch it on. What the hell? The petrol price is falling, the lights are on most of the time, and if it breaks you can get another one. And best of all, we’ll all still be Eskom customers when the nightmare is over.
Tshediso Matona. Picture: PUXLEY MAKGATHO
YOU have to laugh sometimes. According to the front-page lead in Business Day on Thursday, Finance Minister Nhlanhla Nene has suddenly found the money to make a new R6.5bn loan guarantee to South African Airways (SAA). That is in addition to a R5bn guarantee that is already in place and was extended last month.
SAA has, of course, been shifted from the Department of Public Enterprises to the Treasury, and Nene said that the move was "changing the culture at SAA". Wow, you can change the culture of a large, 80-year-old company that quickly?
Perhaps the minister means its culture of no financial accountability. There’s little the Treasury mandarins, nor anyone else for that matter, can do about spoilt pilots, (often) surly crew and profligate managers.
When Khaya Ngqula ran SAA he brought in Canadian consultants who literally sat in a room and ruled on every single expense. You couldn’t get a cup of coffee on the company. For all his reputational weaknesses, SAA had R3bn in the bank when he left.
But the remark about corporate culture is important and it got me thinking, again, about the hill Eskom CEO Tshediso Matona has to climb in his still brand new job.
His performance last week, |I thought, was not that convincing. Admitting that your company has not being doing its public duty by maintaining its kit properly might have sounded sincere, but it could also have been naive.
If I were Eskom’s insurer, I’d now either be raising my premiums or avoiding it altogether. The new news is that there is still dirt in the (Hitachi) pipes at the number 6 unit at Medupi, which is due to come on stream in a few months. Dirt can foul or break the turbines, but Eskom insists it is going to commission the unit anyway. Sounds courageous, but imagine what the insurance is going to be on that unit now.
Matona used automobile analogies throughout his speech, so here’s another. What would your insurer say if you admitted you’d been texting when you wrote off your new Beemer? They surely wouldn’t pay.
Perhaps it would have been better to keep quiet. SAA, for instance, dare not tell the truth about the Helderberg for fear of bankrupting itself in a flood of insurance suits.
Or maybe Matona was being more calculating, overdramatising a situation so that when the worst doesn’t happen, we’ll all be grateful. After all, load shedding, while saying a lot about the state of the group and its shareholder, has not been a big problem since 2008.
But the new CEO’s biggest difficulty is, as Nene said about SAA, cultural. He is not an engineer. He is a (fine) bureaucrat with a degree in development economics and has no engineers of any repute on his board. How, then, is he to interrogate what the Eskom engineers tell him?
They’ve obviously told him they were forced to keep the lights on for the World Cup and various elections. But did that really stop them doing their work? There would still have been plenty of time to upgrade or fiddle with the machinery of electricity, at least until they forgot to check a coal silo at Majuba (I wonder if the insurer’s going to pay for that now the maintenance truth is out?) before it collapsed last year.
I heard someone call into John Robbie on Radio 702 the other morning with a story about how his brother and his colleagues, Eskom staffers, were basically being bribed with watches and other gifts just to come to work. If it’s true, it’s unlikely anyone will have told the CEO.
Deep institutional knowledge is critical to running a business as complex as Eskom and with the best will in the world, Matona can’t possibly have it. Not for nothing are Eskom’s power stations called a "fleet". He may be the admiral but his ships are laws unto themselves. Unless you’ve done time in minesweepers, frigates, destroyers and cruisers, you’re never going to be able to really see inside them and control them. Of course, it’s too late now to find another leader. Who would want the job?
It is all very well big business forming a crisis committee with the utility, but the devil in Eskom is in the detail, in the "culture". It is engineers and managers set in their ways, never asking for help, too proud (or arrogant) to outsource.
I wish I knew more about procurement, but how do we know the parts Eskom uses to replace original equipment are good enough or bought at the right prices by people with only the public good in mind? It’s the people, always the people.
Someone wrote a good letter to the paper on Thursday, making an old point about why even great CEOs fail. It isn’t the strategy. It’s failure to implement the strategy. That needs the appropriate knowledge and experience, and if the engineers now tasked with eight years of maintenance catch-up don’t start doing their jobs a lot better than they’ve been doing them up to now, we’re in big trouble.
...
NEEDLESS to say, my household, along with the rest of the middle classes, is looking for alternatives. We’re getting quotes on solar and, as we live in the right area (we use municipal gas to cook and heat water), gas-powered generators. How independent of Eskom can we make ourselves?
The prices are scary, but some of this may help you.
For instance, assuming you’re not going to be running the washing machine, pool motor or dishwasher in a blackout, we’re being quoted well north of R160,000 for 3kW of solar. That’s about 12 panels, feeding into deep-cycle batteries and an inverter that kicks in when Eskom goes down. You get about 24 hours of backup power.
Replace all your lights with warm white LED lamps and you make a big gain. Fewer batteries perhaps, or fewer panels. But a single LED 40W candle can cost up to R80, so it is also a big expense once you count all your light bulbs.
You can fiddle around. Use fewer panels and batteries and be a little parsimonious when the lights go out, but any stored solar on a three or four-bedroom house is going to cost you close to R100,000. For our current electricity bill, that would take more than 90 months to recoup.
The gas generators are new and also pricey. The cheapest and smallest installed quote we have thus far (for LED bulb installation) is R74,000 for about 5kVA. Gas not included, obviously. And the tricky thing is that alternative power changes so fast. We keep being told it’s getting cheaper, but it isn’t. Innovation keeps prices high.
Maybe the John Robbie option is the right one. Buy a R7,000 petrol generator and, when the lights go off, switch it on. What the hell? The petrol price is falling, the lights are on most of the time, and if it breaks you can get another one. And best of all, we’ll all still be Eskom customers when the nightmare is over.
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