Something is terribly wrong at Eskom Herewith a bit to read about our power supplier: Eskom. You will find all on this post at: news24 Now some might say, what a lot of... Do yourself a favour, read some, read all; and then think about this: Where else are these, and similar, or even worst aspects in practice. (Enjoy the read) Cape Town - Generally, brands that operate in competitive environments are more interesting than those that have no significant competition and vigilant stakeholders to keep a watchful eye on. This is because the former have to invest resources in reputation and in being the best that they can be to attract loyal customers, grow goodwill and maximise profits. They have to operate within the rule of law and behave like good corporate citizens, ensuring that they put the correct tick on all known rights charters: human rights, children’s rights, women’s rights, animal rights, environmental rights, etc. This is in addition to their basic responsibility of delivering on the promises they make through their promotional and corporate messages and delivering quality goods and services at the agreed time and place, driven by a clear set of values. Brands that operate in relatively uncompetitive markets generally get away with delivering sloppy service and poor quality products because they know they can. Ironically, they often spend millions on salaries and benefits for company executives and senior management who, in addition, also receive annual ‘performance bonuses’ that have nothing to do with satisfying customer needs. Monopolies know theres nowhere else to run In some cases, they also benefit from surprisingly huge retention fees. ‘Corporate reputation management’ means one thing for companies operating in a competitive market and something else, if anything, for monopolies like Eskom. Monopolies know that their customers and other stakeholders are trapped, with nowhere else to run when they’re not happy with the quality of goods and services provided, as well as the conduct of company executives. Things get even worse in highly politicised environments like South Africa, where unhappy customers and other stakeholders easily get treated as unpatriotic – in some cases having ‘treason’ hung over their heads - whenever they voice dissatisfaction with government managed brands, especially when this criticism is voiced in the presence of foreign media and potential investors. Eskom perfectly fits the description for brands belonging to this category. After making promise after promise and failing almost each time to deliver as undertaken, Eskom can no longer claim to have a respectable corporate reputation to speak of. The company is known for paying huge salaries to its senior executives and managers on the one hand and, on the other, for poor planning of almost everything it claims to be in control of. Unplanned outages disrupting economic activity and domestic lives; planned outages often lasting longer than scheduled or not happening according to issued schedules; irregular maintenance of existing infrastructure; failure to complete the construction of new power stations according to plan; strategy-making fatigue after umpteen iterations of turnaround strategies in recent years; procurement processes that seem to be conducted in boardrooms filled with smoke and mirrors; and infighting for power - the wrong kind of power. Eskoms forgotten rank and file Added to this long list are employees said to be forgotten in the battle to save Eskom, reduced to a reliance on media reports to learn about company developments. Apart from Eskom management, everyone else is unhappy with the quality of service they get from Eskom. All attempts by the otherwise respected Andrew Etzinger, the utility’s acting spokesperson, to bridge the divides between Eskom and the public seem to have come to naught. Etzinger’s normal job is that of senior general manager for integrated demand management. He should know what is happening in the business but, going by the repeated mismatch between what he says will happen and what ends up happening, something is terribly wrong at Eskom. The sad aspect of this state of affairs is that things have not always been like this. Some of us recall a very ambitious campaign launched a few years ago when Eskom planned to light up the continent. At the time, it was highly believable; all seemed perfectly possible. Now, even this has become a mere pipe dream. Experts will tell you that a brand is a promise, or a list of promises. Brand identity is what brands aspire to be known for and brand image is what they’re actually known for. Brands try to enhance their identity through fancy multi-media corporate and promotional messages aimed at influencing their brand image, i e how they are perceived by customers and other stakeholders. There is always a gulf between brand identity and brand image that all brands should continuously strive to narrow. Going by our experience of corporate behaviour at Eskom, South Africa’s premier power utility doesn’t seem to give a toss about what the world thinks of it. The answer might lie in the opening up of space for increased competition from bigger independent power producers. With luck, this might force Eskom to invest more in corporate conduct befitting a brand that values its stakeholders. Until then, it looks like we’re doomed to more promises and increased and surprise power outages, all capped with more fruitless corporate speak from Etzinger. - Fin24 *Solly Moeng is a brand reputation management adviser and CEO of strategic corporate communications consultancy Hewers of Wood. Eskom hike for salary increases - report Johannesburg - One of the reasons Eskom is applying for an electricity hike is because the average annual salary of one of its employees is expected to be R820 000 in 2017 and 2018, according to a report on Saturday. Beeld newspaper reported that Eskoms total salaries for about 45 600 employees at that time would be about R37bn. These figures are one of the reasons Eskom gave to the National Energy Regulatory of SA (Nersa) as part of its request to increase electricity tariffs from 1 April 1, with 16% for the next five years. Beeld reported that the information was part of Eskoms submissions handed in to Nersa. In the documents Eskom claimed that in the current book year, the average salary per worker is R633 000 annually. According to the documents, the reason for the high salaries was because new power stations needed more employees, and there was need to get more skilled workers and to keep them. However, the National Union of Metalworkers of SAs Karl Cloete told Beeld that their members at Eskom do not get salaries like that. We want to see who gets paid so much that the average is so high. We do know that Eskoms top-managers have been getting big bonuses and increases in the past decade, Cloete said. Investment Solutions economist Chris Hart told the newspaper that no company in the private sector could afford to pay salaries like that. Eskoms spoksperson Hillary Joffe did not deny the proposed salary increase. Nersa is expected to announce Eskoms tariff increase on 28 February SAPA A) Eskom worries grow amid load shedding Johannesburg - Eskom is concerned about its diesel reserves which could affect electricity supply in the coming week, the parastatal said on Sunday. We have a certain amount of diesel, but not full capacity, spokesperson Andrew Etzinger said. If we need to run the... open gas turbines hard in the first few days of the week we will deplete [our reserves]. He said the system was expected to be tight in the early part of the week but no rolling blackouts were scheduled. We are concerned about the latter part of the week if we are not able to get adequate supplies of diesel. Eskom had alternative power stations which burned diesel, however, these were expensive to run and would normally only run at peak times. Now we are virtually running them on a permanent basis, Etzinger said. This pushed up Eskoms operating costs. PetroSAs vice president of corporate affairs Zama Luthuli told the Sunday Times that Eskom had been supplied in excess of their normal requirements of diesel. Weve secured additional supply through imports and we expect the situation to normalise in the coming few days, she was quoted as saying. Etzinger said Eskom was implementing stage one of scheduled blackouts on Sunday. On Friday afternoon, Eskom started with scheduled blackouts. On Thursday, Eskom said the power system was severely constrained as a result of unforeseen technical problems at power stations. B) Eskom mum about crack in silo Johannesburg -Eskom on Thursday declined to comment on what it called rumours of a crack in one of the remaining coal storage silos at its Majuba power station in Mpumalanga. The two remaining coal silos were emptied after the incident and prepared for a thorough examination, spokesperson Andrew Etzinger said. Once that examination has been concluded we will announce the results. Inspections were being conducted at all of Eskoms silos around the country, he said. Etzinger said none of the silos at the Majuba station were being used and temporary measures were still in place. This followed a claim by trade union Solidarity that a silo had a two-metre-long crack. Solidarity today warned against Eskom’s continued denial regarding the actual state of its coal storage silos, spokesperson Deon Reyneke said in a statement. This follows after information has recently been brought to Solidarity’s attention that the Majuba power stations silo 30 has a visible two-metre-long crack just over a month after the collapse of its silo 20. The silos collapse affected coal supplies to all six units at the power station, which had a total capacity of 3 600MW, or about 10% of the countrys power needs. At the time Eskom warned of possible rolling blackouts because of the collapse. Solidarity accused Eskom of ignoring the unions information. Two days after the silo collapsed, Solidarity issued a statement claiming that Eskom had been aware of abnormal vibrations in the silo for months, Reyneke said. Eskom has since repeatedly denied any such knowledge. Etzinger said Eskom urged Solidarity to keep sending it information. Eskom has an open door policy and we are aware of Solidaritys statements in the past regarding information it made available to Eskom about the silos. We continue to ask for the information they have provided in the past, he said. C) Eskoms electricity struggle: Unpaid bills Soweto - Zodwa Madiba has not paid an electricity bill in 14 years and is resolute she never will, holding the African National Congress (ANC) to vague promises made in the dying days of apartheid to provide free electricity to all South Africans. Such defiance is widespread in the sprawling township of Soweto, crucible of the anti-apartheid struggle and home to 1.5 million people who, between them, owe state power utility Eskom R3.6bn ($327m) in unpaid bills. Although the sum is dwarfed by the R225bn revenue shortfall Eskom says it faces over the next 4-5 years, it is important symbolically as the utility battles to raise money for new power stations needed to keep the countrys lights on. Eskom generates almost all the electricity in South Africa, and nearly half that produced in the whole the sub-Saharan region. Prices are set by the energy regulator, but Eskom says it costs more to produce than what South Africans pay for it. Given Sowetos history since the 1960s of militant activism - such as burning barricades, school boycotts and a systemic refusal to pay utility bills - locals are unlikely ever to pay up, setting a disturbing example for the rest of the country. Soweto owes more for electricity than the rest of the country put together, where arrears total just R2.6bn. If you remember, when this government entered they said Free electricity for all. Tell me: what does that mean? asks Madiba, a 57-year-old community activist and member of the Soweto Electricity Crisis Committee (SECC). Founded to counter the governments refusal to deliver free or affordable electricity, the group says Sowetans continue to suffer from poverty and joblessness that linger 20 years after white rule ended. At that time people were fighting apartheid, so they didnt pay. Now, they just dont have money. Young, old and middle aged, there are no jobs. People are depending on grants from their granny, Madiba says. Under the ANC, millions of South Africans have escaped poverty through social welfare but the grants are weighing on government finances, especially as the economy stalls and one in four people remain without work. Eskom is in something of a vicious cycle: without economic growth, powered by electricity, there will not be enough tax money for sustained social spending and to invest in infrastructure, including power generation. With Eskom in financial trouble, the government says all South Africans should do their bit, a message widely rejected in Soweto, where the SECC regularly reconnects - illegally - those whose power has been cut off. The utility says it has a plan to improve debt collection and get customers paying but declined to comment on Sowetos history of institutionalised delinquency. Ten years ago it was forced to write off R1.4bn in debts owed by Sowetans, creating the impression for residents that they can get away with it. Thats the bed Eskom made and they are starting to sleep in it. I dont know what else you can actually do, said economist Chris Hart at Johannesburg consultancy Investment Solutions. People need to be paying for those services. Its really as simple as that. Eskoms bad debts rose to 1.1% of revenue in 2013/14 from 0.82% the previous year, suggesting its billing plans have some way to go and emphasising the need for alternative funding. The government is injecting an extra R20bn into the utility, and may convert a R60bn loan into equity, but other funding options are narrowing fast. Moodys cut Eskoms credit rating to junk two weeks ago. Eskom is not in a comfortable space because the credit rating agencies are looking at this and seeing there are multiple challenges at all levels, Hart said. D) The reason for Emalahlenis R300m Eskom debt Cape Town - The Emalahleni municipalitys R300m debt to Eskom is the result of historically low electricity tariffs and loss through illegal connections and vandalism, Co-operative Governance Minister Pravin Gordhan said on Monday. Gordhan said the Mpumalanga municipality had for years had a shortfall on projected electricity revenue because its tariffs were not cost reflective. While in the previous years the municipality succeeded in paying Eskom accounts from accrued surpluses, during the later stages of 2012 and the beginning of 2012, a cash shortfall in the municipality resulted in under payments of the account, he said in a written response to a parliamentary question posed by the Democratic Alliance. Moreover, the minister said, Emalahleni was experiencing electricity losses of more than R200m due to illegal connections, high maintenance cost to its ageing power infrastructure and constant vandalism of electricity power lines, copper theft, etc. These costs could not be recovered from tariff revenue, Gordhan added. Eskom is owed about R2.82bn by 51 municipalities across South Africa as of May 31 2014. Emalahleni, which has been under administration for more than a year, is the worst offender, followed by Thaba Chweu, also in Mpumalanga. Gordhan said Emalahleni has signed acknowledgement of debt and payment plans with Eskom and established a law enforcement unit to combat vandalism and remove illegal power connections. E) Electricity: Municipalities R2.7bn in arrears Cape Town - Municipalities owed Eskom a total of R11.4bn at the end of last month, but only R2.7bn of this is in arrears, power utility Eskom said on Wednesday. As at end July, total current accounts equal R8.7bn; arrears equal R2.7bn, Eskom acting spokesperson Andrew Etzinger said in an e-mail sent to Sapa. He was responding to questions on reports that municipalities around the country owed Eskom R10.8bn at the end of June this year. This total was given by Co-operative Governance Minister Pravin Gordhan earlier this week in a written reply to a parliamentary question. Asked to what Eskom attributed the apparent steep rise in municipalities power bills, Etzinger said: In the main, debt is increasing due to inability of some municipalities to fully recover revenue within their service territories. According to reports, the amount municipalities owed Eskom in October last year totalled R3bn. However, Eskom was hopeful most of the arrears would be sorted out by the end of the month. We are hopeful that the matter will be resolved by end August, with either payment or a reasonable payment plan forthcoming. On whether the utility would start getting tough with municipalities that did not pay on time, he said Eskom issued disconnection notices to three Free State municipalities last month. Cut-offs were averted through intervention by national government, Etzinger said. In his written reply, Gordhan said his department had been engaging with all parties concerned to find a constructive solution to the challenge. According to Gordhan, the biggest debtor was City Power, of the City of Johannesburg, which owed R1.075bn. The parliamentary question was posed by Inkatha Freedom Party MP Mkhuleko Hlengwa. In a statement posted on the IFPs website this week, Hlengwa said the amounts owed were shocking and worrisome. KwaZulu-Natal municipalities owed R1.27bn, Limpopo municipalities collectively owed R314m, Mpumalanga municipalities owed R135m, North West owed R764m, Northern Cape municipalities owed R225m, and Western Cape municipalities owed R1.27bn. Further, the Ekurhuleni metro owed R972 339, the City of Tshwane metro R793,000, the Nelson Mandela Bay metro R292m, the Buffalo City metro R128m, the eThekwini metro R813m, the Msunduzi municipality R146m, and the City of Cape Town metro R873m. These exorbitant amounts owed to Eskom are an indication of great failure on the part of municipalities to manage their debt in an orderly and systematic manner. There is obvious incapacity in terms of basic financial management, he said. In a statement on Wednesday, the City of Ekurhuleni denied having an outstanding Eskom account. Every single bill received from Eskom, totalling R7bn in the 2013/14 financial year, ending June 30 [this year], was paid in time, said spokesperson Themba Gadebe. According to Gordhans reply, it owed R972 339.161 on that date. F) Municipalities owe Eskom R10bn Cape Town - Eskom is owed R10bn in arrears by municipalities around the country, Minister of Cooperative Governance and Traditional Affairs Pravin Gordhan has told parliament. In reply to a question from Inkatha Freedom Party MP Mkhuleko Hlengwa, who asked which municipalities owed money to Eskom and what amount was involved for each specified municipality, Gordhan said Gauteng municipalities owed R3.4bn, Eastern Cape municipalities owed R650m and Free State municipalities owed R1.5bn. KwaZulu-Natal municipalities owed R1.27bn, Limpopo municipalities collectively owed R314m, Mpumalanga municipalities owed R135m, North West owed R764m and Northern Cape municipalities owed R225m. The only province where the majority of municipalities are run by non-ANC administrations - the Western Cape - also notched up R1.27bn in electricity payments owed. City Power of the city of Johannesburg owed Eskom R1.075bn, followed closely by the Ekhurhuleni Metropolitan Council’s R972 339m and the City of Tshwane Metropolitan (including Pretoria) which owes R793 000. The Nelson Mandela Bay municipality - which includes the Eastern Cape commercial capital of Port Elizabeth - owed R292m, with Buffalo City Metro - which includes East London - owing R128m as at the end of June this year. In KwaZulu-Natal, the Ethekwini Metropolitan (including Durban) owed the most at R813m followed by the Msunduzi municipality (including Pietermaritzburg at R146m. The most owed by a Limpopo municipality was the Thabazimbi Local Municipality at R77m. In Mpumalanga, the municipality owing Eskom the most was Emalahleni local municipality at R428m. In the Northern Cape, the Sol Plaatje local municipality - including Kimberley - owed the most at R47m while in the North West the City of Matlosana local municipality owed R174m. In the Western Cape, the City of Cape Town Metropolitan owed R873m, according to the minister. Clive Keegan, director of the SA Local Government Research Centre, said the problem was mounting because municipalities were failing to collect revenue from end users. “There is a reason to believe that what revenue they (the municipalities) do collect is being diverted to other uses rather than to pay Eskom bulk electricity bills.” Keegan pointed out that the debt figure released in parliament exaggerated the problem a little as only debt over 60 days is regarded as an accounting problem. According to an Eskom document to parliament’s energy committee in July, debt of R2.3bn was owed which was older than 60 days or more. Thus of the R10bn owed altogether, about R7.7bn was outstanding for less than a month. The trend, however, remained worrying. The Top 30 defaulting municipalities owed R2.1bn in October 2013. This had risen to R2.5bn in May this year. Eskom said it had been agreed by all local government MECs in the provinces that all municipal current bills would be honoured by October 2014. All debts must be settled by March 2015. F) R68bn needed to fix infrastrucure backlog Johannesburg - The energy department warned that South Africa faces unplanned power outages unless R68bn was invested in the electricity maintenance infrastructure backlog, the Star reported on Wednesday. The backlog went from R38bn in 2006/2007 to R68bn according to a study, the department told parliament on Tuesday. Energy department acting director general Wolsey Barnard said outages like the one in Johannesburg on Monday were caused by poor maintenance. If we keep doing the wrong things we are doing, not maintaining infrastructure, we will continue to see the trend, he was quoted as saying. Nothing to do with Eskom The problem would require fixing of distribution lines, substations and switch gears. One metro in Gauteng had 400 outages between July 2013 and June 2014 because of poor maintenance of infrastructure, he said. These had nothing to do with Eskom. He told journalists on the sidelines that lack of maintenance had been due to lack of money by municipalities - who were not using money on the tariff structure to fix infrastructure. G) Municipalities to extend free basic service Cape Town - Provinces will receive R469bn next year, rising to R527bn in 2017/18, according to the mini budget. The allocation to local government is R91bn next year. It will increase to R110bn in 2017/18. Over the three-year period national government will receive 48%, provinces 43% and local government 9% of the budget. The Medium Term Budget Policy Statement (MTBPS) mentions personnel-related expenditure is the largest category of spending in provinces (62% in 2014/15). Therefore, tight management of compensation spending will be essential to improve efficiency. National Treasury has been working with provincial treasuries to improve management of personnel spending and as a result, provincial staff numbers declined from 931 471 in December 2012 to 917 061 in August 2014. Although staff costs have risen as average wages have increased, slower growth in headcount saw compensation spending remain within budget in 2012/13 for the first time since 2007/08. Minister of Finance Nhlanhla Nene said in his speech support will be provided to municipalities to improve revenue collection and management of infrastructure, financed from both own revenue and grants. The local government equitable share continues to fund the cost of providing free basic amounts of electricity, water, sanitation and refuse removal to the about 59% of households that have incomes below the value of two old-age grants. In many municipalities greater emphasis will be placed on ensuring that free basic services are extended to reach all poor households, according to the MTBPS.
Posted on: Sun, 23 Nov 2014 22:51:49 +0000
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