News24.com | Eskom is interviewing CEO candidates - and 6 other updates from the utility

• South Africans need to prepare for a winter where load shedding between Stages 4 to 6 should be considered a success, says acting CEO Calib Cassim.
• Eskom's board is also conducting interviews for a new chief executive, which should be named in coming months, says Cassim.
• Eskom also expects its transmission subsidiary to start trading by the end of the year, it still requires a licence.
• For more financial news, go to the News24 Business front page.

South Africans must brace themselves for a "tough" winter where Stage 4 to 6 load shedding is considered a success, Eskom's acting CEO Calib Cassim has said. 

Cassim and general manager for transmission, Segomoco Scheppers, on Tuesday shared updates on the power utility at the Enlit Africa conference - a gathering of energy industry payers across the world - at the Cape Town International Convention Centre.

Apart from the winter outlook, the executives also weighed in on Eskom's succession plan and the progress of the power utility's unbundling.

Six key themes emerged from their discussion. 

1. New Eskom CEO

Eskom's board is currently conducting interviews for the next CEO, said Cassim.

After concluding the process, they will make recommendations to the shareholder, the Department of Public Enterprises, who will then follow government processes with Cabinet before an appointment is made.

"Personally, I would like [the appointment] to happen as quickly as possible so I can try and normalise my life [...]," said Cassim. "It could be anything between two to four months, I am hoping it is not six months," he added.

2. Progress on unbundling

The National Transmission Company (NTC) South Africa should start trading from November or December this year, said Scheppers. "We are advanced with regard to getting the NTC to operate," he said. 

The establishment of the Transmission subsidiary is part of Eskom's overall unbundling process, where two other subsidiaries - generation and distribution - are to be established.

The NTC is registered with the Companies and Intellectual Property Commission and is awaiting a decision from the National Energy Regulator of South Africa (Nersa) to grant it a licence, which could happen as early as the end of the month or June, said Scheppers.

"As we speak, the transmission licence is held by Eskom. The new subsidiary must apply for its own licence before the Eskom licence can be revoked," he said.

Scheppers noted that as CFO Cassim had engaged lenders and the debt solution of its balance sheet is one of the key factors lenders wanted clarity on. "That is now in place," he said.

"The work on lender concerns is quite advanced, and we hope to get through in the next few weeks," he added.

3. Debt relief

Eskom's revenue is around R280 billion to R290 billion, but the utility still has massive expenses owing to coal and diesel to run its open-cycle gas plants.

Its other big expenditure item is interest, which is higher than staff costs. But with debt relief, this should come down over time, said Cassim. Earlier this year the government announced it would take on R254 billion of Eskom's debt. This has come with conditions such that it can't borrow for generation projects. But it has also freed up funding for the power utility to maintain its power stations.

Eskom's Corporate Plan indicates that the utility would not need to borrow for the next five years, said Cassim.

"This is the first time in a number of years that we could release capital expenditure for generation, transmission and distribution for the next three years … From an operational perspective, many of those important capital projects can be executed," said Cassim.

4. Municipal debt persists

Cassim said it is important for consumers and municipalities to pay Eskom as accounts in arrears amount to billions of rands. The total arrears from municipalities amount to R57 billion.

"We heard a lot that Eskom does not invest because we don't have funds. But, imagine if we just collected half of that R57 billion? We would be in a far better position to funded much-needed activities," he said.

READ | EXPLAINER | Will Eskom's old power stations stay or go? Who decides?

5. Fighting corruption

According to Cassim, there has been an increase in the monthly reports of corruption on the whistleblower platform, which has been a positive indicator.

In the past year, 300 arrests were made, and 30 people have been identified and gone on trial, according to Cassim.

But what is needed is for those charged to end up in "orange overalls," said Cassim.

"A lack of convictions and setting examples is what is missing to instil confidence not only for Eskom but greater society... Until we get some of the bigger profile cases where those that are charged land up in orange overalls, you almost get a sense that there are no consequences for malfeasance, " he said.

6. Winter plan

Cassim said that a "successful winter" for the power utility would be keeping load shedding at Stage 6 or lower during peak times and at Stage 4 during off-peak times.

Cassim said that the power utility is starting "on the back foot" this year compared to the winter months in 2022 as there is -3 000MW less online due to three Kusile units being offline, while neither unit at Koeberg will be available.

7. No blackout possibility

Both Cassim and Scheppers assured that there is a limited chance of there being a blackout.

"I have all the confidence in the staff of the System Operator. We will never get there," said Cassim. He is more concerned that the county will slip into higher stages of load shedding, beyond Stage 6.

"I don't lose sleep around a blackout as the acting CEO or when I was the CFO. I lose more sleep around whether we will touch Stage 8 because we need to manage that," Cassim added.

Scheppers noted plans to put in place protocols for beyond Stage 8. He said that there is a misconception that after Stage 8, a blackout follows, but that is not the case. Load shedding signals that the power utility is still in control of managing demand to keep the grid stable.