South Africa’s state-owned power utility Eskom has recently celebrated more than 140 days without implementing rolling country-wide power outages, locally called load shedding. Eskom board chairperson Mteto Nyati attributes this achievement to radical changes within the top management at power stations.

According to Nyati, almost half of Eskom’s power station managers have been replaced since the Generation Recovery Plan was approved in March 2023, News24 reported on August 21.

Deepening energy crisis

South Africa’s ongoing energy crisis reached unprecedented levels in late 2022. Speaking to the media outlet, Nyati, who was then CEO of MTN South Africa and Altron, recalled how President Cyril Ramaphosa cut short a trip to the UK to tend to the crisis at home.

Ramaphosa wanted Nyati, who had a mechanical engineering background and experience in business turnarounds to become the CEO of Eskom, Nyati told News24.

However, Nyati believed that André de Ruyter, who was Eskom CEO at the time, was a good leader who just needed a board of professionals to support him. It was then decided that Nyati was better suited to join the board, but just two months later De Ruyter resigned following an alleged attempt on his life.

New board

New Eskom board members were appointed in 2023, and Nyati eventually took over as chairperson in October after Mpho Makwana stepped down. Nyati believed that the main trouble at Eskom was not its ageing coal fleet but rather its people. He saw the maintenance problems as a symptom of a deeper issue.

Management at the time thought that because the power stations were old, they should be retired and replaced with renewable energy sources by the private sector. However, as an engineer, Nyati questioned this approach, arguing that with proper maintenance, the coal-fired plants could keep running.

Under the leadership of Makwana, the board did something unprecedented by consulting directly with power station managers and staff. This open dialogue revealed that many leaders and managers were not fulfilling their roles effectively. Basic procedures were not being followed, largely because the wrong people were in key positions. It became clear that Eskom needed to place the right people in charge of its generation business.

Turning point

Nyati believes that the key turning point for Eskom was the appointment of Bheki Nxumalo as group executive for generation. Nxumalo, who had extensive experience at Eskom and was highly respected for his knowledge, took over in April 2023 and immediately initiated changes. He replaced about 45% of power station managers and redeployed the best staff to the six worst-performing power stations, which were responsible for 70% of the coal fleet’s failures.

Eskom also reinstated performance incentives, which had been removed due to bailout conditions from the National Treasury. Nyati emphasised that incentives were crucial for driving behaviour and noted that the lack of salary increases over the past five years had been demoralising for employees. He argued that expecting high performance without fair compensation was unjust.

“These are people we are expecting them to do miracles … and no salary increases. It is like collective punishment. We don’t do that,” he told News24.

Focus on maintenance

According to Nyati, Eskom’s two-year Generation Recovery Plan, launched in March 2023, involved ramping up maintenance, which initially led to a decline in the energy availability factor (EAF) and increased load shedding. To mitigate this, Eskom’s diesel spending surged, exceeding the previous financial year’s budget by ZAR3bn ($166mn), totalling ZAR33bn (1.8bn). However, the intensive maintenance resulted in improved plant reliability, leading to over four months without load shedding.

The EAF, which was around 51% when the plan began, has since improved to around 67%. Eskom aims for a 70% EAF by March 2025, which would provide a reserve margin of 10% to 15%, reducing the risk of load shedding. As the old coal-fired plants became more reliable, Eskom has significantly cut its diesel spending, saving ZAR10.21bn compared to the previous year. Nyati believes, that this reduction in costs and load shedding is expected to positively impact Eskom’s profitability in the current financial year.

“When we look at where we are now because the machines are so reliable, we hardly use the open-cycle gas turbines [that run on diesel],” Nyati said.

Way forward

Eskom is projected to report a loss of ZAR15bn this year, which, while significant, is an improvement from last year’s record loss of ZAR23.9bn. The government has helped by taking on ZAR254bn of Eskom’s debt, but Nyati is focused on ensuring that the utility becomes self-sufficient and does not require future bailouts.

Key initiatives include rebuilding relationships with original equipment manufacturers (OEMs) to reduce parts costs and supporting the government’s localisation policy, despite its challenges. Eskom has also improved coal quality control by using geofencing technology to monitor coal deliveries.

Nyati emphasised the need for leadership that makes tough but necessary decisions and stressed the importance of accountability. The current board’s term ends in October 2025, with future continuity yet to be decided.

“We can’t do the same things we did in the past. Some of the things we need to be doing might not be popular, but these are the right things for our country,” he said as quoted by News24.

Furthermore, Nyati added that there should be consequences for wrongdoing.

“Do not be afraid to hold people accountable,” he said. “There is so much lawlessness in our environment. I have not seen any country that thrives on the back of chaos. You need some kind of focus, structure, and discipline. That is what we are missing now. We need courage as leaders.”