Nyati – how Eskom’s killing loadshedding, creating surplus

Eskom chairman Mteto Nyati says cynics are wrong to claim it will be back to loadshedding hell after Election’24 on May 29. He reckons SA’s longest loadshedding-free run in years is based on a solid foundation. The mechanical engineer with an impeccable business pedigree explains how SA’s much improved electricity supply is the result of applying sensible management practices, including performance-related incentives for Eskom staff and productive engagement with its shareholder. He confidently predicts the worst of loadshedding is over, with sufficient capacity coming on stream to support future economic growth. Nyati spoke to BizNews editor Alec Hogg.

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Highlights from the interview

In this interview, Alec Hogg speaks with Mteto Nyati, Chairman of Eskom, about the significant progress made in reducing loadshedding in South Africa. Nyati, who has a notable career background, explains the board’s proactive approach since their appointment, emphasizing their engagement with power station managers and management to understand and address the issues. He clarifies that while he’s not an executive chairman, the board has taken a hands-on approach due to the crisis situation.

Nyati highlights the board’s two-year recovery plan, now halfway through, which has significantly improved the situation without relying heavily on diesel generators. He acknowledges that while lower stages of loadshedding are still possible, higher stages are less likely.

Nyati attributes the success to a collaborative effort, including past groundwork by Jan Oberholzer, and emphasizes the importance of maintaining strong stakeholder relationships, especially with government ministers. He discusses efforts to combat internal corruption using advanced technologies and external assistance.

Regarding future plans, Nyati expresses optimism about Eskom’s trajectory, highlighting ongoing projects like the unbundling of the company and improvements in coal logistics. He foresees a future where Eskom can meet the country’s energy demands, supported by private sector renewable energy contributions, and hints at a personal inclination to step back once stability is achieved.

Edited transcript of the the interview ___STEADY_PAYWALL___

Alec Hogg [00:00:10] Well, we’ve broken 50 days of no loadshedding here in South Africa. It almost feels like a new world. The man being credited for this is the chairman of Eskom, Mteto Nyathi. He recently closed off a successful career as CEO of Altech and previously ran a big part of MTN. We’re going to hear from him about Eskom’s current state and future challenges. When we spoke in Bryanston, you had just been appointed to the Eskom board. President Ramaphosa approached you, and you saw it as a bit of national service. You’ve made significant changes, emphasizing governance and independence. Are you more of an executive chairman than a non-executive one?

Mteto Nyati [00:01:26] I would say the entire board decided to be engaged due to the crisis at Eskom. We respect governance but needed a deep understanding of the issues. We often engaged directly with power station general managers to get quality information. This allowed management to create a recovery plan, which we approved in March last year. I am not an executive chairman. Our CEO was asked to avoid media interactions for the first 100 days to understand the issues deeply. You will see him more after this period.

Alec Hogg [00:03:19] It was interesting to read in the Financial Times that you said loadshedding is a thing of the past. Can you elaborate on that? It’s good news for a nation eager to hear it.

Mteto Nyati [00:03:37] Yes, the question was about the diesel situation and whether we are avoiding loadshedding by using open cycle gas turbines. The answer is no; our power stations are running well. However, we are only a year into a two-year plan approved by the board. The chances of higher stages of loadshedding are much smaller due to the work done in the past year.

Alec Hogg [00:04:36] There was an interview with Professor Sampson Mamphweli, head of energy at the University of Pretoria, where he expressed doubts about the end of loadshedding. He mentioned the possibility of level five loadshedding in a bad winter. What are your thoughts on this, and did Jan Oberholzer lay the groundwork for what we’re seeing now?

Mteto Nyati [00:05:17] The board and management worked hard together to create the recovery plan approved in March. This plan was developed with input from the generation team, not just the CEO. When presenting it to external stakeholders, we had the full support of the leadership team.

Alec Hogg [00:06:52] With an election coming up, Gwede Mantashe mentioned that having an engineer running Eskom has made a difference. What do you think caused the bad blood between André de Ruyter and the politicians or shareholders?

Mteto Nyati [00:07:36] I don’t know the full details, but managing stakeholders is crucial. We have built relationships with different ministers, understanding their perspectives while focusing on Eskom’s interests. This approach has helped us leverage support and manage challenges effectively.

Alec Hogg [00:09:38] Pravin Gordhan has said that Eskom was the epicentre of state capture. With R500 billion injected from taxpayers, have you started to recoup any of that and bring the miscreants to justice?

Mteto Nyati [00:10:18] We are tackling multiple priorities, including keeping the lights on, unbundling the company, and cleaning up corruption. We use external companies and AI technology to strengthen investigations. We know who is involved in corruption and are working with authorities to address it carefully.

Alec Hogg [00:12:35] The Financial Times reported on corruption in India’s Adani Group, similar to what the Guptas did here. An Eskom chief coal scientist, Dr. Mark van der Riet, refused low-grade coal imports and faced severe consequences. How is Eskom addressing issues like this?

Mteto Nyati [00:14:09] Our goal is to leave behind a legacy of excellence with strong controls. We issued a tender to automate coal transportation, removing human interference. Using technology like IoT, we track coal movements to prevent issues. By the end of this year, this system will be implemented in all our power stations, significantly reducing problems.

Alec Hogg [00:17:34] Your term as board chairman ends in October next year. Do you plan to continue?

Mteto Nyati [00:17:54] I didn’t plan this role initially, and I can’t speak for the other board members. Personally, I aim to leave behind a stronger organization with the right leadership in place. By then, Eskom should be stable, and it will be time for new leaders to take over.

Alec Hogg [00:18:45] The unbundling act was expected to be signed into law soon. Is that still on the cards?

Mteto Nyati [00:19:04] We don’t have direct insight into the president’s timing, but we are ready for whatever happens. Competition will make us better, and we are focused on delivering electricity cost-effectively without driving inflation.

Alec Hogg [00:20:09] Will Eskom be able to deliver enough electricity for South Africa’s growth and end loadshedding permanently?

Mteto Nyati [00:20:49] The future is bright. Private generation capacity is increasing, and our focus on reducing unplanned outages has already made a significant impact. We aim to lower these outages further, which will provide the energy needed. With the addition of renewables, I’m positive about the future.

Alec Hogg [00:24:10] Mteto Nyati, chairman of Eskom. I’m Alec Hogg from BizNews.