The heart of SA’s economy is in ICU…And the spine is broken

The dysfunction of ESKOM and Transnet has sent South Africa’s economy into the emergency ward. That has emerged from an interview with Ghaleb Cachalia, the Democratic Alliance’s (DA’s) Shadow Minister of Public Enterprises. “ESKOM, if you like, is the heart of our economy. Transnet is the spine of our economy. We have destroyed the heart of the economy. It’s in ICU. Our spine needs to be looked at by every possible surgeon, to continue that metaphor, in sight, because of course it’s broken.” Cachalia also shares his views on the state of other SOEs including SAA which he says is flying on a “shoestring”, and DENEL which was once the “darling of the investor community and now is the skunk of the investor community”. He singles out SAFCOL as the “only” SOE that’s “holding its head vaguely above water”. However, he warns that there are “huge land claims about to derail SAFCOL over time”. – Chris Steyn

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Relevant timestamps from the interview

00:33 – Ghaleb Gachalia on what’s fixable and unfixable regarding Eskom
05:50 – On the lack of skills
11:45 – The ticking time bomb that is Eskom is far from being diffused
13:30 – On if the gaps between what should be done, what can be done and will be done are reachable at this point
14:44 – On How much time we have for these issues to be fixed
15:58 – On the Transnet disaster
16:37 – The broken spine that is Transnet
24:08 – Ending with words of hope
25:23 – Conclusion

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Highlights from the interview

The dysfunction of State Owned Enterprises (SOEs) ESKOM and Transnet has sent South Africa’s economy into the emergency ward.

That has emerged from an interview with Ghaleb Cachalia, the Democratic Alliance’s (DA’s) Shadow Minister of Public Enterprises who gives BizNews an update on the state of SOEs.

“Eskom, if you like, is the heart of our economy. Transnet is the spine of our economy. We have destroyed the heart of the economy. It’s in the ICU. Our spine needs to be looked at by every possible surgeon, to continue that metaphor, in sight, because of course it’s broken.”

He expressed alarm at the “breakneck speeds” at which power plants are being run at the moment to reduce load-shedding stages.

Read more: Ex-Eskom COO Oberholzer’s inside story on loadshedding, transformation, CR’s plan

“We’ve all witnessed the come down in the load shedding stages, if you like, recently. And that’s entirely attributable to the running of these plants at breakneck speed, which is what got us into trouble in the first instance. That is what got us into trouble. We ran these things like a motor car without servicing it, without putting oil into it, without changing its tires…And that’s what we are doing again.

“Now, we need to develop the space to ensure that we can do proper maintenance. Not only the space, but the space requires the correct people with the correct skills. It requires large amounts of money to ensure that we can do so. And we need to do so with the easiest regulatory route.

Cachalia points out that there are “onerous regulatory routes” across all the SOEs. “They’ve tried to fix it and make it shorter in certain areas, but across these three areas money, people, regulations, and then you add to that the criminality, the ongoing theft, and you have a time bomb which is going to happen and is going to happen if we continue to do what we’ve done in the past. If we allow space for any of those things to perpetuate, we will be in deep, deep trouble.”

As for the “disaster” that it s Transnet, Cachalia says: “We couldn’t even take advantage of the minerals boom that would have allowed for huge exports and the earnings that would come from that, because our ports were unable to do that.”

Read more: Ban the blue light mafia – Ian Cameron

Meanwhile, there are “huge” project problems in terms of Transnet pipeline business, which feeds diesel into the areas of the economy, not least Eskom.

“Those pipelines are continually hijacked, drilled into and robbed of gazillion litres of diesel, which leaves us short…

“Now, if your spine on your economy and your heart of your economy is in complete distress, where is your economy going? It’s going south in a big, big way.”

Cachalia also shares his views on the state of other SOEs including SAA which he says is flying on a “shoestring”, and DENEL which was once the “darling of the investor community and now is the skunk of the investor community”.

He singles out SAFCOL (South African Forestry Company Limited) as the “only” SOE that’s “holding its head vaguely above water”. However, he warns that there are “huge land claims about to derail SAFCOL over time”.

Ending on a positive note, Cachalia says: “…if we just start with Eskom, which is the main gobbler of all our money and all our energy, to coin a phrase, if we start with that and ensure that we get the right skills, that we use the money wisely and that we are transparent about what we are going to do to fill the gaps that certainly do exist, then we will begin to get somewhere. It can be done, it’s not a tall order. It must be done…”