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Eskom is by far the largest of South Africa’s many state owned companies. This near monopoly power utility is in crisis. It’s the single largest threat to South Africa’s economy, according to a former minister of finance. The Conversation Africa spoke to Adjunct Professor Rod Crompton about why this is the case and what can be done.

 How is power generated and distributed in South Africa?

 Electricity markets in most countries consist of three parts: generation, transmission and distribution. Most electricity is generated by using heat to boil water to create steam which in turn spins a turbine that generates electricity.

 Eskom is among the biggest power utilities in the world, famous for its ability to handle vast tonnages of low grade coal. Eskom accounts for over 90% of power generating capacity. Its power plants are mostly coal with one nuclear station and some pumped storage (water). Only a few minor power generators have remained outside Eskom’s fold.

 More recently, international climate change pressure caused government to introduce renewable power generation through bidding rounds. These private investors were given 20 year price guarantees underwritten by government – some at exorbitant prices. Nevertheless, as these technologies became more globally popular, some of them – solar (photo voltaic) and wind power – emerged as the lowest cost generators.

 All power generation is tied into Eskom’s national transmission grid that moves electricity from generation stations to demand areas. Transmission is a natural monopoly. If you want to use the transmission grid you need Eskom’s permission.

 So, Eskom is a vertically integrated near monopoly responsible for generation, transmission and distribution.

 Is this monopoly situation unusual in the 21st century?

 In many countries competition between power generators has been encouraged to drive down prices. Transmission, being a natural monopoly, remains just that; but like toll roads they are open to all who obey the “road rules” and pay the toll. The same goes for distribution to a lesser extent.

 What’s the trouble with Eskom?

 Eskom has two major problems. Its operating costs are too high and it can’t pay its debt. It owes over R400 billion and does not generate enough cash to pay even the interest on its debt. It’s reached the end of the road.

How did it get here?

 The main cause of its troubles is its decision to build two of the biggest coal fired generating plants in the world, (Medupi and Kusile). These plants are running way behind schedule, they’re over budget and the bits that are complete don’t work properly. They are probably the single largest disaster in South Africa’s economic history.

 “State capture” (patronage networks), corruption and poor management have led to over staffing and neglected maintenance, resulting in constant breakdowns. Electricity theft, a culture of non-payment and defaulting municipalities have deepened the crisis. Eskom is owed over R30 billion.

 What are the answers?

 Eskom needs to simultaneously reduce operating costs, increase tariffs and shed a big chunk of its debt. There is no painless way for South Africans to deal with their Eskom crisis. And it can’t wait until the national elections on 8 May 2019.

 President Cyril Ramaphosa appointed a team of advisers and has announced that Eskom is to be split into three subsidiaries: generation, transmission and distribution. This has been a government policy since 1998. This should increase cost and debt transparency and may lead to increased efficiencies, especially if competition is allowed.

 Ramaphosa hinted that Eskom will be allowed to invest in renewables, possibly to absorb surplus staff and avoid retrenchments that have been so vehemently opposed by the unions. Some think this is too little too late. He passed the debt hot potato to the minister of finance’s budget speech on 20 February 2018.

 Until the President’s statement, government seemed paralysed. Will words turn into the effective action that’s needed to save South Africa from its power utility? – The Conversation Africa

A GOLD dealer (31) is battling for life in hospital after he was shot by six men who got away with over US$40 000 cash, 400 grams of gold and other valuables including cellphones all worth over US$65 000.

Thulani Moyo is admitted to the intensive care unit at Mater Dei Hospital in Bulawayo after he was shot at his home in Ilanda suburb on Tuesday at around 2PM. 

When The Chronicle visited his residence where the gold dealer’s office is also located, relatives said Moyo was lucky to be alive.

 “He was lucky to survive but the situation is very bad. He is in the intensive care unit and we are hoping that he recovers soon. We cannot give any further information,” said a relative who refused to be identified. 

Bulawayo police spokesperson Chief Inspector Precious Simango said the gold dealer received a phone call from an unknown person who said he was selling gold. 

“The complainant instructed one of his employees, who is the company driver to go and fetch the clients at Townsend Girls High School gate. When he arrived, he found a white Fun Cargo parked at the school gate and could not see the total number of occupants. He gave them the signal to follow him,” she said. 

 On arrival at the gold dealer’s house, the suspects, numbering about six, according to sources, allegedly disembarked from the Fun Cargo which drove away and they were led to the smelting room.

“The person who had called gave the smelter 13,5 grams of gold. After smelting, the accused persons proceeded to the office for weighing and selling where they found the complainant (the gold dealer) in the company of another male adult who is a gold buying agent of Fidelity Printers,” said Chief Insp Simango. 

She said one of the ‘clients’ drew a pistol while the gold was being weighed and demanded money. 

“Whilst the gold was being weighed one of the accused produced a pistol and pointed at the complainant ordering him to lie down. When the complainant was trying to get down the accused shot him in the abdomen,” she said. 

 The other accused person allegedly produced a revolver, pointed it at one of the gold dealer’s employees and ordered him to surrender money and gold.

Chief Insp Simango said the employee allegedly took 400 grams of gold worth about US$20 000, US$40 000 and gave the armed robbers.

She said the robbers allegedly demanded more money, force-marched the employee to another room where the safe is kept and discovered that it was already open and empty.

The armed robbers allegedly ordered four of the complainant’s employees to get inside the kitchen and lie down.

They allegedly tied them, took two Huawei cellphones, a Samsung cellphone and hit one of the employees on the head with a pistol butt and he suffered a deep cut on the back of the head.

 Chief Insp Simango said the accused persons took the complainant’s car keys, left his car and fled through the gate on foot to a waiting car.

Moyo was rushed to Mater Dei Hospital. Chief Inspector Simango urged people and businesses to employ security personnel from reputable security companies. 

“Police in Bulawayo are appealing to members of the public to employ security guards from reputable security companies to safeguard their valuable property and to avoid keeping or moving around with large sums of money at their homes or on themselves as this will aid or help in reducing armed robbery cases,” Chief Insp Simango said_The Chronicle

THE Zimbabwe Power Company (ZPC) plans to invest in coal production to feed its thermal plants as it is unhappy with existing coal mining companies who are failing to meet demand. 

ZPC head of operations, Engineer Kenneth Maswera, told Energy and Power Development Minister, Fortune Chasi, during a recent tour of the Hwange Thermal Power Station plant, that initial steps have been taken to ensure the utility produces its own coal to augment supplies by private firms.

“Honourable Minister we are considering mining coal ourselves as a long-term measure to avert the current challenges. We had been granted mining rights in the Western areas. However, the structure of the company we had partnered with changed and this affected the implementation of the project. We may still pursue the issue plan,” he said.

At a time the country is grappling with power shortages owing to subdued electricity generation at the thermal and hydro power stations, ZPC said inadequate coal supplies were crippling its operations.

Hwange Power Station general manager, Engineer Arnold Chivurayise, said mining companies were struggling to meet the power station’s daily demands for thermal coal and peas.

Hwange Colliery Company Limited, Makomo Resources and Zambezi Gas and Coal are the major suppliers of coal to ZPC’s thermal power stations. 

“The major problem is that we are not getting enough supplies from Hwange Colliery, Makomo and Zambezi Gas. Our target stock is 300 000 tonnes, which is equivalent to 45 days of power generation at 600MW. However, we have 84 729 tonnes, which is equivalent to 11 days generation,” said Eng Chivurayise.

“Hwange Colliery is supposed to supply 4 000 tonnes per day, which translates to 120 000 tonnes per month but has been hovering around 1 500 tonnes daily. Makomo, which is also expected to deliver 120 000 tonnes monthly is currently managing a daily delivery of 2 400 tonnes against a target of 4 000 tonnes.”

Meanwhile, Zambezi Gas with a 60 000 tonnes per month target is delivering 3 000 tonnes per day against a target of 4 000 tonnes.

Hwange Colliery and Makomo have also been undersupplying coal peas to Munyati, Bulawayo and Harare small thermal stations. Eng Chivurayise said the companies had advised them that they were facing capacity challenges in meeting demand brought on by high production costs as well as unavailability of diesel.

“We have since engaged the companies over the issue and they have indicated to us that they are facing various challenges such as high production costs, limited foreign currency to service key mining equipment, delivery system, diesel availability and inadequate haulage capacity amongst others,” he said.

Eng Chivurayise, however, assured Government that they would continue to engage coal miners to improve supplies ahead of the rainy season through stockpiling.

“We are engaging coal producers to increase their supply ahead of the rainy season. We intend to increase our stockpile since during the rainy season we have challenges of coal getting wet. When we have a stockpile and because of the mechanism we employ, the coal doesn’t become muddy,” he said. 

“This forces us to resort to using diesel to increase temperatures. However, we have started restocking to ensure that we continue producing. As part of solutions we suggest prepaying these companies to capacitate them. They need to be adequately capacitated to be able to produce the right volumes of coal.”

Eng Chivurayise said a Chinese contractor, Zimberly Investments, had expressed interest in supplying 10 000 tonnes of thermal coal to Hwange Power Station with a trial run currently underway-The Chronicle

THE Zisco board is evaluating the possibility of coming up with a domestic resource mobilisation strategy aimed at revitalising operations at the defunct steel plant.

Following the appointment of a new Zisco board led by acting chair Dr Gift Mugano last month, efforts are underway to explore new avenues of bringing the closed steel manufacturing giant to its feet again. 

Zisco ceased operations in 2008 at the height of hyperinflation.

While negotiations between Government and R&F, a Chinese steel manufacturing firm that has shown keen interest in taking over operations at Zisco were ongoing, Dr Mugano said the board has resolved to explore the domestic resource mobilisation route to re-ignite operations.

“We met as a board sometime back, a week or so and resolved that we need to take the route of local resource mobilisation as we wait for the finalisation of discussions between the Government and R&F,” he told Business Chronicle.

“Our strategy is never to close the door to foreign investors but as we wait for negotiations between Government and R&F to be concluded, we have seen it fit for us not to sit back and relax.

“As we wait for the finalisation of the discussions, we are looking at the possibility of developing a domestic resource mobilisation strategy to revive operations at Zisco.”

In August this year, Industry and Commerce Minister Mangaliso Ndlovu said Government’s agreement with R&F for the US$1 billion revival of Zisco remains firmly in place, but a few loose ends relating to iron ore claims which need to be granted to the investor. Dr Mugano said their hope was that the domestic resource mobilisation strategy could take between four and five months to implement before the Redcliff-based steel manufacturing firm starts operating.

It is hoped that if Zisco resumes operations using domestic resources, the steel plant would be operating at between 20 and 30 percent capacity.

Dr Mugano said the resource mobilisation strategy involved local institutions such as technical universities, banks as well as experts in different fields.

“As a board we have resolved that we need to come up with a strategy to use domestic resources to revive Zisco and we are going to have technical partners such as technical universities focusing on technology,” he said.

“We are also engaging established private entities which also focus on technology so that they become technical partners to deal with a feasibility study.”

After the feasibility study, Dr Mugano said, they were expected to come up with terms of reference for the revival of Zisco and the local technical partners would inform the company’s board on the state of technology at the steel plant.

“The technical partners will also inform us in terms of the state of infrastructure that is at Zisco, is it able to run and if so, at what level of production should we reignite the blast furnace.

“The domestic resource mobilisation for Zisco also involves economists and financial experts who will look at the economic side. For example, how do we mobilise finance to resuscitate operations at Zisco,” he said.

Due to Zisco’s closure, the country is importing US$400 million worth of steel and its products annually. Against this background, Government has said urgent steps were needed to invest and develop anchor industries for strategic sectors. 

“Looking at the existing industries that use steel and its products in their production processes, we need to do a research to find out what kind of steel products they want,” Dr Mugano said.

“We will also look at their annual demands and see if we can produce for them using linkages with that sector’s value chain system. We also want to look at a financing model where financial institutions locally can pool their resources together to oil companies such as the National Railways of Zimbabwe (NRZ) and Hwange Colliery Company Limited so that they deliver coal to Zisco”.

 At its peak, the former steel giant employed over 5 000 people_The Chronicle

AN artisanal miner from Gweru has been sentenced to 10 years in prison for stabbing a fellow patron once in the chest outside a bar in Mkoba Village 14 suburb in a botched robbery.

Njabulo Ngwenya (25) who resides in the same suburb, was convicted of attempted murder by Gweru provincial magistrate Mrs Phathekile Msipa.

Ngwenya who had pleaded not guilty, was however found guilty after a full trial.

In passing sentence Mrs Msipa said Ngwenya deserved a lengthy prison term in order to deter would-be offenders.

“Cases of robbery and unwarranted attacks on innocent people are on the increase and as such courts should pass deterrent sentences to protect society. You are therefore sentenced to 10 years in prison,” she said.

 Prosecuting, Mr Kelvin Guvheya told the court that on August 26 at around 1am, the complainant Mr Lucky Chigwendere (47) was drinking beer inside Tatenda bar with his brother.

The court heard that Mr Chigwendere went out of the bar to receive a call from his mobile phone. Mr Guvheya told the court that while answering his cellphone- Ngwenya approached Mr Chigwendere and stabbed him with a knife once in the chest in an attempt to rob him.

A report was made to the police leading to Ngwenya’s arrest.

Meanwhile, a 46-year- old man from Gweru has been sentenced to 15 years in prison for raping his daughter`s 11-year- old friend.

The man who pleaded not guilty was convicted of one count of rape by Mrs Msipa.

She sentenced him to 15 years in prison but he will serve an effective 12 years in prison after three years were suspended on condition of good behaviour.

Mr Guvheya told the court that on October 26 at around 11AM, the complainant who cannot be named to protect her identity, was sent by her grandmother to Mambo suburb in Gweru to go and see her father.

The court heard that on her way back the accused saw her and called her into his house.

Mr Guvheya said the accused asked the complainant to cut his toe nails before asking his daughter who was also in the room to go and buy some sweets.

The court heard that the accused took some unknown substance from a bottle and sprayed it onto the face of the complainant whose vision became poor before raping her once.

The court heard that the complainant went home crying and narrated her ordeal to her mother before the matter was reported to the police leading to the accused’s arrest_The Chronicle