IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

CASE NUMBER: 2023/005779

In the matter between:

UNITED DEMOCRATIC MOVEMENT AND 18 OTHERS Applicants

and

ESKOM HOLDINGS SOC LIMITED AND 7 OTHERS Respondents

FIRST RESPONDENT’S ANSWERING AFFIDAVIT: PART A

TABLE OF CONTENTS
PURPOSE AND STRUCTURE OF THE ANSWERING AFFIDAVIT......................... 4

PART 1: OVERVIEW OF ESKOM’S ANSWER TO PART A .................................... 7

PART 2: WHY DO WE HAVE LOADSHEDDING? ................................................. 16

WHAT IS LOADSHEDDING AND WHY IS IT IMPLEMENTED? ............................ 17

THE ROOT CAUSES OF LOADSHEDDING .......................................................... 19

INSUFFICIENT GENERATION CAPACITY ............................................................ 23

The failure to implement the 1998 Energy White Paper ............................................................. 23

Medupi and Kusile .......................................................................................................................... 26

Deferred Maintenance and Excessive EUF .................................................................................. 29

Regulatory Obstacles .................................................................................................................... 31

Eskom’s Ageing Fleet .................................................................................................................... 35

 The 2015 Decision to Cease the REIPP Programme .................................................................. 37

ESKOM’S DETERIORATING FINANCIAL POSITION ........................................... 38

Sub-cost Reflective Tarrifs ............................................................................................................ 39

Municipal Arrear Debt .................................................................................................................... 46

Eskom’s High Debt Servicing Costs ............................................................................................ 47

CORRUPTION, SABOTAGE AND UNLAWFUL INDUSTRIAL ACTION ............... 48

Corruption ....................................................................................................................................... 48

Sabotage, criminality, and unlawful industrial action ................................................................ 51

STAGE 6 LOADSHEDDING ................................................................................... 54

PART 3: ESKOM’S PLAN TO ADDRESS LOADSHEDDING ................................ 56

THE ENERGY ACTION PLAN ................................................................................ 57

ESKOM’S GENERATION RECOVERY PLAN ........................................................ 64

Recovery of the ‘Top 6’ stations ................................................................................................... 66

The Reliability Maintenance Recovery Programme ................................................................... 67

Eskom’s New Build Programme – bringing Kusile and Medupi units online .......................... 73

Improving coal quality ................................................................................................................... 75

Recruiting and retaining skills and experience........................................................................... 78

Combatting theft, fraud and corruption ....................................................................................... 79

Key assumptions and enablers for Eskom's plan to succeed ................................................. 82

Financial enablers ......................................................................................................................... 83

Eskom's debt ................................................................................................................................. 84

Cost reflective tarrifs .................................................................................................................... 85

Municipal debt ............................................................................................................................... 86

Minimum emissions ................................................................................................ 88

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ADDING ADDITIONAL CAPACITY TO THE GRID ................................................ 90

Eskom’s Just Energy Transition Project .................................................................................... 92

Surplus energy .............................................................................................................................. 93

The Government’s renewable energy programme .................................................................... 94

Facilitating private sector generation projects .......................................................................... 96

RESTRUCTURING ESKOM AND OPENING UP ACCESS TO THE GRID............ 99

A transmission grid for the future ........................................................................... 102

THE APPLICANTS’ ALTERNATIVE PROPOSALS ............................................. 104

PART 4: INTERIM RELIEF ................................................................................... 112

Prayers 3 and 4 ..................................................................................................... 115

Practical Impossibility ........................................................................................... 122

Legal Impossibility ............................................................................................... 133

The Grid Code ...................................................................................................... 133

The NRS048-09 Code ............................................................................................ 134

Eskom's authority vis-à-vis municipalities ................................................................ 139

Prayer 5 .............................................................................................................. 141

Eskom's efforts to find solutions for public hospitals and other facilities .................... 149

CONCLUSION ....................................................................................................... 152

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I the undersigned,

ANDRÉ MARINUS DE RUYTER

do hereby make oath and say as follows:

1 I am the Group Chief Executive Officer (GCEO) of the First Respondent, Eskom

Holdings SOC Limited (“Eskom”). I assumed this office in January 2020. I am

authorised to depose to this affidavit on behalf of Eskom.

2 The facts in this affidavit are within my personal knowledge or have been extracted

from the records of Eskom, unless the context indicates otherwise, and are to the best

of my knowledge both true and correct.

3 In my understanding and statement of the facts, I also rely on the evidence of the

following persons at Eskom, whose affidavits and reports shall be filed herewith and

which I believe to be true and correct:

3.1 Mr Thomas Conradie, Eskom’s Acting Group Executive: Generation;

3.2 Mr Calib Cassim, Eskom’s Chief Financial Officer;

3.3 Ms Isabel Fick, Eskom’s General Manager of Transmission;

3.4 Ms Gabisile Vuyisile Mkhatshwa, Senior Manager of Climate Change and

Sustainable Development in Eskom’s Risk and Sustainability Division;

3.5 Mr Augusto Jose Correia, the Emergency Response Manager in Eskom’s Risk

and Sustainability Division;

3.6 Dr Ulrich Minnaar, Middle Manager: Eskom Distribution Solutions, Research,

Testing and Development in the Office of the Chief Operations Officer; and
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 3.7 Ms Daphne Mokwena, Senior Manager of the Centre for Excellence in Eskom’s

Distribution Division.

4 Where I make legal submissions, I do so on the advice of Eskom’s legal

representatives.

5 I structure this answer in four parts:

5.1 Part 1 provides an overview of Eskom’s response to Part A of this application.

5.2 Part 2 deals with the question at the heart of this application: Why do we

currently have load shedding? It is a simple question, but it has a complex

answer that dates back to at least 1998. I provide as full account as possible

in the time and space available of the historical and immediate causes of the

load shedding South Africa is burdened with today.

5.3 Part 3 addresses Eskom’s plans to address load shedding and the measures

it is already taking and plans to take in the immediate future. I explain Eskom’s

Generation Recovery Programme and the extensive maintenance work it is

doing on its base-load power stations to improve their performance and

reliability, as well as the measures it is taking to onboard new sources of energy

supply, all as a matter of urgency. In Part 3, I also address the applicants’

assertions that alternative solutions to load shedding are immediately available

which Eskom has failed to consider and/or implement. I explain why the

applicants’, and NUMSA’s expert, Mr Ted Blom’s assertions are ill-informed

and wide off the mark.

5.4 Part 4 pointedly addresses the interim relief being pursued in Part A. I explain

why the orders sought in prayers 3, 4, and 5 require Eskom to do what is

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 practically and legally impossible and that they cannot, therefore, be granted.

I also explain what Eskom is doing to alleviate the impact of load shedding on

some of the public facilities and institutions the applicants have identified as

requiring protection from load shedding. The applicants’ suggestion that

Eskom has been callous about the impact of load shedding and has simply

thrown up its hands when confronted with the impact on vulnerable public

facilities is patently wrong.

6 This answer and the supporting affidavits and reports, as complex and voluminous as

they are, have been prepared under immense time pressure. To the extent that any

matter traversed in this affidavit or its supporting affidavits and reports require further

explication, it will be provided in the answer to Part B.

7 To avoid unduly burdening already voluminous papers in the context of urgent

proceedings, Eskom has not attached documents that are readily available online or

which are not pertinent to the relief sought in Part A. Should these documents be

required to be produced, Eskom will do so.

8 Further, instead of answering the founding affidavit ad seriatim, I answer the

application thematically, with pertinent aspects addressed in more detail in the

supporting affidavits and reports by Eskom officials with the relevant expertise. I refer

in this answer to those affidavits and reports where they are relevant.

9 Any allegation in the founding affidavit that is not answered in this affidavit and the

supporting affidavits, and which is inconsistent with what is stated in these answering

papers, must be taken to be denied.

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PART 1: OVERVIEW OF ESKOM’S ANSWER TO PART A

The load shedding crisis and Eskom’s plans to address it

10 Eskom recognises that load shedding is taking a heavy toll and negatively impacting

on the lives of South Africans and the economy of the country. It recognises that there

is a human cost to load shedding and that the prolonged, frequent and more severe

cycles of load shedding have precipitated a national crisis.

11 Eskom readily supports the marshalling of all available resources to ameliorate and,

wherever possible, to prevent the human and socio-economic costs of load shedding.

12 The load shedding that South Africa is continuing to experience is implemented as a

measure of last resort, because there is insufficient generation capacity – and thus

insufficient electricity supply – to meet the demand for electricity in the country. On

Eskom’s assessment, the current shortfall in available electricity supply is 4000 to 6000

megawatts (MW), depending on the season, time of day and customer usage patterns.

13 Load shedding is implemented to save the national electricity grid from complete

collapse and a resulting national blackout. If supply and demand are not kept in

balance on the national electricity grid, the grid will collapse and the entire country will

experience a blackout or total loss in electricity supply.

14 How long such a blackout would last is impossible to predict with any certainty.

However, for the reasons explained by Eskom’s General Manager of Transmission

System Operator Ms Isabel Fick, Eskom estimates that it could take up to several

weeks to restore the electricity grid, that length of time being highly dependent on the

state of the grid when the black-out occurs. Without wishing to sound alarmist, the

consequences of such a blackout would be catastrophic. Some of the likely impacts

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 are identifiable from international experiences of extended blackouts (such as the

week-long blackout in Venezuela in March 2019). They include: the loss or interruption

of water supply and sewerage treatment; the shut down of telephone and internet

services; rationing and shortages of liquid fuel (petrol and diesel) with knock-on

impacts on transport, industry and institutions that depend on liquid fuel to run back-

up generators (including hospitals, laboratories, morgues); digital platforms, including

payment platforms and automatic teller machines not running with the consequence of

a shortage of hard currency; chaos on the roads, as traffic lights go down; shops and

residents will struggle to keep produce fresh, and food supplies will be impacted; and

a high risk of looting, vandalism and public unrest. Self-evidently, a blackout is a risk

that South Africa cannot afford to take.

15 While the immediate cause of load shedding is the current shortfall in electricity supply,

the reasons for that shortfall are complex and can be traced back decades. Since at

least 1998, Eskom has been calling on the Government to urgently invest in new

generation capacity in the light of increasing electricity demand. Eskom was divested

of its independent mandate and means to invest in new generation capacity after it

was converted into a state-owned enterprise. With the building of new power stations

delayed for over a decade, Eskom has had to run its ageing coal fleet at far higher

usage levels than accepted international industry practice and defer planned

maintenance (since maintenance requires taking the power stations offline, sometimes

for as long as three months).

16 This combination of running coal-powered plants harder and deferring maintenance

has, inevitably, had a knock-on effect on the performance of Eskom’s coal fleet –

evidenced by the declining Energy Availability Factor (“EAF”) of the plants. An

unfortunate (but also predictable) cycle has begun: unplanned plant breakdowns and

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 reduced available capacity compels further increases in the usage of the working

plants and continued deferral of planned maintenance outages.

17 The applicants call for accountability in this application. They seek an explanation of

why South Africa is still suffering the effects of load shedding and disclosure of what

Eskom has done and plans to do to immediately address load shedding.

18 The South African public should undoubtedly have this information. While Eskom has

endeavoured – through its regular reports to Parliament, the Minister of Public

Enterprises, the Minister of Mineral Resources and Energy, the National Energy

Regulator of South Africa (“NERSA”), National Treasury and various other

stakeholders – to convey its understanding of the causes of load shedding and what

its plans are to address it as quickly as possible, it welcomes the opportunity in this

case to explain as fully as it can in this answer, its understanding of the causes of load

shedding and, more crucially perhaps, what its plans are to address it. These aspects

are dealt with in Parts 2 and 3 of this affidavit.

19 The applicants call on Eskom and its shareholder representative, the Minister of Public

Enterprises, “to produce a plan” that explains the measures we will take to end load

shedding and to maintain Eskom’s power stations and improve their EAF.1 Eskom

already has such a plan: Eskom’s Generation Recovery Plan. This plan provides for

the generation of 6000MW of additional supply within 24 months. It sets out the

measures Eskom shall take and is already taking – including immediate measures –

to address load shedding. The measures detailed in Eskom’s Generation Recovery

Plan align with what is expected of Eskom under the Energy Action Plan produced by

the National Energy Crisis Committee (“NECOM”, the multi-sectoral committee

1 Paragraph 8 of the Notice of Motion, Part A. This prayer has since been abandoned for Part A.

9
 established by the President in July 2022 to address load shedding). Eskom is also

already implementing detailed plans for the maintenance and performance recovery of

its fleet of coal power stations.

20 Eskom’s plans have all been developed with an appreciation of the urgency of the need

to address load shedding as swiftly as possible. They are developed with the view to

both ameliorating the impact of severe load shedding in the immediate term and to end

load shedding altogether as soon as possible.

21 Eskom’s plans take into account, as they must, the constraints under which Eskom

operates. These constraints – financial, legal, regulatory – impact on what is possible

for Eskom to achieve and cannot, unfortunately, be discounted or wished away. These

plans also identify and set out the key enablers that are required – and which must be

actioned by Government and NERSA – to ensure effective and efficient

implementation. Whether these enablers are met are, in the main, out of Eskom’s

control.

22 The applicants contend that there are a range of measures available to Eskom to

address the shortage of electricity supply immediately. They suggest that Eskom’s

failure to take these measures evidences its failure to treat the electricity crisis as an

emergency and with the seriousness it deserves. They rely in particular on the

evidence of Mr Ted Blom in advancing these submissions. As I explain in Part 3 of

this affidavit, and as is further detailed in the supporting affidavit of Eskom’s Acting

Head of Generation, Mr Thomas Conradie, Mr Blom’s account of these alleged

‘alternative solutions’ is patently unrealistic and a gross oversimplification of what is

practically entailed in solving the energy crisis. He fails to have regard to fundamental

practical realities (such as what resources are in fact available) and to Eskom’s legal

obligations (such as Eskom’s obligations to reduce its reliance on polluting coal).

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 Eskom has considered all the measures Mr Blom describes and has, for the reasons

outlined in Part 3 of this affidavit and particularised in Mr Conradie’s affidavit,

determined that they are either not viable alternatives at all or certainly not within the

timeframes and at the scale proposed by Mr Blom.

Ameliorating the impacts of load shedding on public facilities and institutions

23 The harsh reality is that, until the national electricity supply is increased to meet

demand, load shedding is unavoidable in the discharge of Eskom’s obligation to avoid

a national black out. On Eskom’s best estimation, assuming Eskom is able to

implement its Generation Recovery Plan, it could take up to 24 months to generate the

additional supply required to bring an end to load shedding.

24 Given this timeframe, the applicants are understandably concerned to protect a range

of public institutions and facilities from the impact of load shedding. I reiterate that

Eskom supports the marshalling of all available resources to ameliorate the impact of

load shedding.

25 However, for the reasons addressed in Part 4 of this affidavit, the relief the applicants

seek in prayers 3, 4 and 5 is simply not possible for Eskom to implement. The

impediments are predominantly technical and legal in nature, but also financial.

26 In summary:

26.1 In most cases, hospitals and clinics, schools, police stations, small businesses,

electronic communications networks and telecoms infrastructure are

embedded in distribution networks containing other residential and non-

residential loads. Due to their embeddedness, these institutions cannot be

excluded from load shedding without also excluding the other customers who

11
 share those distribution lines. In other words, to continue to supply an

embedded customer with electricity thus requires continuing to supply all the

other upstream customers on the distribution line as well.

26.2 Given the very large number of institutions and facilities the applicants seek to

protect from load shedding and the fact that most are embedded in distribution

networks spread throughout the country, were they to be excluded from load

shedding, there would be very little load left to shed to reduce demand on the

grid. The relief in prayers 3 and 4 thus defeats the very purpose of load

shedding: it requires maintaining much the same level of demand on the grid

in circumstances where there is an insufficient supply to sustain that demand.

This presents a manifest risk of grid collapse or blackout.

26.3 Wherever load is protected or excluded from load shedding (by the grant of

load shedding exclusions or otherwise), other customers have to endure a

greater reduction of supply. This is because:

26.3.1 Maintaining the grid, and preventing a blackout, requires keeping

electricity supply and demand levels in balance.

26.3.2 Load shedding is only implemented as a measure of last resort to

ensure that demand does not outstrip supply, once all other available

means to reduce demand or increase supply have been exhausted.

The NRS 048-09:2017 Code of Practice for Emergency Load

Reduction (“the NRS 048-09 Code”), which governs the

implementation of load shedding, obliges Eskom as the System

Operator to exhaust all other available measures to balance supply

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 and demand before declaring a System Emergency to permit load

shedding.2

26.3.3 Maintaining supply to excluded customers where load shedding is

being implemented – and by implication, when all other measures

have been exhausted – will require more severe load shedding

elsewhere on the grid.

26.4 Under its transmission and distribution licences, Eskom is obliged to apply the

South African Grid Code System Operation Code (“Grid Code”) and the

NRS048-9 Code. As the Electricity Regulation Act obliges Eskom to adhere to

the conditions of its licences, it renders compliance with the Grid Code and the

NRS 048-09 Code a statutory obligation. These codes impose significant

constraints on Eskom’s ability to implement the relief in prayers 3 and 4 of Part

A of the Notice of Motion when it implements load shedding.

26.4.1 The Grid Code obliges Eskom to maintain the safe and efficient

operation of the interconnected power system, and to implement load

shedding where all other available measures have been exhausted

to maintain the necessary balance between electricity supply and

demand. As the System Operator, Eskom is obliged under the Grid

Code to implement load shedding when and to the extent that it is

necessary. Prayers 3 and 4 effectively require Eskom to desist from

doing so.

2 The NRS 048-09 Code has been developed by industry representatives and a range of other stakeholders,
and is approved and enforced by NERSA. The background and particulars of the NRS Code are described in
the affidavit of Mr Correia.

13
 26.4.2 The NRS 048-09 Code sets protocols for determining whether critical

loads (such as hospitals, schools and police stations) can be

excluded from load shedding and it obliges licensees, like Eskom, to

treat all customers without discrimination in applying those rules. The

rules in the NRS 048-09 Code do not permit the blanket exclusions

the applicants seek. To accommodate that relief, NERSA would have

to approve the variation or exemption from the requirements of the

NRS 048-09 Code.

26.5 Just as Eskom cannot implement the relief in prayer 3 without violating the NRS

048-09 Code, it also cannot issue instructions to municipalities to do so.

Municipalities also hold distribution licences which oblige them to adhere to the

NRS 048-09 Code.

26.6 Moreover, municipalities are vested with the constitutional responsibility for the

reticulation of electricity. Save for the instructions it can issue as the System

Operator (in terms of the Grid Code), Eskom does not, and I am advised

cannot, instruct municipalities on how to exercise that power.

26.7 A revision of the current version of the NRS Code (the 2017 edition) is presently

underway and the process is well-advanced. Eskom chairs the NRS Working

Group (a multi-stakeholder body), which has held extensive consultations on

the revision of the NRS 048-09 Code and is formulating proposals for approval

by NERSA. Of particular relevance is the assessment whether the ‘critical load

protocols’ in the NRS 048-09 Code can be revised to better protect public

institutions and facilities. Eskom expects that NERSA will conduct its own

public consultation process in considering the proposed revisions to the NRS

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 048-09 Code, and the applicants should have the opportunity to participate in

that process.

27 Notwithstanding these constraints, Eskom is presently working with various

government departments and National Treasury to find solutions as quickly and cost-

effectively as possible to protect vulnerable facilities and institutions from load

shedding. Given the different configurations and infrastructure used in distribution

networks around the country, the variety of electricity supply-needs of different

customers, and the disparities in the resources that may be available (including in

terms of technology, materials, manpower, funding etc.), no single technological

solution can be applied to all. Eskom is, therefore, working with different departments

and customers seeking protection from load shedding – including public hospitals and

agri-food producers – to assess their needs and to determine the optimal solutions on

a case-by-case basis, all the while keeping in mind its overall duty to ensure that any

exemptions granted are done rationally, equitably, and without compromising the

integrity of the grid overall. These engagements are addressed in Part 4 of this affidavit

and in the supporting affidavit of Ms Daphne Mokwena, Senior Manager of Eskom’s

Centre for Excellence within the Distribution Division.

28 The complex technological considerations, time and costs involved in rolling out

alternative technological solutions to embedded customers on the grid are detailed in

the report of Dr Minnaar and the affidavit of DMs aphne Mokwena. They demonstrate

that implementing any of the alternative solutions will take time and be very costly.

29 Given Eskom’s constrained financial position and the extensive maintenance and

supply generation programmes it is already implementing, Eskom’s resources for

implementing these alternative solutions are limited. It is simply not feasible for Eskom

to implement such technological solutions for all the categories of institutions and

15
 facilities the applicants identify in prayer 3. Eskom does not have the resources

available to do so.

30 Eskom has to use its limited resources to balance and optimise the short, medium and

long-term electricity supply needs of the country. As is explained in the affidavit of

Eskom’s Chief Financial Officer, Mr Cassim, Eskom’s resources are extremely

constrained – predominantly due to many years of having non-cost reflective tariffs

imposed by NERSA (with the result that Eskom does not recover the cost of supplying

electricity) and ballooning municipal debt (now in the region of R57 billion). Eskom

must maximise the benefit it derives from the use of its financial and human resources.

31 Short-term solutions are likely to be less sustainable. Rolling out the “short-term”

solutions the applicants suggest may, in any event, take over two years, by which time

Eskom’s Generation Recovery Plan – if efficiently implemented and not diverted –

would have resolved the supply shortage we are currently experiencing, in a

responsible, rational and sustainable way.

32 Most short term solutions are by no means quick fixes. The implementation of the

technological solutions Eskom is exploring is dependent on a host of factors, including,

among other things, the lead time for supply of technology and materials; the rights

and licenses required (such as servitudes and environmental approvals); the

availability of manpower, skills and resources; and budgetary constraints.

33 Against this overview, I proceed to explain the causes of load shedding and Eskom’s

plans to address it.

PART 2: WHY DO WE HAVE LOAD SHEDDING?

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34. Eskom, like the rest of South Africa, shares the applicants’ desire that load shedding be

brought to an immediate end. But regrettably this is impossible to achieve, and

dangerous for any court to order.

35. To understand the challenge that ending load shedding presents, and when and how

this can be achieved, requires an understanding of the causes of the problem.

36. In calling for an immediate end to load shedding, the applicants have failed to

appreciate the nature of the problem, the complexity of its causes, and the delicate

balance that Eskom has to maintain to avoid collapsing the national electricity grid.

They have also failed to appreciate the practical realities, constraints, and regulatory

and financial hurdles that Eskom has to confront in bringing an end to loadshedding.

37. I endeavour, therefore, to explain the causes of load shedding, and to do so with the

necessary historical perspective. Before turning to the causes of load shedding (and

the causes of the current levels of load shedding in particular), I provide a high-level

explanation of what load shedding is, when it becomes necessary, what happens if it

is not implemented, and the metrics that indicate when it becomes necessary.

WHAT IS LOAD SHEDDING AND WHY IS IT IMPLEMENTED?

38. Load shedding is the controlled reduction of electricity demand. It is implemented by

disconnecting certain points on the transmission and distribution networks on the

national electricity grid. Load shedding is employed as a last resort when electricity

demand exceeds the supply of electricity, to avoid a collapse of the electricity grid and a

complete loss of supply across the country (otherwise known as a blackout3).

3The technical definition of a blackout is “an uncontrolled interruption of electricity supply effecting many (if
not all) customers simultaneously and for an unpredictable length of time”.

17
 Restoration of supply after a blackout could take days or possibly weeks, depending on

the root cause and prevailing conditions including the status of the network when the

blackout occurs.

39. The consequences of a blackout, and the particular difficulties South Africa will face if it

sustains one, are explained fully in the supporting affidavit of Eskom’s General Manager

of Transmission System Operator, Ms Isabel Fick. In short, unlike many other countries,

South Africa cannot rely on neighbouring countries to generate sufficient electricity to

allow it swiftly to restore its electricity system to operation. During the period of a

blackout, the country would suffer immense human and economic harm.

40. The immediate cause of load shedding is insufficient generation capacity. Where a

system generates a surplus amount of electricity, it can temporarily take various of its

power stations offline in order to perform required maintenance. It can also sustain

required supply during unplanned outages (or breakdowns) of power stations by

relying on its reserves.

41. Where there is little or no surplus of generation capacity, however, unplanned

outages can result in electricity demand exceeding available supply, meaning that

load shedding is required. Additionally, if power stations are intentionally taken offline

to perform required maintenance, electricity demand can exceed generation supply.

Insufficient generation capacity therefore often means either that maintenance cannot

be performed or that load shedding must be implemented to enable required

maintenance.

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 42. An additional consequence of insufficient generation capacity is that generation units

must run at a higher-than-benchmarked Energy Utilisation Factor (“EUF”).4 This

metric describes the ratio of actual energy produced by a unit during a specific time

over the total energy availability capacity, taking into account all planned and

unplanned outages. In essence, it reflects “how hard” a unit is run. Where a unit is

run above the benchmarked EUF, it degrades faster than it otherwise would and, over

time, will only be able to supply a decreasing amount of electricity.5 This is reflected

as a decrease in the power station’s EAF, which reflects the percentage of its nominal

capacity (taking into account all outages) that a power station is able to produce.6

THE ROOT CAUSES OF LOAD SHEDDING

43. The load shedding that South Africa is experiencing today has been at least 25 years

in the making. Over this period, a confluence of factors – the bulk of which are entirely

out of Eskom’s control – have inhibited Eskom’s ability to ensure adequate electricity

supply. Many of these factors persist and continue to remain out of Eskom’s control,

making the relief sought against Eskom all the more unrealistic.

44. Most fundamentally:

44.1. Since 1998, there has been insufficient investment in new generation

capacity, a responsibility vested in the Minister of Minerals and Energy.7 As

a result, Eskom has had to operate with insufficient generation capacity. At

present, therefore, and as Eskom has consistently and publicly explained, it

4The benchmarked amount is that of the members of Vereinigung der Großkesselbesitzer e.V (“VGB”), a
European-based technical association for electricity and heat generation industries.

6 This is explained, in detail, in the supporting affidavit of Mr Thomas Conradie.

7 Section 1 read with section 34 of the Electricity Regulation Act, 2006.

19
 requires 4000 to 6000 MW of additional generation capacity. It cannot obtain

that additional capacity unless new capacity is unlocked. Eskom does not

hold that key.

44.2. For approximately 15 years, NERSA has not permitted Eskom to recover

cost-reflective tariffs, leading to a revenue shortfall of approximately R40

billion to R60 billion per annum in recent years. Eskom has repeatedly

explained to NERSA the need for cost-reflective tariffs. This need was

recognised in the Department of Mineral Resources and Energy’s Electricity

Pricing Policy, 2008 and in the proposed revisions to the Electricity Pricing

Policy published for public comment in February 2022.8 Despite this, the

need for cost-reflective tariffs has not been met.

45. These two factors have had a mutually reinforcing adverse effect. Insufficient

generation capacity has meant that Eskom has had to run its power stations at a

higher-than-benchmarked EUF – simply put, it has had to run its stations too hard. It

has also had to defer the maintenance of its power stations which require it to take

them off-line. Given its insufficient generation capacity, as well as a Government

instruction to “keep the lights on”, Eskom deferred required maintenance over many

years, resulting in degraded power stations with reduced generation capacity (or

EAF).

46. The absence of cost-reflective tariffs has compounded this difficulty. Without cost-

reflective tariffs, Eskom has had insufficient revenue to perform the fleet maintenance

required to increase its generation capacity. In turn, this has meant that Eskom’s

8 GG 45899 dated 10 February 2022, GNR 1747.

20
 existing power stations have been further degraded, which has further diminished

Eskom’s generation capacity.

47. These core underlying problems have been exacerbated by a series of other events

and circumstances, which have compounded the pressure on Eskom’s supply

capacity. I shall detail them later in this affidavit but in summary they are the following:

47.1. In 2005, the decision was belatedly taken by Government to permit Eskom to

introduce new generation capacity through the construction of the Kusile and

Medupi coal power stations. These power stations were poorly designed and

poorly built, partly due to the unreasonably short timeframes imposed for

implementation as well as the inherent corruption in procurement activities

associated with the build programme. The result is that the on-streaming and

operation of these plants have been beset with problems and significant cost

overruns, and they have consistently failed to generate the expected supply.

47.2. Eskom’s fleet of coal power stations are, in general, approaching 50 years of

service.9 As they age, the coal plants are manifesting increased unreliability

with more frequent unplanned breakdowns and lower supply capacity

(measured as EAF), and increased maintenance costs.

47.3. Eskom’s Koeberg nuclear plant is due to reach the end of its 40-year lifespan

in 2024. To extend this lifespan for another 20 years, Eskom has had to take

Koeberg’s unit one offline in order to install new steam generator. This has

temporarily reduced Eskom’s generation capacity.

9 Based on international standards and best practice, the 50 year landmark is significant for coal pwer stations.
As I explain below, after this period, it is generally not economically viable to sustain power plants as
maintenance costs increase substantially. As a result, beyond the 50 year period, it is generally prudent to use
available funds to maintain younger power stations, or to introduce new generation capacity.

21
47.4. Until recently (prior to the change in management at Eskom in 2020), there

has been inadequate maintenance of Eskom’s power stations and years of

deferred maintenance to keep the lights on in the absence of sufficient

reserve capacity. There is now a maintenance backlog which cannot be

deferred any longer. Eskom has had to take several of Eskom’s power units

temporarily offline, resulting in unavoidable planned outages, in order to

address the maintenance backlog, safety concerns and statutory

requirements.

47.5. From 2015 to 2017, under former Eskom Group Chief Executive Officers, Mr

Brian Molefe and Mr Matshela Koko, Eskom refused to conclude agreements

with Renewable Energy Independent Power Producers (“REIPP”). Mr Molefe

and Mr Koko took these decisions in contravention of a determination by the

Minister of Minerals and Energy that Eskom was to conclude REIPP

agreements to mitigate the foreseeable supply constraints we are now

experiencing. By taking these decisions, Mr Molefe and Mr Koko inhibited

the necessary growth of South Africa’s generation capacity.

47.6. Eskom’s ability to maintain its power stations and introduce new generation

capacity has been, and continues to be, hampered by a host of regulatory

obstacles.

47.7. Municipalities are indebted to Eskom in an amount of approximately R57

billion which has further limited Eskom’s budget for maintenance and

generation.

47.8. State Capture, and corruption more generally, have hollowed out Eskom’s

financial resources and its experienced and skilled personnel.

22
 47.9. Eskom’s various power stations have experienced widespread sabotage,

criminality and destructive and unlawful industrial action.

47.10. In 2021 and 2022, units at Medupi and Kusile suffered catastrophic failures,

which have required sustained outages, for reasons that remain under

investigation.

48. I shall endeavour to explain these factors in the limited time and space available as

follows: I first address the series of decisions and events that have caused Eskom’s

generation shortfall. I then turn to the financial considerations which have

compounded this shortfall. Thereafter, I address the effect on Eskom of corruption,

sabotage and unlawful industrial action. Finally, I explain the recent events which

have required escalations to stage 6 load shedding.

INSUFFICIENT GENERATION CAPACITY

Failure to Implement the 1998 White Paper

49. In 1990, only 35% of South African households had access to electricity. As a result,

in the Reconstruction and Development Programme, the African National Congress

set as a policy objective the electrification of 2.5 million additional households by

2000.

50. In 1993, 300 000 new households were electrified. By 1995, the total number of

additional electrified houses reached 450 000 and by the end of 1999, the target of

2.5 million additional electrified households had been achieved. Over this period,

South Africa achieved the highest annual electrification rate in the world.

23
51. Additionally, from the mid-1990s, South Africa experienced strong industrial and

economic growth, further contributing to the increased demand for electricity.

52. By 1998, therefore, it was apparent that without the introduction of additional

generation capacity, Eskom’s existing generation capacity surplus would be fully

utilised by 2007. This was explained by the Department of Minerals and Energy in

the 1998 White Paper, which was approved by Cabinet. The Department explained

there that “Eskom’s latest Integrated Electricity Plan forecasts for an assumed

demand growth of 4,2%”, meaning that, without the introduction of additional

generation capacity, “Eskom’s present generation capacity surplus will be fully

utilised by about 2007”. It went on to caution that:

“[t]imely steps will have to be taken to ensure that demand does not exceed

available supply capacity and that appropriate strategies, including those with

long lead times, are implemented in time. The next decision on supply-side

investments will probably have to be taken by the end of 1999 to ensure that

the electricity needs of the next decade are met”.

53. The 1998 White Paper also set out the intended structural reforms of Eskom,

including the unbundling of Eskom’s Generation, Transmission, and Distribution

divisions. Through this restructuring, it was hoped that the private sector would

ultimately contribute approximately 30% of South Africa’s electricity generation.

54. To avoid overburdening these papers, I attach only the relevant portions of the 1998

White Paper as annexure “AA1”.

55. Throughout 1998, Eskom made various requests to Government to heed the warning

set out in the 1998 White Paper and to allow it to commission additional generation

24
 capacity. Regrettably, these requests were refused on the basis that, through the

restructuring of Eskom (which would involve the establishment of an independent

system and market operator), the private sector would supply an additional 30% of

generation capacity. In April 2001, Cabinet took the decision that “Eskom is not

allowed to invest in new generation capacity in the domestic market”. Eskom was

thus divested of the mandate and responsibility for investing in new generation

capacity, and this responsibility was assumed by the Department responsible for

energy. For a variety of reasons, including that Eskom was not restructured, the

anticipated private sector investment in generation also did not materialise. Neither

of these decisions were within the control of Eskom.

56. Former President Thabo Mbeki would later acknowledge that the decision to refuse

Eskom’s requests for additional generation capacity was a mistake. At a 2007

fundraising gala, he admitted that:

“When Eskom said to government: “We think we must invest more in terms of

electricity generation”, we said no, but all you will be doing is just to build

excess capacity. We said not now, later. We were wrong. Eskom was right.

We were wrong”.

57. I attach as annexure “AA2” a news report detailing President Mbeki’s comments.

58. As a result of Government’s refusal to procure additional generation capacity,

coupled with increased electricity demand, from 1998 onwards Eskom’s reserve

margin began to decrease. This metric reflects the amount of surplus generation

capacity within an electricity system. Admittedly, it is an imperfect means of

discerning the adequacy of an electricity system’s generation capacity, but it does

provide some indication of the ability of an electricity system to meet demand.

25
 58.1. Typically, a well-run electricity system has a reserve margin of

approximately 15% which allows for preventative maintenance and

unplanned shut-downs without load shedding.

58.2. In 1992, Eskom had a reserve margin of 40%.

58.3. By 1998, this had decreased to approximately 30%.

58.4. By 2001, it had dropped to 13.6%; by 2003, to just above 10%; and by 2008

to 5%.

59. At the same time as Eskom’s reserve margin dwindled and its EUF increased,

Government adopted a “keep the lights on” policy. Eskom was effectively prohibited

from performing required maintenance if doing so would result in load shedding.

Medupi and Kusile

60. Only in late 2004, when Eskom’s reserve margin had fallen to approximately 8.2%,

was it finally permitted by Government to introduce new generation capacity. Eskom

could therefore initiate plans to tender for the construction of Medupi and Kusile, two

approximately 4800 MW, coal-fired, direct dry-cooled power stations.

61. By this time, however, Eskom faced two obstacles. First, given its dangerously low

generation capacity, the tender process and construction of Medupi and Kusile would

have to follow impossibly short timeframes. As the 1998 White Paper had warned, a

decision about the commissioning of new generation capacity should have been

taken by 1999, at the latest, to avert a generation capacity shortage in 2007. The

large power stations constructed in the 1980s took approximately 7 to 8 years, or 84

to 96 months, from placing of the relevant contracts to commissioning of the first units.

26
 It was nonetheless hoped that the first units of Medupi and Kusile would be

commissioned within an international best practice time period of about 54 months,

by 2011 – against the typical period in the USA of 60-66 months, for typically two-unit

power stations, not the six-unit type such as Medupi and Kusile. This has proved to

have been wildly optimistic and miscalculated. The first units of Medupi were

commissioned in August 2015 and its last units in August 2022. The first units of

Kusile were only commissioned in August 2017 and the last of its units have still not

been commissioned. Regrettably, these delays appear to have been caused in part

by a series of corrupt tender awards.

62. Second, in 2005, Eskom had not built a new power station for approximately 16 years.

In addition, against the backdrop of a government policy and cabinet decision that it

would never again build new power stations in South Africa, Eskom had significantly

reduced its skills and capacity to execute mega-construction projects. Eskom thus

had to entirely re-establish its new build project management capacity.

63. The result of these two obstacles was that Eskom did not follow normal tendering

processes when it commissioned Kusile and Medupi, and instead went to market

using so-called “virtual designs”. That is, Eskom went to market using the designs for

the Majuba power station, which had been formulated in the 1980s.

64. In October 2007, Hitachi Ltd, a Tokyo based conglomerate, was awarded the tender

to construct both the Medupi and Kusile boilers. At the time Hitachi was awarded

these contracts, it had no experience working with South African coal.

65. Medupi and Kusile have been plagued by a litany of design and construction failures

which have delayed their completion and negatively affected their performance.

27
 These are detailed in the supporting affidavit of Mr Thomas Conradie, Eskom’s Acting

Group Executive for Generation.

66. As at 1 November 2022, Kusile and Medupi had nominal capacities of only 2 880 and

3 600 MW, respectively, below the 3 720MW10 that each station was intended to

produce.

67. Based on the media release referred to below, it appears that the appointment of

Hitachi for the Medupi and Kusile construction projects could be a result of possible

corruption. In September 2015, the United States Securities and Exchange

Commission (“SEC”) charged Hitachi with various violations of the Securities

Exchange Act of 1934 in relation to the award of the Medupi and Kusile contracts. It

alleged, in particular, that:

67.1. Hitachi sold a 25% stake in one of its South African subsidiaries to Chancellor

House Holdings (Pty) Ltd (“Chancellor House”), knowing that this was a

funding vehicle for the African National Congress;

67.2. This arrangement gave Chancellor House the ability to share in the profits

from any power station contract that Hitachi secured;

67.3. Hitachi encouraged Chancellor House to use its political influence to ensure

that it obtained contracts from Eskom; and

67.4. Hitachi paid Chancellor House approximately US$5 million in “dividends”

based on profits derived from the Medupi and Kusile contracts.

As is explained in the supporting affidavit of Mr Conradie, the total capacity of a power plant differs from its
10

nominal capacity. The latter metric reflects what the plant is actually intended to produce, since it takes into
account the energy the plant will have to expend powering itself.

28
68. In September 2015, without admitting liability, Hitachi agreed to pay the SEC a

settlement penalty of US$19 million and that it would be permanently enjoined from

future violations of the Securities Exchange Act. I attach as annexure “AA3” the

relevant SEC briefing.

Deferred Maintenance and Excessive Energy Utilisation Factor

69. Kusile and Medupi have failed to deliver their expected increase in generation

capacity. However, even if they had done so and had therefore been commissioned

in 2011, this would have come too late to avert the first onset of load shedding in

2007 and 2008. The first implementation of load shedding was partly caused by a

shortage of coal. But more fundamentally, it was caused by Eskom’s already

insufficient generation capacity.

70. From 2008 onwards, Eskom deferred maintenance and ran its units at a higher than

benchmarked EUF because of its insufficient generation capacity and the “keep the

lights on” mandate from Government. In 2010, because South Africa was hosting the

2010 FIFA World Cup, Government reaffirmed the instruction to keep the lights on.

71. Government has, in fact, consistently explained the consequences of doing so. Thus,

in its 2010 Integrated Resource Plan, the Department of Energy explained that

“maintenance has been significantly postponed and further delays create health and

safety risks and increase the risk of serious breakdowns and outages”.

72. In the 2013 Integrated Resource Plan Update Report, the Department of Energy

similarly explained that:

“Since the 2008 electricity supply crisis Eskom was able to meet electricity

demand through delaying maintenance on the generation fleet. This has led

29
 to the deterioration in performance of the aging fleet, exacerbating the current

crisis but also incurring a longer term impact on the effectiveness of the fleet

to meet future demand.”

73. To avoid overburdening these papers, I attach only the relevant portions of the 2010

Integrated Resource Plan and the 2013 Update Report as annexures “AA4” and

“AA5”.

74. More recently, on 4 November 2022, in response to a request for information from

NERSA, Eskom delivered representations to NERSA which included the graph

below. It indicates that from about 2008, Eskom’s Planned Capability Loss Factor

(“PCLF”) fell below the globally benchmarked VGB amount. This metric reflects the

number of planned outages implemented in order to perform maintenance or other

required construction at a power plant.

75. Eskom’s representations to NERSA also explained that:

30
 75.1. “since 2008, necessary philosophy or reliability maintenance and midlife

refurbishment were delayed to avoid load shedding caused by lack of

capacity, as units would have had to be taken offline for maintenance”;

75.2. “after 10 years of running the stations above design parameters since

2002/03 and of deferring maintenance since 2008 (as a means of creating

‘virtual capacity’ to compensate for the lack of system capacity), the inevitable

reduction in reliability finally started manifesting at the end of 2012”;

75.3. “by 2014, because of high utilisation, deferred maintenance, and age, about

80% of stations were already in a period where they required major

equipment replacements to restore plants’ technical performance and

economic life”; and

75.4. “deferring this work to “keep the lights on” in a context of inadequate system

capacity was a major cause of continued escalation in plant breakdowns”.

76. I attach the Eskom’s representations to NERSA as annexure “AA6”.

Regulatory obstacles

77. Eskom’s ability to maintain its existing fleet has been further hampered by regulatory

obstacles. As Eskom explained in its aforementioned representations to NERSA in

November 2022:

77.1. “There is an added challenge of the cumbersome procurement process

where Eskom needs to get the National Treasury to make decisions on our

operations with a waiting time of up to 90 days for a decision”; and

31
 77.2. “Efforts to save money by using least-cost methods resulted in using cheaper

and often inferior parts”.

78. Two particularly significant delays caused by regulatory obstacles in the procurement

context11 occurred in respect of the Camden and Majuba power stations:

78.1. In May 2020, National Treasury refused Eskom’s request to appoint WBHO

Construction (Pty) Ltd (“WBHO”) to complete work urgently required at

Camden at a cost of R212 million. It did so despite the fact that Eskom

explained that, if this work was not timeously completed, it would incur

expenses of R1.2 billion to make up the consequent generation shortfall

elsewhere, and that WBHO was already established onsite, reducing lead

times and costs.

78.2. Subsequent to National Treasury’s refusal, Camden had to remain offline for

four months, reducing Eskom’s generation capacity by approximately

1600MW over this period. Had WBHO been timeously appointed, this time

period would have been significantly truncated.

78.3. On 12 June 2020, Eskom applied to National Treasury for approval to appoint

Tenovo Mining and Minerals (Pty) Ltd (“Tenovo”) to complete work upgrading

the coal offloading facilities at Majuba, at an approximate cost of R108 million.

This work became necessary because, as I explain below, Majuba’s coal

conveyor had caught fire and been destroyed in circumstances which

suggested deliberate sabotage.

11The requirement for National Treasury approval to procure goods or services without conducting a
competitive bidding process derives from National Treasury SCM Instruction No. 3 of 2016/2017, which
remained in effect until 31 March 2022.

32
78.4. Eskom explained that Tenovo was best placed to perform the work because,

amongst other things, it had designed and manufactured the coal offloading

facilities, was established onsite, and could therefore source and install the

relevant parts at a lower cost and in a shorter time frame. Eskom also

explained that the work was urgently required because, without its coal

offloading facilities, Majuba was reliant on trucked coal supply, which had

increased costs by approximately R60 million from the date of the fire.

Additionally, without the ability to properly offload coal at Majuba, Eskom

would incur costs of approximately R6.5 billion made up, amongst other

things, of contractual penalties and damage sustained as a result of inferior

coal.

78.5. On 5 August 2020, after it had not received a decision from National

Treasury, Eskom wrote to National Treasury to emphasise again the urgency

of the requested approval. 110 days after its initial request, on 30 September

2020, National Treasury’s erstwhile Acting Chief Procurement Officer, Estelle

Setan, notified Eskom that the request had been rejected.

78.6. On 7 October 2020, Eskom appealed the decision but, on 19 October 2020,

Ms Setan responded to indicate that the appeal had been refused.

78.7. On 20 October 2020, Eskom therefore again wrote to National Treasury, and

to the Minister of Public Enterprises, to explain the urgency and necessity of

Eskom’s initial request, and the substantial costs and damage Eskom would

sustain if it was not approved.

78.8. On 3 November 2020, National Treasury reversed its decision and approved

Eskom’s initial request. However, the consequences of this delay were

significant. Tenova withdrew its offer and Eskom was only able to appoint a

33
 new contractor to perform the work in June 2021. Over this period, Majuba

was therefore reliant on coal transported by truck and, as a result, it incurred

additional costs of approximately R276 000.00 per day.

79. In his address of 25 July 2022, President Cyril Ramaphosa acknowledged that regulatory

obstacles had inhibited Eskom’s ability to ensure the adequate performance of its plants.

He explained that Government was “cutting red tape that has made it difficult for Eskom

to buy maintenance spares and equipment within the required period to effect repairs.” I

attach a copy of the President’s address as annexure “AA7”.

80. Eskom is also constrained by environmental legislation. These constraints are

explained fully in the supporting affidavits of Mr Conradie and Ms Mkhatshwa.

81. For instance, a number of Eskom’s power plants do not and cannot comply with new

Minimum Emission Standards (“MES”), promulgated under the National

Environmental Management: Air Quality Act of 2004. If it had immediately complied

with the MES, Eskom would have lost approximately 16GW of generation capacity

for extended periods and would have needed to spend over R300 billion. It therefore

applied to the Department of Forestry, Fisheries and the Environment to postpone

the implementation of the MES, but its applications were only partially successful.

Eskom has since appealed the Department’s decision and is awaiting a response.

82. Importantly, even if it were feasible to indefinitely extend the lifespans of Eskom’s

coal power stations (which, as I explain below, it is not), a wilful breach of the MES

would put all available “Green Funding” at risk, and would accordingly jeopardise the

most cost-effective means of introducing new generation capacity. While Eskom is

committed to a just and sensible energy transition, it has nonetheless extended the

34
 lifespan of certain of its coal power stations. The supporting affidavit of Mr Conradie

sets out the details of these extensions and of Eskom’s shutdown plans.

Eskom’s Ageing Fleet

83. The applicants make the startling submission that Eskom’s ageing fleet is unrelated

to current levels of load shedding. They suggest that a power station can operate for

an indefinite length of time, provided it is suitably maintained. Respectfully, this is

hopeful sophistry. Like any piece of machinery, as a power station ages, maintenance

becomes more expensive. Eventually, maintenance of a particular power station

becomes so expensive that resources are better spent elsewhere. Specifically,

resources are better utilised introducing new generation capacity or performing

maintenance on power stations where maintenance is less expensive and generation

capacity can be improved at less cost. For this reason, international experience is

that coal power plants are retired on average at about 50 years.

84. With the exception of Kusile and Medupi, Eskom’s fleet of coal powered stations are

on average 43 years old. Eskom’s declining reserve margin, coupled with the “keep

the lights on” policy, has meant that these power stations have been run at a higher

than benchmarked EUF without adequate maintenance, and have therefore

degraded at a faster rate than might otherwise have been expected. This is detailed

in the graph below which reflects Eskom’s coal power stations median EUF measured

against the VGB median, which reflects the global benchmark.

35
85. As a consequence of Eskom’s high EUF, as the graph below indicates, from 2011

onwards the Energy Availability Factor of Eskom’s power stations has decreased at

a faster rate than the benchmarked decrease. However, even at the benchmarked

rate, Eskom’s fleet would have shown a deteriorating EAF.

36
 86. Additionally, as is explained in Mr Conradie’s supporting affidavit, the costs of repairs

and maintenance for Eskom’s coal fleet is the largest portion of the repairs and

maintenance costs and is growing annually by an average of 4.7 %.

87. The applicants also ignore that the Koeberg nuclear power station is nearing the end

of its operational life. To prolong the lifespan of Koeberg for a further 20 years beyond

2024/25, Eskom has to install new steam generators at both of its units. The first such

installation began on 8 December 2022 at Koeberg Unit 1 and is expected to be

completed by June 2023. This planned outage has meant that this unit has had to

be taken offline reducing Eskom’s generation capacity by approximately 920MW.

Koeberg Unit 2 is scheduled to undergo a similar steam generator replacement,

refuelling and maintenance outage towards the end of 2023.

The 2015 decision to cease the REIPP program

88. From 2011 to 2015, pursuant to the Integrated Resource Plan for Electricity 2010-30

(“IRP 2010”), and various ministerial determinations, Eskom procured approximately

6300MW of generation capacity from independent power producers and secured

R200 billion private investment through the REIPP programme.

89. In 2015, however, Eskom’s erstwhile GCEO, Mr Brian Molefe, took a decision that

Eskom would no longer conclude agreements with independent power producers.

This despite Eskom having been designated as the buyer in determinations made by

the Minister of Mineral Resources and Energy under section 34 of the Electricity

Regulation Act. From 2016 to 2017, when Mr Matshela Koko assumed the role of

GCEO, Eskom continued to refuse to buy from independent power producers.

37
90. The State Capture Report has highlighted that during that same period starting in

2015, “the conduct of Eskom officials [including Mr Molefe and Mr Koko] involved the

abuse of their position and power and undue influence on subordinates in order

unduly to benefit the Gupta family in the awarding of the Brakfontein Coal Supply

Agreement to Tegeta”.

91. On 24 January 2023, I appeared before the Standing Committee on Public Accounts

(‘SCOPA”) and explained the consequences of this set of decisions. I that it was

estimated that up to 96% of the load shedding today would have been avoided had

Mr Molefe and Mr Koko not halted the REIPP program. This has since been

corroborated by an independent firm, Meridian Economics. While the 96% estimate

might be open to debate, there can be no doubt that Mr Molefe and Mr Koko acted

contrary to the IRP 2010 and the relevant ministerial determinations and, in doing so,

significantly worsened Eskom’s current generation capacity.

92. I attach the relevant pages of Meridian Economics’ report as annexure “AA8” and the

minutes of the SCOPA meeting as annexure “AA9”.

ESKOM’S DETERIORATING FINANCIAL POSITION

93. Eskom’s financial position has substantially weakened over time, making it

impossible for Eskom to ensure that its fleet is reliably maintained and its performance

enhanced and to invest in adding more generation capacity.

94. Eskom’s deteriorating financial position has three main contributing factors:

94.1. the non-cost reflective pricing of electricity;

94.2. the non-payment by and bulk debt owed by municipalities; and

38
 94.3. Eskom’s high debt servicing costs and inability to access debt funding due to

sub-cost reflective tariffs.

95. Each of these factors has directly hindered Eskom’s efforts to avert load shedding.

Sub-cost reflective tariffs

96. As mentioned above, NERSA’s sustained refusal since at least 2006 to enable

Eskom to recover cost-reflective tariffs is amongst the dominant causes of Eskom’s

current predicament. The effect of sub-cost reflective tariffs and a consequent

revenue shortfall for an energy utility are well-known: insufficient funds for increasing

generation capacity and for maintenance. In a 2007 report, Professors Newbary and

Eberhard explained that the—

“reluctance to raise prices hinders the ability either to fund investment and

maintenance out of profits, or the creditworthiness to borrow against future

profits. In extreme cases the ESI cannot even maintain existing equipment;

reliability and availability drop, and power outages become the norm.”

97. In a 2016 report, the World Bank similarly explained the consequences of a revenue

shortfall for an energy utility:

“One of the casualties of insufficient revenue is maintenance expenditure.

Utility managers often have to choose between paying salaries, buying fuel,

or purchasing spares (forcing them to cannibalize parts from functional

equipment)”.

98. I attach the relevant extracts from these reports as annexure “AA10” and “AA11”.

39
99. There also can be no dispute that Eskom’s tariffs have consistently been sub-cost

reflective. In its 2016 report, the World Bank reported that Eskom’s average tariff was

US$ 6c/kWc whereas Eskom’s total costs were approximately US$ 10c/kWh. It also

explained that 80% of the difference between the tariff and costs was due to under-

pricing of electricity in South Africa. This figure was, in fact, significantly higher, as

the World Bank overvalued the contribution to the differential caused by labour costs.

More recent tariffs continue to fall significantly below Eskom’s costs:

99.1. In 2021, Eskom’s costs were 143c/kWh and the average tariff was 111c/kWh;

99.2. In 2022, Eskom’s costs were 152.6c/kWh and the average tariff was

127.9c/kWh; and

99.3. Eskom’s current costs are approximately 170c/kWh and the average tariff is

138/kWh.

100. While NERSA’s most recent determination is a much needed step towards cost-

reflective tariffs, if implemented, the average tariff will still be around 5 to 10% short

of covering Eskom’s costs after 2024.

101. The effect of this lengthy history of non-cost reflective tariffs has been a sustained

and significant revenue shortfall and increasing pressure on Eskom’s liquidity. The

difference between what cost-reflective electricity tariffs would have been and the

tariffs NERSA has authorised is a cumulative after-tax revenue shortfall of

approximately R370 billion since 2006.

102. The history of non-cost reflective tariffs has had a demonstrable impact on the funds

available to Eskom to perform required maintenance. Specifically:

40
 102.1. In its 2014 MYPD3 determination, NERSA disallowed R68.3 billion of

generation capital expenditure, of which R39.3 billion was related to capital

expenditure for Eskom’s existing fleet.

102.2. In Eskom’s 2022 representations to NERSA (previously attached as

annexure “AA6”), Eskom explained that this amounted to an average

reduction per year of R7.9 billion of expenditure required to improve plant

performance.

102.3. As a result of the MYPD5 determination, Eskom will in the 2024 financial

year see a capital shortfall of approximately R10.6 billion.

103. Eskom’s sustained revenue shortfall, owing to sub-cost tariffs, has, of course, also

significantly impacted its financial viability. In turn, this has reduced Eskom’s ability to

borrow funds necessary to increase generation capacity and perform maintenance.

103.1. The 2014 5-year MYPD3 revenue determination implied R225 billion less

revenue over the five-year period than Eskom had applied for – which

application reflected a five-year phased implementation of cost-reflective

tariffs.

103.2. The following year, in March 2015, Eskom was downgraded from investment

grade to sub-investment grade status.

103.3. On 25 November 2016, Standard & Poor (“S&P”) reported that Eskom’s weak

metrics are “due to continued delays in implementing tariffs that reflect costs”.

103.4. On 5 December 2016, Moody’s reported that “Eskom's credit metrics… are

already very weak owing to: (1) tariffs that are not cost-reflective… its

41
 standalone credit quality or Baseline Credit Assessment (BCA) of b3 …

reflects Moody's expectation of a… default assessment of 50% or the debt

that is not supported by the government guarantee.”

103.5. On 8 December 2016, Fitch published a report which explained that Eskom’s

“failure to achieve more cost-reflective tariffs” resulted in an unsustainable

credit profile and a reduction in Eskom’s debt service capability.

103.6. I attach the relevant extracts from the S&P, Fitch, and Moodey’s S&P press

releases as annexure “AA12”, “AA13”, and “AA14”.

104. For further details on the impact of non-cost reflective tariffs on Eskom’s financial

position, I refer to Eskom’s answering affidavit filed in response to two other pending

applications challenging NERSA’s decision,12 deposed to by Eskom’s Chief Financial

Officer, Mr Caleb Cassim. It is attached hereto marked “AA15”. I ask that its contents

be incorporated herein to the extent relevant.

105. I pause here to make three important points, which the applicants have seemingly

overlooked in challenging NERSA’s latest Eskom revenue decision. I am advised that

Part A of this application has been limited to prayers 3,4 and 5 of the notice of motion,

and the applicants therefore no longer seek a suspension of NERSA’s determination

pending Part B. Nonetheless, these three points of clarity place in proper context the

enduring prejudice that Eskom has suffered as a result of sub-cost reflective tariffs.

106. First, in terms of section 15(1) of the Electricity Regulation Act, NERSA is obliged to

set tariffs which enable Eskom, as a licensee, to “recover the full cost of its licensed

12Democratic Alliance v NERSA and Others, GP case no. 003615/2023 and Tebeila Institute v NERSA and
Others GP case no, 1338/2023.

42
 activities, including a reasonable margin or return”. Given the adverse consequences

of a revenue shortfall, the reasons for this injunction are apparent. As I have

explained, despite this requirement, NERSA’s latest revenue decision will not enable

Eskom to recover the prudently and efficiently incurred costs of its activities.

107. The relief the applicants seek (previously in Part A and still in Part B) in respect of

NERSA’s revenue decision would, therefore, require NERSA not only to act in breach

of its statutory duties but would also exacerbate Eskom’s continued revenue shortfall

and inhibit Eskom’s ability to perform essential maintenance of its power stations.

Since the applicants correctly acknowledge that Eskom must perform increased

maintenance, the relief they seek is palpably self-defeating.

108. Second, the applicants misconceive the nature and effect of NERSA’s revenue

decision. They allege that it will render electricity unaffordable to poor citizens and

inhibit such citizens’ access to electricity. But this is not necessarily so. It remains

possible, and within NERSA’s mandate, to grant subsidies to particular categories of

end-users, for instance indigent consumers. Whether and how such subsidies will be

granted, will be determined by NERSA in or about late February 2023, when it makes

its retail tariff structural adjustment determination. In addition, beyond this

determination, it is also within the purview of National Treasury to subsidise electricity

tariffs for particular end-users. The relief sought by the applicants in relation to

NERSA’s tariff determination is therefore misguided and premature.

109. Third, it bears noting that, even if tariffs were set at a cost-reflective price of 170c/kWh

(and thus above NERSA’s latest determination), they would still be:

109.1. the lowest unsubsidised average tariff in the world;

43
 109.2. far lower than the minimum price that new electricity generation technology

from nuclear or fossil fuel would require;

109.3. far lower than the cost at which any consumer could self-generate (other than

low-volume agricultural consumers at the end of a long and dedicated

transmission line); and

109.4. far lower than the economic cost of load shedding.

110. For these reasons, Eskom has consistently challenged NERSA’s inadequate tariff

determinations and those challenges have consistently vindicated Eskom’s view.

111. From 2011 to 2021, Eskom challenged NERSA’s revenue allocations by way of

Regulatory Clearing Account (“RCA”) applications. The details of the MYPD formula

and the RCA are explained in the affidavit of Eskom’s Chief Financial Officer, Mr

Cassim. In essence, the MYPD formula calculates a licensee’s allowable revenue,

which is supposed to allow a licensee to recover its efficient and prudent costs. Where

the initial calculation is subsequently shown to fall short of this amount, the relevant

shortfall is “held” in the RCA, and a licensee can apply to NERSA to recover these

amounts.

112. In each year from 2011 to 2021, Eskom has had to apply for an RCA determination

on the basis that its allowable revenue had been under calculated. While these

applications have partly been necessitated by changes in environmental factors, they

are largely the result of inadequate original revenue decisions. Those applications

have all been successful. NERSA itself has therefore been constrained to accept,

through its RCA determinations, that it has consistently and significantly under-

calculated the amount of revenue which Eskom should be entitled to recover. It has

therefore permitted Eskom to recover an additional R70 billion over its initial

44
 determinations. The history of these RCA applications and decisions is reflected in

the following table:

FY RCA RCA decision Reviewed Amount Additional amount

application amount reviewed after review
amount
2011-2013 R18.4bn R7.8bn N Accepted N/A

2014 R22.8bn R11.2bn N Accepted N/A

2015 R19.1bn R12.6bn Y R4.9bn R0.5bn

2016 R23.6bn R12.1bn Y R8.4bn R1.1bn

2017 R23.9bn R8.1bn Y R13.6bn R3.1bn

2018 R20.6bn R3.9bn Y R14.3bn Judgment

outstanding

2019 R27.3bn R13.3bn Y R10bn Judgment

outstanding

2020 R8.4bn R3.5bn To be R3.3bn

Reviewed

2021 R10.7bn TBD TBD TBD

113. Despite this, as is apparent from the table, Eskom maintains that even in its RCA

determinations, NERSA has under-calculated Eskom’s allowable revenue. For this

reason, since 2015, Eskom has also taken the RCA determinations on review.

Eskom has succeeded in every one of those applications in which there has been a

court decision so far.

45
 114. The above table also does not take into account an additional revenue shortfall in

excess of R70 billion, which in 2018 and 2019, led Eskom to launch two further

successful reviews of NERSA’s revenue determinations.13

115. Although Government has committed to provide Eskom funding in the total amount

of R136.8 billion over the period 2020 to 2023, this will only enable Eskom to service

its debt commitments and improve its liquidity in the short-term. Without cost-

reflective tariffs, Eskom’s financial position will continue to deteriorate and it will

continue to be forced to rely on Government support at the expense of the tax-payer.

Municipal arrear debt

116. Eskom’s financial viability, and consequent ability to increase generation and

maintenance spend, has also been impacted by alarming amounts of debt owed to

Eskom by municipalities. The problem of non-payment by municipalities for the

electricity that Eskom supplies has ballooned in recent years.

116.1. In 2015, the total municipal arear debt owed to Eskom stood at approximately

R5 billion.

116.2. By 2017, the amount owing had nearly doubled to R9.4 billion.

116.3. By September 2020, total municipal arrear debt stood at R33 billion.

116.4. To date, municipalities owe Eskom approximately R57 billion.

13Eskom Holdings SOC Limited v National Energy Regulator of South Africa and Others (74870/2019) [2020]
ZAGPJHC 168; and Eskom Holdings Soc Limited v National Energy Regulator of South Africa (Case No.:
37296/2018)

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 117. The top 20 defaulting municipalities – including Maluti-a-Phofung, Emalahleni,

Matjhabeng and Emfuleni – constitute 80% of total invoiced municipal arrear debt,

with 38% of that owed by Free State municipalities. A total of 48 municipalities have

arrear debt of more than R100 million each.

118. Eskom has taken numerous steps to arrest the escalation of debt owed by

municipalities and to reduce the overdue debt. I detail these steps in Part 3 of this

affidavit. Suffice it to say that despite Eskom’s best – and continuing efforts – the

problem of escalating municipal debt remains. It poses an increasing risk to Eskom’s

financial viability.

Eskom’s high debt servicing costs

119. A number of factors have contributed to Eskom’s burgeoning debt. Key among the

these is the non-cost reflective tariffs and the non-payment by municipalities. The

continuous pressure on liquidity caused by insufficient revenue recovery has forced

Eskom to borrow funds.

120. Despite recovering insufficient revenue, Eskom had to engage in an ambitious

capacity expansion programme due to the system capacity constraints. The build

programme embarked on by Eskom involved the construction of three large-scale

power stations (Ingula, Medupi and Kusile) and the strengthening of its transmission

network. The capital expansion programme was mostly funded from debt financing

as revenue was not sufficient to fund it. Raising funding on Eskom’s own balance

sheet became difficult and was expensive. Due to the weakening of Eskom’s balance

sheet, the Department of Public Enterprises, in its capacity as the shareholder of

Eskom, provided guarantees to the value of R350 billion to Eskom.

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121. As at 31 March 2022, Eskom’s net debt amounted to R389 billion; by the end of

December 2022, this had increased to R422 billion. Its debt servicing costs for the

2022 financial year amounted to R70.7 billion. Eskom has had to repay just under

R81 billion in capital and interest repayments in the 2023 financial year. It has now

entered a three-year cycle in which its debt repayments are expected to be R89

billion, R69 billion and R41 billion per annum. Eskom cannot afford its high debt

servicing costs and relies on equity support and debt relief from the Government.

122. Eskom’s constrained ability to access debt funding, combined with high debt servicing

costs means that it has less money available to fund the maintenance needed to

improve the performance of its existing fleet and capital expansion programmes to

add much needed new capacity to the grid.

CORRUPTION, SABOTAGE AND UNLAWFUL INDUSTRIAL ACTION

Corruption

123. Corruption has had a profound effect on Eskom. The report issued by the Judicial

Commission of Inquiry into State Capture, Fraud, and Corruption (“State Capture

Report”) found that “in total, R14.7 billion of Eskom’s contracts are calculated to have

been afflicted by State Capture”. The cumulative financial impact on Eskom of State

Capture and corruption more generally is difficult to quantify, but it is likely to be

significantly higher than the amount of R14.7 billion.

124. By way of example of the damning contents of the State Capture Report, the

Commission found that:

124.1. The evidence “revealed quite clearly that part of the reason why some of the

state owned companies have performed as badly as they have and why some

48
 rely on Government bail outs year in year out is the calibre of some of the

people who are appointed as members of the Boards of these companies or

who are their Chief Executive Officers and Chief Financial Officers”.

124.2. A vivid example of the impact of corruption on both Eskom’s finances and

generation capacity is the unlawful award, in March 2015, of a contract to

supply coal to Eskom’s Majuba power station to the Gupta-owned company,

Tegeta Exploration and Resources (Pty) Ltd (“Tegeta”). I already touched on

that contract above. Pursuant to this contract, Eskom paid Tegeta

approximately R1.26 billion.

124.3. Tegeta’s coal failed numerous quality control tests before Mr Koko intervened

to ensure that it was scored positively.

124.4. To this end, the Commission explained that “[c]ontrary to his assertions of

self-righteousness, evidence before the Commission shows that, acting on

Tegeta’s request, Mr Koko lifted the suspension of the Tegeta Brakfontein

contract, which had been suspended for supplying Eskom with substandard

coal. Mr Koko also breached the terms of the contract by sending coal from

the Tegeta owned Brakfontein Mine to Kendall Power Station during late

2015, which was not a SANAS accredited laboratory, nor were they an

independent laboratory, which was a requirement of the Coal Quality

Management Procedure, a standard procedure attached to all Eskom coal

contracts, including the Brakfontein Coal Supply Agreement.”

124.5. The State Capture Commission also found that Eskom officials negotiated a

price with Tegeta for both S4L (a particular grade of coal) and a blended

product for supply to the Majuba Power station, even though the blended

product was unsuitable for that station. Additionally, Tegeta’s resource

49
 estimates were insufficient to sustain the quantity required for the Majuba

Power Station over the life of the contract.

124.6. Tegeta therefore provided the Majuba power station with out-of-specification

coal and, from October 2016 to September 2017, it undersupplied Eskom by

around 265 000 tones of coal. As a result, at one time Majuba’s coal stockpile

fell below 10 days, whereas it required 40 days’ worth to maintain security of

supply. This put power supply from the station at risk.

124.7. Additionally, Mr Koko and Mr Molefe, together with various other Eskom

officials, colluded to ensure that, on 10 December 2015, Tegeta procured

Optimum Coal Holdings Ltd (“OCH”) from Glencore.

124.8. Amongst other things, on 9 December 2015, the day before Tegeta

concluded the relevant sale of shares agreement with Glencore, the Eskom

Board approved a prepayment of R1.6 billion to Optimum Coal Mine (“OCM”),

a subsidiary of OCH, purportedly for the supply of coal to Eskom’s Hendrina

power station. A day later, this payment was reclassified as a guarantee. On

11 April 2016, the Eskom board approved payment of a further amount of

R659 million to Tegeta, purportedly for the supply of coal to Eskom’s Arnot

power station.

124.9. These transactions were, however, a sham as both the R1.68 billion

guarantee and further R659 million payment were used by Tegeta to pay the

purchase price for OCH. The commission therefore concluded that these

payments “were made with the single purpose of ensuring that the Guptas'

deal in terms of which they acquired the Glencore coal interests did not fall

through for want of finance on the part of the Guptas”.

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125. The Commission recommended, amongst other things, that the National Prosecuting

Authority consider criminal prosecution of Mr Koko and Mr Molefe, and various other

Eskom officials for their involvement in numerous state capture matters.

126. To avoid overburdening these papers, I attach only the relevant parts of the State

Capture Report as annexure “AA16”, “AA17”, “AA18”, “AA19”.

127. Former GCEOs Mr Koko and Mr Molefe have since been charged in respect of

findings made in the State Capture Report. These individuals are also being pursued

for the recovery of losses suffered by Eskom due to their involvement in state capture

and corrupt activities.

128. Corruption has compromised Eskom’s financial position, board, and management

structures; reduced its coal supply security; degraded its power stations through the

use of out-of-specification coal; and thereby negatively impacted its generation

capacity.

Sabotage, criminality, and unlawful industrial action

129. In recent years, Eskom has also experienced unprecedented levels of sabotage,

criminality and unlawful industrial action, which has significantly impaired its

operations.

130. Tutuka provides a particularly vivid example. Despite being one of Eskom’s newest

power stations, it currently operates at an EAF of between 15% and 17% (a sharp

drop from 30% in the 2022 financial year). As I explained to SCOPA on 24 January

2023 (the minutes of which are attached as annexure “AA9”), at present, the Tutuka

station manager has to wear a bulletproof vest when walking the stations and has to

be accompanied by two bodyguards. His wife and children also have to be

51
 accompanied by bodyguards all as a result of threats being made on his life. Tutuka’s

underperformance, of course, has various causes. But intolerable levels of criminality

plaguing Tutuka are undoubtedly a significant contributor to its unacceptably low

EAF.

131. Tutuka is not an isolated example. Eskom is spending approximately R3.2 billion per

annum on private security due to the sustained sabotage and criminality it and its

personnel have experienced.

132. In a number of cases, it is clear that damage to Eskom property and operations has

been deliberate. This is not always the case, but the sheer number of inexplicable

incidents of damage to Eskom’s property, coupled with the substantial number in

which intention is clear, overwhelmingly confirms that Eskom has experienced a

sustained campaign of sabotage. For example:

132.1. On 18 December 2019, Majuba’s overland coal conveyor caught fire.

Subsequent investigation revealed that two valves controlling water flow to a

fire suppression system on the conveyor were shut off before the fire broke

out. There was no record of any approval for the valves to be shut off. As a

result of this fire, Eskom had to transport coal to Majuba by truck, at an

approximate cost of about R100 million per year.

132.2. On 17 November 2021, a pylon carrying power lines to Lethabo’s overland

coal conveyor was cut, causing the pylon to collapse, and the conveyor to

stop functioning. It took 9 hours the coal supplies to be re-routed to Lethabo.

Eskom narrowly avoided an entire outage of Lethabo’s 3558 MW of

generating capacity which would have moved the country from stage 4 to

stage 6 load shedding.

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 132.3. In May 2022, Eskom’s Chief Operating Officer, Jan Oberholzer, received a

bomb threat.

132.4. On 22 June 2022, an extension cord was dropped into Matimba’s unit 2

transformer. All three of Matimba’s cooling units consequently shut down.

Three units tripping in this way at Matimba, one of Eskom’s best performing

power stations, was unprecedented.

132.5. On the same day, a unit at Kendal and two units at Matla broke down.

Cumulatively, these incidents reduced generation capacity by 2 400 MW.

132.6. On 28 June 2022, unlawful industrial action at various of Eskom’s power

plants interrupted its operations, and caused 10 generation units to trip. As a

result, the country was moved from stage 4 to stage 6 load shedding.

132.7. On 10 November 2022, a contractor at Camden removed the bearing oil plug

from the stations bearing, causing oil burners to trip repeatedly, resulting in

an outage of Camden Unit 4. The contractor later confessed that this was an

intentional act of sabotage.

132.8. On 12 December 2022, I was poisoned with cyanide.

132.9. Eskom has recorded more than 25 arrests for matters of sabotage relating to

plant tampering and theft of diesel and fuel oil.

132.10. On 16 December 2022, since Eskom was under near constant siege,

the President deployed South African National Defence soldiers to four of

Eskom’s power stations.

133. I attach as annexures “AA20”, “AA21”, “AA22”, “AA23”, “AA24”, “AA25”, “AA26”,

“AA27”, and “AA28” news article reporting on these incidents.

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134. The applicants, nonetheless, describe sabotage and criminality at Eskom as “an

exaggerated risk”. Respectfully, this is an uninformed submission that is entirely

wrong.

STAGE 6 LOAD SHEDDING

135. Stage 6 load shedding – which essentially requires the reduction of 6,000 MW of load

– was implemented for the first time in December 2019. That stage 6 load shedding

was precipitated by unusually high rains and flooding in Mpumalanga, which

impacted coal supply and flooded two power stations taking out about 4000 MW of

expected supply.

136. Stage 6 was implemented again on 28 June 2022, following the loss of generating

capacity due to unlawful strike action coupled with a loss of 2,766 MW from planned

maintenance and another 17,395 MW from power station breakdowns.

137. Since then, the country has been subject to stage 6 loadshedding on several further

occasions, including: on 18 September 2022 (after the tripping of a generation unit

each at Kusile and Kriel power stations); on 7 December 2022 (when over 20,000MW

of generation was taken off line due to a high number of power station breakdowns);

on 16 December 2022 (with the breakdown of eight generating units overnight); on

20 December 2022 (following the breakdown of six generating units on the same

day); from 11 to 16 January 2023 (with the breakdown of 11 generating units); on 31

January 2023 (with the breakdown of 6 generating units in 24 hours); and on 19

February 2023 (following the breakdown of eight generating units).

138. As indicated in Eskom’s 22 November 2022 System Status and Outlook Briefing

(attached to the founding affidavit as annexure FA14), three recent events have

54
placed particular strain on Eskom’s supply, which have compounded the problems

described above. They are major contributors to the implementation of stage 6 load

shedding in late 2022 and earlier this year.

138.1. First, on 8 August 2021, Medupi Unit 4 experienced a large explosion, after

air was introduced into its generator while combustible levels of hydrogen

were still present. Extensive damage was caused to the Unit 4 generator.

Investigations revealed that there was a deviation from procedure when

carrying out the activities which led to the explosion, and the incident remains

under investigation. As a result of this explosion, Unit 4 was taken offline and

remains offline. Based on the property damage assessment and taking into

account the long-lead items required for repairs, the commercial operation of

Medupi Unit 4 is expected in about August / September 2024. The temporary

loss of Medupi Unit 4 has reduced Eskom’s generation capacity by 720 MW.

138.2. Second, on 23 October 2022, Kusile’s unit 1 flue gas duct experienced a

structural failure and collapsed onto a windshield supported by the units 2

and 3 ducts, which were thereby compromised and at risk of collapsing. The

decision was therefore taken to keep unit 2 offline, which had been scheduled

to return to service after a planned outage for maintenance. Unit 3 was initially

kept running but, on 3 November 2022, tripped due to an issue with its recycle

pump. Unit 3 has therefore also had to remain offline. These units have

remained offline. The loss of Units 2 and 3 at Kusile removed more than 2000

MW of capacity.

138.3. Third, in order to extend the operational lifespan of the Koeberg nuclear

power station by a further 20 years beyond 2024/25, Koeberg Unit 1 was

taken offline on 8 December 2022 until the end of June 2023 to install three

55
 replacement steam generators. This reduced Eskom’s generation capacity

by approximately 920MW.

139. Cumulatively, these three incidents have reduced Eskom’s generation capacity by

more than 3,600 MW, which translates to nearly four levels of load shedding.

140. These incidents, coupled with the high number of unplanned breakdowns being

experienced at Eskom’s ageing coal fleet, continues to severely constrain the

country’s electricity supply.

PART 3: ESKOM’S PLANS TO ADDRESS LOAD SHEDDING

141. Load shedding is a problem that has been decades in the making, and it cannot be

remedied overnight. However immediate steps can – and are – being taken by

Eskom, in conjunction with the government and other stakeholders, to bring an end

to load shedding as swiftly as possible.

142. In this part, I describe these plans and their key components. This account is a

summary. Further detail can be found in the plans themselves, which are attached.

143 Eskom has developed plans that are aimed at meeting the problem of loadshedding.

However, those plans are not an island; they are subject to and must be understood

within the framework of plans of government and other stakeholders.

144 These plans are developed collectively as a policy response to the energy crisis, and

they involve multiple actors across the executive, with inputs from a variety of experts,

sectoral representatives and business actors, across the energy landscape. Eskom’s

input into the plans has been critical, and many of its proposals have recently been

incorporated into the overarching Energy Action Plan, discussed below.

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145 To avoid ad hoc or conflicting implementation of the plans, the President has attempted

to ensure the implementation of the overarching plan in a coordinated manner. While

Eskom has attempted to put in place various measures to respond to the energy crisis,

many of those measures depend, for their implementation and efficacy, on regulators

and factors that are oftentimes outside of Eskom’s control.

146 Much of what follows in this section of my affidavit is only indirectly relevant to Part A

of this application, as it goes beyond Eskom’s plans to address the current energy

crisis. However, it is with respect necessary for the Court to get a sense of the medium

and long term plans Eskom – together with many other actors – has painstakingly

developed to address the energy supply crisis. That is because, should this Court

decide to grant the relief the applicants seek in Part A, it should be aware of the

cascading effect the relief would have on longer term planning. The crisis in energy is

in large part the product of Eskom historically prioritising immediate energy supply

imperatives over the – often competing – imperatives to invest in maintaining its

infrastructure and developing new sources of electricity supply. The current Eskom

leadership is determined to find an appropriate balance between addressing the

immediate crisis and laying solid foundations for the future. By granting the relief

applicants seek, this Court will inadvertently upend those carefully considered plans.

THE ENERGY ACTION PLAN

147 The Energy Action Plan is the government’s overarching plan to address load shedding

and achieve energy security. It was announced by President Ramaphosa on 25 July

2022, after consultation with Eskom and other stakeholders (labour federations,

business representatives, experts in the energy sector, amongst others). At the same

time, the President announced the establishment of the NECOM, charged with

57
 ensuring that the measures announced in the Energy Action Plan are implemented in

a coordinated manner.

148 The NECOM comprises all relevant government departments and Eskom, and is led

by the Director-General in the Presidency. NECOM reports directly to an

Inter-Ministerial Committee, which is chaired by the Presidency and comprises the

Minister in the Presidency, the Minister of Mineral Resources and Energy, the Minister

of Public Enterprises, the Minister of Finance, the Minister of Forestry, Fisheries and

the Environment and the Minister of Trade, Industry and Competition.

149 I attach a copy of the Energy Action Plan released by the Presidency entitled

‘Confronting the Energy Crisis: Actions to End Loadshedding and Achieve Energy

Security’ marked “AA29”.

150 The short-term objective of the Energy Action Plan is to reduce the severity and

frequency of load shedding through immediate measures to improve the performance

of Eskom’s existing power stations and stabilise the energy system. The long-term

objective is to end load shedding altogether and achieve energy security by adding as

much new generation capacity to the grid as possible, as quickly as possible.

151 In his State of the Nation Address, on 9 February 2023, President Ramaphosa

announced the establishment of a new post in his Cabinet – the Minister of Electricity

– who will oversee all aspects of the electricity crisis response including the work of

NECOM.

152 The Energy Action Plan is intended to build upon and fast-track the programmes to

which the government had already committed itself to address the shortfall in

electricity, including (but not limited to):

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 152.1 reviving the renewable energy procurement programme in 2018 to facilitate the

procurement of new generation capacity;

152.2 diversifying generation by allowing parties other than Eskom to generate

electricity. Raising the licensing threshold for new generation projects to

100MW in June 2021 – enabling private investors to build generation facilities

up to this size without needing to obtain a licence; and

152.3 making changes to the Regulations under the Electricity Regulation Act to allow

municipalities to procure power independently.

153 The Energy Action Plan identifies five key areas of intervention needed to address the

immediate load shedding crisis and move South Africa decisively towards energy

security. It identifies the actions to be taken by government, Eskom and other

stakeholders under each of the five key interventions, and stipulates timeframes where

possible. I summarise these steps below (for a fuller description of the steps and

timeframes, the Court is referred to the Plan itself).

154 Intervention 1: Fix Eskom and improve availability of existing supply. This entails:

154.1 bringing the remaining units at Medupi and Kusile online as quickly as possible;

154.2 enabling Eskom to implement so-called “reliability maintenance” across the

fleet to prevent further decline in its energy availability;

154.3 National Treasury to provide a sustainable solution to deal with Eskom’s debt,

in recognition that the huge debt burden on Eskom hinders its ability to address

the challenges it faces;

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 154.4 a coordinated effort by law enforcement agencies to address sabotage, fraud

and theft at Eskom.

155 Intervention 2: Enable and accelerate private investment in generation capacity. This

entails:

155.1 removing the licensing threshold for new generation projects entirely to allow

private investment in larger, utility-scale plants;

155.2 accelerating new generation projects by:

155.2.1 declaring embedded generation projects Strategic Infrastructure

Projects – which shortens the timeframes for environmental

authorisations, water use licences and other requirements.

155.2.2 declaring certain areas Renewable Energy Development Zones,

where strategic environmental assessments have already been

undertaken.

155.2.3 creating dedicated capacity at Eskom to process grid connection

applications quickly.

155.2.4 simplifying the NERSA registration process including by removing

the requirement for a Power Purchase Agreement (“PPA”);

155.3 passing special legislation on an expedited basis to ease the legal and

regulatory obstacles and facilitate investment in new generation capacity for a

limited period;

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 155.4 in the meantime, taking steps to reduce the regulatory requirements for

renewable energy projects and simplify the process and reduce the timelines

for all energy project applications; and

155.5 the release by Eskom of land adjacent to its existing power stations for private

investment in renewable energy projects.

156 Intervention 3: Accelerate procurement of new capacity from renewables, gas and

battery storage. This intervention recognises that a massive implementation of

renewable energy offers the best chance of ending load shedding as quickly as

possible. The specific actions aimed at to accelerate new generation capacity include:

156.1 Eskom to take steps to add new generation capacity to the grid on an urgent

basis by:

156.1.1 purchasing surplus capacity from existing independent power

producers;

156.1.2 purchasing additional energy from existing private generators that

have surplus power (such as mines and shopping centres);

156.1.3 importing power from neighbouring countries, which have surplus

energy, through the Southern Africa Power Pool arrangement;

156.2 Eskom to use climate funding provided through the Just Energy Transition

Partnership to invest in the grid and repurpose shut down coal fired power

stations;

156.3 Eskom to procure battery storage through its Battery Energy Storage Systems

programme;

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 156.4 Government to procure additional capacity through the renewable energy

procurement programme. This includes releasing further bid windows for

renewable energy, gas and battery storage and increasing the amount of new

capacity to be procured; and

156.5 Government to review and update the Integrated Resource Plan 2019 to reflect

current energy needs and climate commitments.

157 Intervention 4: Facilitating businesses and households investing in rooftop solar. This

intervention recognises that there is significant potential for households and business

to install rooftop solar PV and connect this power to the grid. Specific actions include:

157.1 Eskom will develop rules and a pricing structure to enable consumers who have

installed solar PV to sell surplus power to Eskom; and

157.2 National Treasury to consider the expansion of tax incentives for residential

and commercial installations.

158 Intervention 5: Transforming the electricity sector to achieve long-term energy

security. This requires:

158.1 restructuring Eskom to separate its generation, transmission and distribution

businesses into separate entities;

158.2 diversifying South Africa’s energy sources to improve the security of supply.

This will enable large-scale private investment in generation capacity as the

only long-term solution to address the electricity shortfall. The following actions

are specified:

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 158.2.1 Establishing a competitive electricity market allowing multiple

generators (both private and state-owned) to compete on an equal

footing, while the grid remains public and managed by an

independent transmission company; and

158.2.2 Expediting broader reforms to establish a competitive electricity

market through finalisation of the Electricity Regulations Amendment

Bill, to enable private investment in the electricity sector.

159 Eskom welcomed the President’s announcement of the Energy Action Plan and is in

full support of the measures it proposes. Many of the interventions set out in the

Energy Action Plan were recommended to the President by Eskom as critical

interventions needed to end load shedding. The three critical pillars of Eskom’s own

plans are now reflected in the Energy Action Plan – I detail those pillars further below.

160 Eskom is doing all it can to ensure the rapid and effective implementation of the Energy

Action Plan. It is working with government, the regulator, labour and the private sector

to bring an end to load shedding as swiftly as possible.

ESKOM’S PLANS TO END LOAD SHEDDING

161 Within the boundaries of its mandate, Eskom has developed its own plans to end load

shedding – that is, to address the immediate shortage of generation capacity to meet

the country’s needs as well as to ensure the long-term adequacy and sustainability of

South Africa’s energy supply.

162 Eskom’s plans have three main pillars:

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 162.1 First, recovering the performance and supply capacity at Eskom’s power

stations. This process is guided by Eskom’s Generation Recovery Plan.

162.2 Second, adding additional generation capacity to the grid, including by

prioritising Just Energy Transition projects, procuring emergency supply, and

facilitating private investment in renewable energy; and

162.3 Third, pivoting to a sustainable future by restructuring Eskom and opening

access to the electricity grid.

163 I address these pillars in turn.

ESKOM’S GENERATION RECOVERY PLAN

164 Eskom’s immediate priority is to improve the reliability and predictability of its

generation fleet and to get more operational megawatts on the grid to reduce the need

for load shedding. Improving the available generation capacity at its plants – measured

as the EAF – entails (i) improving performance at its plants; and (ii) bringing the units

of its new builds online as quickly as possible. The measures required, and which

Eskom is already implementing, are described in Eskom’s Generation Recovery Plan.

165 Eskom’s Generation Recovery Plan was introduced in October 2022, following the

appointment of Eskom’s new Board of Directors. However, it builds upon and continues

the implementation of earlier plans, including Eskom’s Turnaround Plan, the 2035

Strategy, the 9-Point Plan and the Reliability Maintenance Recovery Programme.

166 The Plan is geared towards improving the EAF from the current 58% to 65% by the

end of the 2024 financial year and at least 70% by the end of the 2025 financial year.

The target set by Eskom is to recover approximately 1 862 MW in the 2023 financial

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 year – this amounts to about two stages of load shedding. By improving generation

performance and bringing the new builds online, approximately 6 000MW can be

delivered by Generation in the next 24 months. How this may be achieved is illustrated

in the diagram below.

167 Eskom’s Generation Recovery Plan is directed at:

167.1 improving performance at six priority stations while sustaining the performance

of the rest of Eskom’s generation fleet; and

167.2 addressing 10 focus areas to improve generation performance (at the level of

people, plant and process).

168 Eskom’s Generation Recovery Plan is being periodically reviewed and updated; the

latest version is dated January 2023. A copy of the latest version is attached marked

“AA30”.

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Recovery of the Top 6 stations

169 The Generation Recovery Plan applies to Eskom’s entire generation fleet. Eskom has

detailed maintenance plans for each of its power stations, with specific targets and

interventions to drive towards these targets. However, Eskom’s Generation Recovery

Plan prioritises the maintenance and recovery of performance at six stations – Duvha,

Kendal, Kusile, Majuba, Matla and Tutuka. These stations – dubbed “the top 6” – were

selected because they are amongst the highest contributors to unplanned load losses

and show the greatest potential for adding available megawatts to the grid by improving

their performance. Eskom is therefore prioritising the maintenance and recovery work

required at these six stations – i.e., in terms of timetabling and implementing planned

maintenance and budget allocation.

170 The maintenance plans for each station, starting with the top 6 stations, are centrally

monitored and tracked by Eskom. They are also being stress-tested by independent

consultants reporting directly to Eskom’s Board. Engagements have already started

with the external service provider to provide these reviews. The Generation division is

executing the maintenance plans by following a detailed work plan with deadlines in

order to ensure project success.

171 The Generation Recovery Plan also identifies 10 focus areas for intervention and

monitoring, to achieve improved generation performance. These are itemised in the

graphic below:

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172 Eskom has made and continues to make significant progress in a number of these key

areas, which I discuss in more detail below.

The Reliability Maintenance Recovery Programme

173 Eskom continues to implement its Reliability Maintenance Recovery Programme,

introduced in 2020, as the best means to improve plant performance and reduce

unplanned outages.

174 All stations have their own specific maintenance requirements, but generic rules exist,

including:

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 174.1 A mid-life refurbishment takes place after about 25 years of service to improve

or extend the life span of the plant. This involves the refurbishment of the

control systems, the electrical systems, the boiler and the terminal.

174.2 A general overhaul needs to be carried out every 10 to 12 years and requires

the plant to be shutdown to do inspection and repair of the turbine and

generator.

174.3 A mini general overhaul needs to be carried out every 5 to 6 years and requires

the plant to be shut down for inspection of low pressure turbines and a pressure

test.

174.4 Interim repair is needed every 18 to 24 months and requires the plant to be

shutdown to inspect and repair the boiler components.

174.5 A boiler inspection is carried out between interim repairs to review the condition

of the boiler and plan the scope of the next outage.

174.6 Minor inspections and maintenance activities to ensure plant safety and

operability are carried out on a continuous basis with the plant remaining online.

This work is essential to facilitating planning and budgeting for more intrusive

maintenance work that may be required.

175 Projects aimed at improving plant reliability and performance (reliability maintenance)

are carried out during general overhauls and mini general overhauls. Eskom is focused

on executing reliability maintenance because it is an essential minimum requirement

to improve on reliability and predictability of the fleet. Reliability maintenance requires

specialised skill as well as spares and equipment from Original Equipment

Manufacturers, which require long lead times to secure. For this reason, planned

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 outages for general and mini overhauls need to be planned 24 months in advance. In

addition, budgeting for and the timely release of funding for planned outages has a

significant impact on Eskom’s ability to properly prepare for and execute the planned

outage. Eskom has increased funding for planned outages for the current financial year

from R8.2 billion to R9.5 billion. However, there is still a shortfall of outage funding and

additional funding is required.

176 Eskom has a detailed strategy for planning, preparing for and executing planned

outages for maintenance and repairs. The process starts 24 to 18 months before the

outage with outage planning, which requires a high level definition of the scope of work

required, ensuring that budget is available for the work planned and that any spares

that have a long lead time to procure have been ordered. The next stage, outage

scoping, takes place 7 to 9 months before the planned outage. In this stage, the scope

of work is fully defined, potential issues identified and responsibility allocated and

timelines put in place for resolving them. From this stage onwards, outage readiness

is closely monitored using a scoring process to aid in determining the potential for

success.

177 The final stage before the planned outage, outage preparation, starts 6 months before

the outage. The work order, which provides all the information about the planned

maintenance tasks and outlines the process for completing the tasks, including the

scope, who it's assigned to, and what is expected, is released and the spares required

are delivered.

178 During the execution of the planned outage, the scope of work is actively managed to

ensure successful execution. Once maintenance and repairs are complete,

recommissioning activities are carefully coordinated to bring the plant back online.

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 Finally, after the outage, any incidents are investigated and formal reviews are

conducted.

179 The steps required at each stage of a planned outage and the timelines for completion

are set out in the diagram below.

180 Eskom continues to direct its efforts towards improving outage readiness. A central

Reliability Maintenance Recovery team is in place, which provides direction and

support on outage planning and overall outage readiness at stations. Long-term

contracts required to support the objectives of the Reliability Maintenance Recovery

programme – such as contracts for the supply of equipment and parts with the Original

Equipment Manufacturers – are being put in place.

181 Eskom is also accelerating the sourcing of spares and equipment needed for

maintenance through more agile procurement. National Treasury has relaxed some

requirements that will speed up procurement. For instance, it has granted exemptions

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 from local content designations for equipment such as transformers and insulators, to

enable expedited procurement.

182 Eskom measures outage performance using four key indicators: outage readiness;

reduction in outage duration; execution of the outage by the due date; unplanned lost

capacity following the outage. As a result of the measures that Eskom has adopted,

Eskom is seeing a steady improvement across all four indicators. Critically, while still

below target of a 6% reduction in outage duration, Eskom has seen a marked reduction

in the duration of planned outages – decreasing the time that plants have to be taken

offline. A comparison of the 2021 and 2022 financial years illustrates the improvement.

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183 These short-term measures are thus showing immediate benefits. The road ahead is

not an easy one, however. As explained elsewhere, the difficulty of doing maintenance

is compounded by the many years that Eskom was not able to do maintenance

properly, including because of decisions by government to “keep the lights on” despite

Eskom’s warnings that this would present very severe future problems. Those

problems of the past continue to manifest in the present, and planned outages are still

being deferred and cancelled, even at the top six stations, due to the volatility of the

system and capacity constraints. The moving of planned outages is essential to

avoiding even higher stages of loadshedding, but it delays the performance of

maintenance which is required for performance to improve and can make the

maintenance more complicated.

184 Despite planned outages to conduct reliability maintenance being deferred and

cancelled, space has to be found for additional outages to address the most urgent

emergent issues that could result in load losses or plant damage (such as

breakdowns). Eskom uses these outages as an opportunity to perform additional

maintenance while the plant is offline. However, these outages often can only address

the symptoms and not the root cause of problem. That is why this affidavit, and

Eskom’s Generation Recovery Plan, speak to a multitude of other required

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 improvements and innovations to ensure solutions to loadshedding, and which are

aimed at addressing root causes rather than only symptoms.

Eskom’s new build programme – bringing Medupi and Kusile units online

185 Eskom’s capacity expansion programme, which commenced in 2005, aimed to build

three new power stations (Ingula, Medupi and Kusile), reinstate mothballed stations

(Grootvlei, Camden, and Komati14), build Open Cycle Gas Turbines (Gourika and

Ankerlig) to increase installed generation capacity, and to strengthen the transmission

network. Since the inception of the programme, about 10 587MW of nominal capacity

has been added to the grid.

186 The programme is close to completion with only the two coal-fired plants, Medupi and

Kusile, each with a generation capacity of approximately 4,800 MW, still needing to be

brought fully online. Significant progress has been made with bringing Medupi and

Kusile online.

187 The final unit of Medupi Power Station achieved commercial operation on 31 July 2021.

However, as I have already explained, Medupi Unit 4 suffered an explosion, which

resulted in extensive damage to the generator. Unit 4 is currently out of service –

resulting in a loss of 720 MW. Based on results from the property damage assessment

and taking into account long lead items for replacement parts, the commercial

operation of Medupi Unit 4 is expected to be returned online in August/September

2024.

14
Komati, which has reached the end of its operational life, is being repurposed as part of Eskom’s Just Energy Transition initiatives.

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188 Unit 4 at Kusile Power Station was synchronised to the grid on 23 December 2021,

adding 800MW to the grid. The Unit achieved commercial operation on 31 May 2022,

earlier than the scheduled date of January 2023.

189 Kusile Unit 5 was making good progress towards first synchronisation scheduled for

June 2023. However, the gas air heater at Kusile Unit 5 caught fire on 17 September

2022, resulting in a discontinuation of all commissioning activities. While this has

delayed the schedule, the Unit will be synchronised to the grid in December 2023 –

adding 720MWs to the grid – and will achieve commercial operation by June 2024.

The last unit – Unit 6 – will be synchronised in November 2023, with commercial

operation planned for May 2024.

190 In addition, for the reasons, explained above, Kusile Unit 1 suffered a collapsed flue

duct. Units 1, 2 and 3 are presently out of service, resulting in a loss of 2 100MW.

Eskom will be making a formal application to the Department of Mineral Resources

and Energy to grant it a temporary exemption to allow it to bypass the flue gas

desulphurisation units at Kusile. This would enable Eskom to return Units 1, 2 and 3 to

service much earlier. The generation capacity lost with the units out of service equates

to about 2 stages of load shedding. If this exemption is approved, it is anticipated that

Units 2 and 3 will return to service in around six months, while Unit 1 will return to

service in around 12 months.

191 The new plants at Medupi and Kusile Power Stations did not initially achieve required

levels of performance and reliability because of a combination of plant design defects

(in particular, in the design of the generator boilers) and operational and maintenance

inefficiencies. Solutions for major boiler plant defects were developed in collaboration

with the boiler contractor, Hitachi, in 2019. Good progress is being made on the

correction of new build defects. At Medupi, the boiler plant modifications by the boiler

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 contractor have been implemented on all six units. At Kusile, the major boiler plant

modifications have been completed on four units (Units 1 to 4), while modifications on

Units 5 and 6 are being rolled out during construction and will be completed before

commercial operation.

192 Performance at Medupi has improved considerably as a result of the interventions. All

units (with the exception of unit 4 following the fire) are now capable of reaching full

load, and Medupi is currently averaging supply capacity (EAF) in excess of 90%.

193 The latest total estimated cost for the defects correction of all Medupi and Kusile units,

based on the best available information, ranges from R5.6 billion to R7.2 billion. Eskom

prioritised remedying the defects in collaboration with the relevant contractors before

engaging in a dispute about liability. Eskom has now entered into a contractual

consultation process with Hitachi to determine liability for the necessary modifications

to correct the defects. At the conclusion of this process, should it be adjudicated that

Eskom is not contractually liable, Eskom’s costs will recover the disputed costs.

Improving coal quality

194 Coal quality remains a problem, with poor coal quality contributing to partial load losses

and ultimately, the need to implement load shedding. Eskom has implemented a

variety of measures to both secure coal supply and improve coal quality. These

measures are fully set out in the supporting affidavit of Mr Conradie. I briefly summarise

the measures implemented by Eskom here.

195 Eskom utilises three types of contracts for the supply of coal:

195.1 Cost plus mine contracts in terms of which Eskom invests in a mine situated

close to a power station and secures a dedicated supply of coal with the coal

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 price set at the mining costs plus an agreed profit consisting of management

fees and a return on the capital originally invested by the supplier;

195.2 Fixed price contracts in terms of which coal is sold to Eskom at a pre-

determined base price, which escalates annually in accordance with an

escalation formula; and

195.3 Short and medium term contracts, which are similar to fixed price contracts

except that they are of much shorter duration. These contracts, while allowing

for flexibility, have a much higher R/t cost and generally require coal to be

transported to power plants by rail or road.

196 Eskom is implementing a long-term coal supply strategy. The strategy gives preference

to dedicated long-term coal contracts – giving preference to fixed term and cost plus

mine contracts over short and medium term contracts. This strategy will ensure a

predictable coal price path and security of coal supply. Eskom is also focussing on coal

delivered on conveyors instead of road – reducing the risk of coal theft and tampering

(for instance, contractors mixing lower quality coal with higher quality coal to meet

volume targets).

197 After years of underinvesting in cost-plus mines, Eskom has resumed investing in cost

plus mines to expand the mines and access the remaining contracted reserves. Cost

plus contracts have certain advantages: they are historically the lowest R/t cost; the

coal is dedicated to Eskom – ensuring security of supply; and the coal is transported

to the power plant by conveyor instead of road.

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198 Eskom’s strategy is already paying off. The volume of coal from short and medium-

term contracts had decreased from 56% in the 2020 financial year to 41% total coal

volumes by the 2022 financial year.

199 The shift towards cost plus and fixed price contracts also has a significant impact on

plant performance. Power stations that are supplied from a single mine receive a more

consistent quality of coal – allowing them to better optimise combustion and unit

processes for that quality of coal. This is associated with a significantly higher energy

availability factor. Power stations with imports from multiple coal sources from short

and medium-term contracts receive a more variable quality of coal and resultantly do

not perform as well.

200 In addition to this, Eskom has taken several measures to increase verification and

monitoring in order to prevent the delivery of poor quality coal, including

200.1 ensuring that coal supplies are also pre-certified by laboratories to ensure they

adhere to contractual quality before being delivered;

200.2 ensuring that the magnets or metal detectors from all coal suppliers are in place

and working effectively;

200.3 deploying monitors at the power stations and mines to identify any coal-quality

issues, including foreign material, excessive contamination and wet coal; and

200.4 increasing the intensity of the coal verification at various sites. This is an audit

process where Eskom confirms the quality of coal delivered at a particular

power station.

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201 A large part of the problem relating to coal quality is rampant criminality. The risk of

criminality is increased where coal is transported by road. To prevent coal theft and

tampering, stockpiles of coal destined for Eskom from the contracted mines are pre-

tested and certified by both parties. It is required that the delivery coal trucks are

inspected at source and the trailers are sealed on site for security purposes. The seals

are to remain in-tact until the truck reaches the Eskom power station where it is again

inspected for tampering before the coal is off-loaded. Eskom is also seeking to pilot a

project whereby the coal will be tested to determine whether it meets certain

specifications upon delivery at the power plant. Eskom is aware that criminals are

actively engaged in circumventing these controls, sometimes in connivance with

corrupt Eskom contractors and employees.

202 In addition, Eskom has contracted private security to investigate coal theft and

tampering, and overt and covert surveillance and intelligence gathering have been put

in place. These measures are already bearing fruit with instances of coal tampering at

Camden and Matla recently being uncovered.

203 Where Eskom encounters instances of coal tampering it investigates and acts

accordingly. This includes reporting the incidences to law enforcement and suspending

the contracts of suppliers and transporters. Four illegal coal blending facilities have

been stopped and are with law enforcement for action. There are also approximately

30 other such blending facilities which are under investigation and against whom law

enforcement will take appropriate action

Recruiting and retaining skills and experience

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204 One of Eskom’s biggest challenges in recent years has been the loss of skills and

experience and the failure to transfer and replenish those skills. Eskom is working hard

at addressing this problem:

204.1 In 2021, Eskom implemented a focused recruitment drive, which has already

shown a significant increase in the replacement of skills, particularly since

February 2022. Eskom has brought back 18 skilled specialists with skills

covering engineering management, operating management, plant

commissioning, outage management, project management, procurement

management, materials management, and power station management. The

recruitment drive will continue into 2023.

204.2 Eskom has developed a crowdsourcing digital platform to attract skilled and

experienced candidates. Eskom has shortlisted 153 candidates for recruitment

from a database of 238. Twenty-five individuals were selected with the first

intake and commenced work in November and December 2022. To ensure

sustainability, these individuals will be required to transfer skills to the

permanent Eskom team they are paired with.

204.3 Eskom is conducting a skills audit for technical managers, technical

non-managerial employees, and non-technical staff. The skills audit is critical

for enabling Eskom to understand the gaps in skills and appropriately redress

them. The skills audit is now nearing completion.

204.4 Eskom has restarted staff competency, skills development and mentoring

programmes, including the Generation Technical Leadership Programme;

Eskom’s Management Development Programme; and the Top Talent and

Millennial Programme.

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205 Eskom has also launched the Culture Transformation Programme in recognition of the

demise in performance culture at Eskom and the urgent need to restore the integrity

of the institution. This programme aims to re-establish a high performance culture at

Eskom over the next three to five years. The programme is built around six principles:

accountability, operational excellence, people prioritisation, financial prudency, a

values driven culture and customer centricity.

Combatting theft, fraud and corruption

206 Theft, fraud and corruption have been hampering Eskom’s operations and generation

business, in particular in the areas of procurement, coal and other fuel supplies (oil and

diesel). Eskom is taking urgent measures in an effort to combat this and continues to

appeal to the SAPS and NPA for assistance.

207 Eskom is engaged in a campaign of governance clean-up, which is focussed on the

following key areas:

207.1 Conducting proactive lifestyle audits and reviews of conflicts of interest for

executives and senior management.

207.2 Enhancing ethics and anti-fraud frameworks, as well as consequence

management. Eskom is implementing its Fraud Risk Prevention Plan, which is

monitored by Eskom’s Anti-Fraud and Corruption Integration Committee. As

part of the plan, Eskom’s Assurance and Forensic Department is tasked with

visiting each power station to identify possible fraud risks and opportunities for

improved fraud detection and response activities.

207.3 Instituting disciplinary proceedings against employees and suppliers, as well

as pursuing criminal and civil legal action where appropriate. Eskom has

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 adopted a zero-tolerance approach to fraud and corruption, in which every

matter where evidence of criminality exists is referred to law enforcement

agencies for criminal investigation. In addition, where appropriate, civil

proceedings are instituted to recover losses suffered by Eskom.

207.4 Establishing a dedicated task team to address the recommendations of the

Zondo Commission. Eskom’s task team has developed an implementation

plan, which was submitted to the Presidency in October 2022. Key focus areas

include civil recoveries; consequence management for implicated suppliers,

former employees and former directors; and the review of policies and

procedures, specifically related to procurement and human resources, to

support the eradication of fraud and corruption.

207.5 Strengthening Public Finance Management Act and commercial governance

processes. Eskom’s Procurement and Supply Chain Management department

has implemented several initiatives to reduce the occurrence of irregular

expenditure and improve commercial governance processes through its

procurement roadmap. The procurement roadmap aims to: reduce the number

of cancellations of published tenders; improve compliance with procurement

plans; reduce the number of contract modifications, expansions and deviations;

enhance contract management and performance monitoring; and ensure that

continuous reviews and monitoring are under way.

208 Eskom is also in the process of establishing a crime-risk management compliance

programme focused on combating bribery and corruption, financial crime, physical

assets crime, cybercrime and anti-money laundering.

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209 Eskom has employed private security at a cost of R3.2 billion per annum nd has

acquired additional technology, including drones and smart cameras, to tackle

sabotage and theft. It has put overt and covert detection and monitoring systems in

place to monitor and secure its power plants.

210 Eskom is now receiving increased support from law enforcement to address crime at

its plants, and the increased efforts of law enforcement are beginning to show results.

A total of 67 cases are on the court roll and three have been finalised with a conviction.

In addition to this, the South African National Defence Force has been deployed since

December 2022 at four Eskom power stations: Majuba, Camden, Grootvlei and

Tutuka.

Key assumptions and enablers for Eskom’s plan to succeed

211 For the EAF percentage to improve to the levels targeted by Eskom, the main

requirement is for Eskom to perform the required maintenance, repairs and component

replacements. And for the required maintenance to happen, there are essentially two

main requirements, namely:

211.1 adequate system space for long planned outages so that Eskom can carry out

the reliability maintenance required; and

211.2 sufficient funding secured and released timeously to ensure that contracts can

be placed and spares ordered in advance.

212 Planned outages for reliability maintenance continue to be deferred or cancelled

primarily due to system and budget constraints. These constraints correctly result in

priority being given to outages required to address safety requirements over outages

for performance improvement or reliability maintenance.

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213 The steps that are being taken by Eskom, government and private investors to add

additional capacity to the grid are discussed in the next section. These steps are

essential to the success of the Generation Recovery Plan.

214 However, in addition to creating system space, Eskom requires sufficient funds to

properly plan maintenance and procure long-lead spares well in advance, as it needs

to do to execute maintenance effectively. Until Eskom has sufficient funds, plant

performance cannot be expected to improve. Therefore, re-establishing an adequate

and reliable power supply is dependent on a financially sustainable Eskom.

215 Lastly, a solution needs to be found to Eskom’s aging coal fleets’ non-compliance with

the MES limits to prevent critical capacity being lost from the grid. The challenges in

this regard and the plans in response are discussed further below.

Financial enablers

216 There is a shortfall in the budget needed to implement Eskom’s Generation Recovery

Plan. To execute the Plan, Eskom needs adequate funds to carry out reliability

maintenance and to procure diesel fuel for its Open Cycle Gas Turbines. Additional

funding, which must be immediately secured, includes:

216.1 An additional R13.1 billion over and above the R131 billion that has been

allocated to the Generation business based on the previous corporate plan.

216.2 An additional R12.7 billion to enable Eskom to continue using Open Cycle Gas

Turbines at higher levels. Eskom runs Open Cycle Gas Turbines at high cost

in order to minimise or avoid loadshedding and to increase space for

maintenance to be executed.

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217 These figures are subject to change, as they are dependent on the rate of exchange

and other macro-economic factors.

218 In addition to requiring increased funding, a solution must be provided for Eskom’s

financial sustainability. This entails:

218.1 Cost-reflective tariffs approved by NERSA and implemented;

218.2 National Treasury to provide support to reduce Eskom’s debt; and

218.3 Municipal debt reduced significantly through government intervention.

219 The deterioration in Eskom’s financial position as a result of non-cost reflective tariffs,

its huge debt burden and high debt serving costs and the non-payment by

municipalities (coupled with its inability to access debt funding), has made it impossible

for Eskom to fund the required maintenance and diesel fuel to prevent loadshedding.

220 While these debilitating factors are largely beyond Eskom’s control, Eskom has not

simply thrown its hands in the air. It has taken steps to regain sound financial footing.

It has limited its capital expenditure and engaged in aggressive cost cutting measures

to save on operational expenditure. However, for Eskom to regain financial

sustainability, cost-reflective tariffs, debt relief as well as municipal debt collection and

revenue recovery are essential.

221 Further details around financing and the related challenges are provided elsewhere.

Eskom’s debt

222 As explained above, Eskom’s debt has burgeoned resulting in unaffordable debt

servicing costs. Addressing Eskom’s high debt burden is essential to ensuring its

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 financial sustainability, and to enabling Eskom to implement the Generation Recovery

Plan. The Minister of Finance announced a prospective debt relief solution in the

Medium-Term Budget Policy Statement (“MTBPS”) on 26 October 2022 to the effect

that government will take over between 1/3 and 2/3 of the Eskom debt. National

Treasury is working on a sustainable solution to deal with Eskom’s debt, as per the

MTBPS, in a manner that is equitable and fair to all stakeholders. Further detail,

including the conditions to be attached to the debt relief, will be communicated by the

Minister of Finance in the National Budget Speech in February 2023.

Cost reflective tariffs

223 As explained above, electricity prices in South Africa have been maintained at

artificially low and unsustainable levels by pricing electricity without adequately

accounting for the cost of generating, transmitting and distributing electricity.

224 NERSA’s revenue determination decision of 12 January 2023 goes some way to

putting Eskom back on the path towards cost-reflective tariffs. However, as explained

above, the revenue determination is still below the amount needed for Eskom to cover

the prudent and efficient costs of providing electricity services. A suspension of

NERSA’s ‘tariff hike’ will, accordingly, have a negative impact on Eskom’s already

constrained financial position.

225 For Eskom to be financially sustainable and to continue to operate and maintain its

fleet in a reliable state, the tariff needs to migrate to cost-reflective levels. Any delay in

this migration would worsen Eskom’s financial position and prolong the need for

loadshedding.

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 Municipal debt

226 The trend of non-payment by municipalities is continuing and the total arrear municipal

debt has escalated to unsustainably high levels. As explained above, the municipal

arrear debt owed to Eskom currently stands in excess of R57 billion.

227 Eskom cannot afford for this trend to continue. The overdue debt has contributed

negatively to the liquidity, financial performance and sustainability of Eskom. The

budget deficit caused by non-payment by municipalities means that Eskom has to

borrow more money to fund its operations and capital expansion programme.

228 Eskom has adopted a Municipal Debt Strategy to address the challenges of municipal

debt and revenue collection. A copy of a PowerPoint presentation outlining Eskom’s

Municipal Debt Strategy is attached marked “AA31”.

229 The objectives of Eskom’s strategy include:

229.1 Current account management – stopping the defaulting and enforcing payment

of current amounts;

229.2 Arrear debt management – reducing and/ or eliminating overdue debt; and

229.3 Future debt management – preventing future defaulting through pre-emptive

action.

230 To address the systemic issues that perpetuate municipal debt, including a shortage

of key skills, electricity theft, meter tampering and non-payment by consumers, Eskom

has offered Active Partnering to Municipalities. Active partnering is intended to support

Municipalities to build capacity and improve their ability to manage their customers and

service their Eskom debt. However, there has not been a significant level of uptake by

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 Municipalities. A factsheet explaining Eskom’s Active partnering Programme is found

at slide 9 of annexure “AA31”.

231 Eskom adopts a balanced approach to the problem – offering support to Municipalities

to enter into debt repayment arrangements with Eskom as well as enforcing Eskom’s

right to payment through legal processes and limiting service provision as a measure

of last resort. Eskom’s ability to limit service provision to Municipalities as a means to

encourage payment has now been drastically diminished by the recent order and

judgment of the Constitutional Court in Eskom Holdings SOC Ltd v Vaal River

Development Association (Pty) Ltd.

232 Eskom’s Municipal Debt Strategy has not as yet yielded a significant improvement in

the situation. Eskom requires government intervention to support the reduction or

elimination of municipal debt and to assist Eskom to collect its outstanding debt.

233 Eskom is engaging with National Treasury on reinforcing financial oversight of affected

municipalities and ensuring municipalities prioritise the settlement of the arrear

amounts due to Eskom. Eskom is also participating fully in the work of the Eskom

Political Task Team, which was established by President Ramaphosa in 2020 to

provide political leadership support to Eskom, and its Multi-Disciplinary Revenue

Committee. Unfortunately, progress has been slow.

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Minimum Emissions

234 The execution and success of Eskom’s Generation Recovery Plan is dependent on

finding a solution to Eskom’s aging coal power plants’ non-compliance with the

Minimum Emissions Standards.

235 As detailed above, the decision of the Department of Forestry, Fisheries and the

Environment refusing Eskom’s application for a postponement of or exemption from

the implementation of the Minimum Emissions Standards for certain power stations

threatens the continued operation of these stations. Eskom has appealed this decision,

and the appeal process is currently ongoing.

236 Full compliance with the Minimum Emissions Standards would necessitate expenditure

of more than R300 billion. This is simply unaffordable to both Eskom and the South

African economy. Eskom proposes that emissions reduction could better be achieved

by closing down old coal-fired power stations and spending the capital, which would

otherwise be required to retrofit old coal-fired power stations to meet the Minimum

Emissions Standards, on adding urgently needed new capacity through renewables.

237 If the Minimum Emissions Standards decision is upheld, the result will be an immediate

loss of 16 000 MW of capacity, resulting in stage 8 of continuous loadshedding

immediately. This is because seven power plants (Lethabo, Matla, Tutuka, Kendal,

Kriel, Duvha, and Medupi) will be unable to meet the primary particulate matter (PM)

and nitrogen oxide (NOx) limits and will be forced to immediately cease operations fully

or operate at reduced outputs until retrofits can be completed. There would also be an

immediate knock-on impact on the coal mining industry (specifically those mines with

cost-plus and fixed-term supply agreements with Eskom) and broader socio-economic

impacts.

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238 Moreover, the Department’s decision requires eight stations (Duvha, Lethabo, Matla,

Tutuka, Kendal, Majuba, Matimba and Medupi) to meet a certain sulphur dioxide (SO2)

limit by 2025. The only means to comply would be to install flue gas desulphurisation

plants at these eight stations. This is not only practically unachievable by 2025 but

would require all eight stations to be taken offline simultaneously for these installations

to take place, resulting in a capacity loss of 30 000 MW post 2025. This would require

stage 15 loadshedding – essentially leaving South Africa without electricity. I note that

the applicants have not joined the Department responsible for this decision.

239 The diagrams below demonstrate the current compliance status and the risk of non-

compliance across Eskom’s coal fleet.

240 This goes some way to explaining why it is no answer to the load shedding problem to

merely say that Eskom should continue to rely on coal-fired power stations, rather than

to transition to clean energy sources. Relying on coal-fired power stations comes with

its own significant costs, including costs that Eskom will be forced to incur because of

regulatory imposition beyond its control.

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ADDING ADDITIONAL CAPACITY TO THE GRID

241 Eskom has long maintained that improving the performance of its ageing coal fleet is

not enough to meet South Africa’s immediate energy needs. New, clean generation

capacity must be added to address the shortage in supply.

242 This view is not Eskom’s alone. South Africa has bound itself to international

agreements targeted at reducing carbon emissions, which inarguably are exacerbated

by fossil fuel energy production. The move towards renewable energy as a source of

power is reflected in the National Development Plan and the Integrated Resource Plan,

2019.

243 Eskom has developed its own renewable energy strategy — Eskom Strategy for 2035

— which must read with Eskom’s Just Energy Transition Strategy, both of which are

attached to Ms Mkhatshwa’s supporting affidavit as annexures “GM6” and “GM7”,

respectively. The Just Energy Transition Strategy contemplates three routes that may

be taken by Eskom. Eskom favours the route that would leverage the transition to just

energy in order to resolve South Africa’s most significant challenges: environmental,

future capacity, financial and socio-economic. The benefit of renewable energy is that

it is:

243.1 At less than 2 years, these plants are quick to construct (compared to new coal

which would take between 10 and 12 years);

243.2 More economical with access to abundant concessional green finance

(compared to new coal which costs two to four times more and has no financing

options); and

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 243.3 Ensures South Africa can continue to export its products across various sectors

of the economy, in spite of growing carbon tariffs (compared to new coal which

compromises 46% of South Africa’s exports due to decarbonisation).

244 By constructing renewable energy power sources, Eskom could add over 850MW to

the grid in 2023, 238MW to the grid in 2024 and 5 000MW, beyond 2024.

245 A number of projects are being accelerated to add additional capacity to the grid over

the next two to three years, and beyond – with a particular emphasis on clean and

renewable energy. These projects are highlighted in the diagram below together with

an indication of the amount of megawatts that the project is expected to add to the

system.

246 I discuss some of these projects and the roles of different stakeholders.

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Eskom’s Just Energy Transition projects

247 As I have said, as part of Eskom’s Strategy for 2035, Eskom is transitioning towards

renewable sources of energy. Renewable energy sources offer the quickest path to

adding capacity to the grid at the lowest cost, and are thus essential to ending load

shedding as quickly as possible. Generation is thus focusng on priority JET-related

projects to urgently add additional capacity to the grid.

248 Solar, wind, gas and storage projects are under development at nine stations. Solar

and battery storage projects at Komati, Majuba and Lethabo and several other power

stations are expected to connect to the grid in 2023, and will result in over 500MW

being added to the system.

249 Eskom’s battery energy storage system project is making good progress. Battery

energy storage systems are devices that store and discharge electrical energy as and

when required. The system stores and releases energy instantly at the flick of a switch.

249.1 Phase 1 of the project, which is expected to deliver approximately 199MW

additional capacity, is underway. Contracts have already been concluded and

construction begun for 162MW, which will be added to the grid in 2023. Eskom

is currently in the process of concluding contracts for the remaining 35MW and

it is anticipated that the projects will be completed by the end of 2024.

249.2 Phase 2 of the project consists of 144MW at Distribution substations with an

additional 58MW of solar PV planned. Eskom is awaiting Public Finance

Management Act approval from National Treasury.

250 Eskom is also seeking to repurpose its end-of-life stations through the accelerated

construction of renewable plant and cleaner-fuel technologies. Repurposing these

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 stations allows Eskom to take advantage of the existing transmission infrastructure,

network and connections already in place and to contribute to the capacity solutions

and the sustainability of local communities.

251 Eskom has already commenced with its repurposing and repowering programme at

Komati power station. The repurposing of the Komati power station into a renewable

energy plant is expected to produce or store a total of 370M comprised of solar

(150MW), battery (150MW) and wind (70MW). Eskom is leveraging climate finance to

undertake the Komati repurposing and repowering. The World Bank Group has made

a financial commitment to the project of just under US$498 million (which equates to

around R9 billion at the present exchange rate).

252 While Eskom would wish to add even more capacity to the grid through additional

renewable energy projects, its financial constraints mean that it has to rely on grant or

concessionary funding or find innovative solutions such as private-public partnerships.

Surplus Energy

253 Eskom has taken a number of steps to procure surplus energy on an urgent basis.

These include the following:

253.1 Eskom has launched a Standard Offer Programme to procure power from

companies which have existing generation capacity through PPAs of a

maximum of three years duration. The Standard Offer Programme allows

Eskom to purchase energy at an established price. Through the Standard Offer

Programme, Eskom is in the process of securing approximately 1 000MW of

excess energy from existing generators.

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 253.2 Eskom has launched an Emergency Generation Programme to procure more

expensive power from existing generation facilities when the grid is significantly

constrained. The Emergency Generation Programme, which will add 600MW

to the grid, has received conditional Public Finance Management Act approval

from National Treasury as well as an exemption from Electricity Regulations on

New Generation Capacity15 from the Department of Mineral Resources and

Energy.

253.3 Eskom is securing imports of power to the country through the Southern African

Power Pool, which aims to provide reliable and economical electricity supply to

its 12 member countries by coordinating the planning and operation of the

electric power system among member utilities. So far, 300 MW has been

secured and a further 1 000 MW has been identified for 2023.

253.4 Eskom is applying to purchase energy under the Department of Mineral

Resources and Energy’s short-term independent power producer programme.

In terms of this programme, independent power producers who are already

signed and producing energy would provide extra energy in addition to their

already contracted capacity. Eskom has established that a total of 64MW of

additional capacity could be provided in this way. Eskom is working with the

Independent Power Producers Office (within the Department of Mineral

Resources and Energy) and generators to unlock this capacity.

The government’s renewable energy programme

254 The IRP envisages that government will acquire additional generation capacity from

renewable energy sources. Electricity produced by these projects is purchased by

15 Published under the Electricity Regulation Act; GN R399 in GG 34262 of 4 May 2011.

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 Eskom, which is the designated single buyer, after government has entered into PPAs

with the independent power producers.

255 The REIPP Programme is a competitive tender process that was designed to facilitate

private sector investment into renewable energy generation in line with the Integrated

Resource Plan.

256 At the end of the 2022 financial year, the programme had connected a total of 91

independent power producer projects with a capacity of 6 490MW to the grid since its

inception.

257 Under existing and expected bid windows, 8 500MW of renewable energy is expected

to be added to the system before 2025. Bid Window 5 projects are expected to add

2 600 MW to the grid by 2024, while Bid Window 6 projects are expected to add 5 200

MW beyond 2024.

258 As is recorded in the Presidency’s sixth month update on the progress in implementing

the Energy Action Plan (issued in January 2023), recent progress has been made on

the REIPP Programme. The update is annexure FA16(b) to the founding affidavit.

259 The update explained that:

259.1 19 out of 25 projects from Bid Window 5 have signed project agreements to

date for 1 800 MW of new capacity, and are proceeding to financial close and

construction.

259.2 Five preferred bidders have already been selected for Bid Window 6 to provide

1 000 MW of solar power.

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 259.3 A request for proposals for battery storage has been finalised and will be

released shortly.

259.4 A request for proposals for gas power will be released by March 2023.

259.5 The Minister of Mineral Resources and Energy published a ministerial

determination for the remaining allocations in the IRP (over 18 000 MW).

Further bid windows will be opened to procure this new generation capacity

from wind, solar and battery storage.

260 The Risk Mitigation Independent Power Producer Procurement Programme was

identified in the IRP 2019 as an urgent requirement to address the gap in supply and

demand. Thus far, Eskom has signed three projects with a total of 150MW of

dispatchable energy under this programme. An additional 1 500MW was targeted for

January 2025 through the Karpowership deal, but this has been delayed.

261 An accelerated execution of both programmes is needed to add new generation

capacity to the grid as quickly as possible. Eskom is engaging with the Department of

Mineral Resources and Energy to expedite them.

262 In addition, the Integrated Resource Plan 2019 needs to be revised with great urgency

to ensure that South Africa’s energy needs are met in the future. The Presidency has

committed that the review of the IRP 2019 will be completed by March 2023.

Facilitating private sector generation projects

263 As is recorded in the Presidency’s sixth month update, significant progress has been

made towards accelerating private investment in generation capacity.

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264 Raising the licensing threshold has increased the pipeline of private sector projects to

over 100 projects with more than 9000 MW of new capacity. This new capacity will

reduce the need for load shedding when the megawatts become available. Schedule

2 of the Electricity Regulation Act has been amended to remove the licensing

requirement entirely for generation projects of any size. This, together with the

streamlining of the authorisation processes and the reduction of the timelines for

energy projects, will facilitate and accelerate private investment in energy projects at a

larger scale.

265 Eskom recognises that facilitating private investment in new generation capacity is the

quickest way to provide relief to the constrained electricity system. Adding new

generation capacity through private investment will alleviate pressure on the system,

thus increasing Eskom’s ability to conduct maintenance at its existing fleet, reducing

loadshedding and the usage of open cycle gas turbines. While many of the steps

urgently need to facilitate private investment in new generation capacity fall within the

remit of government, Eskom is actively playing its part.

266 Eskom also recognises that innovative ways must be considered to add new

generation capacity to the system, including leveraging Eskom assets to incentivise

independent power producers to expedite the establishment of generation capacity.

To this end, Eskom has made large tracts of land available adjacent to its existing

power stations where there is existing grid capacity for private investments in

renewable energy projects. Leasing land to independent power producers supports

faster deployment of additional capacity to support the system and mitigate load

shedding.

267 In October 2022, Eskom signed land leases for around 6 000ha for the purpose of

generating electricity from renewable technologies either for Eskom’s consumption or

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 for sale to third parties. This will enable an estimated 2 000MW of additional private

sector investment. It is anticipated that the generators will be connected to the grid

within 24 to 36 months from financial closure, subject to environmental, land zoning

and other regulatory approvals.

268 Eskom plans to make more land available around its power stations and other sites

where there is sufficient grid capacity to connect renewable energy producers.

Eventually, up to 30 000ha can be made available for similar projects. It is estimated

that this programme could add further generation capacity of up to 4 000MW to the

national grid over the next few years.

269 Eskom is also working, together with government, towards enabling businesses and

households to invest in rooftop solar.

270 Work is underway to develop a compensation mechanism so that customers can sell

surplus energy they produce to distributors. The objective is to increase the uptake of

rooftop solar PV to support the electricity system. Eskom has already applied to

NERSA to approve a net metering billing mechanism. This would give consumers

credits for the electricity that they add to the grid, which are offset against their

electricity bill. This will make it more financially beneficial to the consumer to invest in

rooftop solar. Another option is the use of a feed-in-tariff, which similarly offers a

financial benefit to the consumer who gets paid for supplying surplus energy to Eskom.

271 There is significant potential for additional capacity from rooftop PV – approximately

10 000MW by 2030. This is comprised of 2 100MW from residential, 3 500MW from

commercial and industrial, 1 750MW from agriculture and 2 700MW from mining.

However, as explained in the supporting affidavit of Mr Conradie, this is a lengthy and

complex process. Regrettably, it does not provide the quick and immediate fix which

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 Mr Blom suggests. It is also plainly not within Eskom’s power to ensure the roll-out of

rooftop solar alone. In particular, to achieve these results would require a funding

mechanism to make solar more accessible to all customers, as not enough customers

can self-fund rooftop solar.

RESTRUCTURING ESKOM AND OPENING ACCESS TO THE GRID

272 The third pillar of Eskom’s plans to ensure adequate and sustainable supply – and so

to bring an end to load shedding – involves structural reform. There are two key

priorities: (i) restructuring Eskom; and (ii) enabling open access to the grid.

Eskom restructuring

273 In October 2019, the Department of Public Enterprises published the Roadmap for

Eskom in a Reformed Electricity Supply Industry, which aims to restructure Eskom’s

outdated, vertically integrated structure. The Department of Public Enterprises

recommended that Eskom be unbundled into three entities responsible for different

functions – Generation, Transmission and Distribution – with the immediate priority

being the establishment of a Transmission entity to manage the transmission grid. The

Department’s recommendations built on the recommendations of the Presidential

Eskom Sustainability Task Team, appointed in 2018. I attach a copy of the relevant

portion of the Roadmap dealing with the restructuring of Eskom marked “AA32”.

274 The need to restructure Eskom is driven by an evolving South African energy market

and policy landscape. The Department of Public Enterprises points out that

restructuring Eskom into separate entities will facilitate private investment in energy by

providing more investment comfort. A critical feature of Eskom’s reform is the

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 establishment of an independent transmission system and market operator, with its

core function to act as an unbiased electricity market broker.

275 The establishment of independent transmission system and market operator will put in

place the basis for a competitive energy generation sector, where multiple generators

sell to the national grid –setting the electricity industry on a new path, with more

diversification, competition and private sector investment.

276 Eskom is implementing the Department of Public Enterprise’s recommendations

through its restructuring programme, which will culminate in the establishment of an

independent transmission company and separate Generation and Distribution

businesses.

277 The Roadmap originally set out timelines for the restructuring of Eskom as follows:

divisionalisation by March 2020; functional separation by March 2021; legal separation

of the Transmission entity by December 2021; legal separation of the Generation and

Distribution entities by December 2022.

278 Eskom completed divisionalisation in the 2020 financial year and achieved functional

separation in April 2021. As part of the first stages of separation, Eskom ring-fenced

the financials of each of the divisions and started reporting separate financial

statements.

279 To complete the structural reform and legal separation, Eskom requires support from

government and regulators. Specifically, Eskom requires:

279.1 adapted legislative, regulatory and licensing frameworks to accommodate the

three businesses; and

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 279.2 lender approval from some lenders to transfer assets to new entities.

280 Eskom has established the National Transmission Company South Africa SOC Ltd to

house the transmission business. The National Transmission Company will play the

roles of system operator (balancing supply and demand) and market operator. Eskom

finalised an asset transfer agreement in December 2021, in which it agreed to transfer

its transmission division to the National Transmission Company.

281 The National Transmission Company is not yet operational. Eskom’s aim is to

operationalise the National Transmission Company as quickly as possible.

282 Eskom is putting in place arrangements for the operationalisation of the National

Transmission Company and the implementation of the asset transfer agreement.

Eskom applied to NERSA for a transmission licence for the National Transmission

Company in December 2021. The licensing has been delayed as a result of a number

of both internal and external matters. However, on 17 February 2023, it was announced

that NERSA has published the license for public comment. NERSA will take a decision

on the license after the public participation process. Eskom is working with the

Department of Public Enterprises to appoint an independent Board of Directors for the

National Transmission Company. Given these delays, it is uncertain whether the

National Transmission Company will commence trade around April 2023, in line with

Eskom’s revised timelines. It is subject to the external dependencies mentioned

above.

283 Both the Distribution and Generation divisions have started their journey towards legal

separation, but they similarly depend on government to action the necessary legislative

and regulatory reforms. Eskom’s revised plans target readiness for Distribution

operationalisation by December 2023 and commencement of trade by April 2024.

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 Legal separation of Generation is targeted in 2025. These dates remain subject to

external dependencies which may affect the timelines.

284 The Department of Mineral Resources and Energy has started the process of

amending the Electricity Regulation Act, 2006 and the Electricity Pricing Policy. The

Electricity Regulation Amendment Bill, which will establish a competitive electricity

market, was finalised for submission to Cabinet in January 2023. In his State of the

Nation Address, President Ramaphosa committed to tabling the Electricity Regulation

Amendment Bill later this year.

A transmission grid for the future

285 Eskom’s transmission division is focussing on enabling access to the grid for new

generation capacity by expanding the transmission grid. Most new generation capacity

from renewable energy will reside in the Northern, Eastern, and Western Cape, where

the conditions are ideal for solar and wind energy. This requires a fundamental

transition given that the transmission grid was developed to transport energy from the

coalfields in Mpumalanga and Limpopo. The grid of the future will require the

transportation of renewable energy from the Northern, Eastern, and Western Cape to

major economic hubs across the country.

286 Eskom formulated the Transmission Development Plan 2020 in response to the

Integrated Resource Plan 2019. The Integrated Resource Plan identified additional

generation capacity to be connected to the system, much of which is intended to come

from renewable energy sources. The expansion of the transmission grid is critical to

enable access for the new energy sources in line with the Integrated Resource Plan.

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287 Eskom’s Transmission Development Plan is a living document, which is reviewed and

revised. The most recent version, the Transmission Development Plan 2022 covers

the planning period from 2022 to 2030. Over this period, 30 GW of new generation

capacity is expected, mainly from renewable energy sources in areas with limited

network infrastructure. To provide for an adequate and reliable transmission system,

Eskom plans to increase the transmission infrastructure by approximately 8 400 km of

extra-high-voltage lines and 119 transformers to bring on board 58 970 MVA of

transformer capacity over the next 10 years. A copy of chapter 6 of the Transmission

Development Plan 2022, which provides a high-level description of the planned

transmission infrastructure, is attached marked “AA33”.

288 The Transmission Development Plan 2022 had to revise the plan contained in earlier

versions due to capital constraints, which required reprioritisation of projects to fit in

with the available budget. Similarly, the plan had to be revised in light of protracted

land and servitude acquisition processes, which necessitated the delay of certain

projects. Transmission projects are frequently delayed because of the complexity of

obtaining land and servitude rights over the long distances associated with

transmission lines.

289 Adequate funding is a key enabler for the successful execution of the Transmission

Development Plan 2022 include adequate funding. Significant investment in

strengthening and upgrading the transmission grid is required to execute the

Transmission Development Plan - R118 billion over the next 10 years. An additional

essential enabler is expediting the acquisition of land and servitude rights.

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THE APPLICANTS’ ALTERNATIVE PROPOSALS

290 The applicants rely on an affidavit from Mr Ted Blom (attached to the affidavit of

NUMSA’s General Secretary, Mr Irvin Jim) to submit that alternative measures are

readily available to Eskom to address load shedding. They suggest that Eskom’s

failure to take these measures is evidence of poor management and a lack of

appreciation of the urgency of the impacts of load shedding on South Africa. Eskom

denies these accusations which, as appears in particular from Mr Conradie’s and Ms

Mkhatshwa’s affidavits, are ill-informed.

291 Together with the rest of the Eskom management team, I fully appreciate the heavy

toll that load shedding is having on South Africa and the livelihoods of people living in

the country. Eskom is committed to doing everything within its power and available

resources to ending load shedding as quickly as possible. The plans that Eskom has

developed to recover and bolster its generation capacity are the culmination of careful

and considered planning, scenario-testing and budgeting (as well as re-budgeting

processes). Eskom’s plans entail a necessary balancing of the immediate, medium

and long-term needs of Eskom – and indeed, of the country – to ensure not only a

quick end to the immediate problem of load shedding, but also to ensure South Africa’s

long term energy security. They are informed by the financial and legal constraints in

which Eskom has to operate, and a concern to maximise the benefit of Eskom’s

available resources. Eskom can no longer afford to make short-term decisions which

compromise its longer term performance.

292 As will already be clear from what I have said above, the question of how to fix the

energy crisis is not an easy one. It involves a proper appreciation of the history of the

problems, the nature and extent of the current situation, the plans that have already

painstakingly and with much time been prepared by Eskom, how those plans are being

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 coordinated with other parties, including government, and the budgetary implications

for each of those plans to be actioned and implemented. Any outside interference with

those plans, even well-meaning ones, could not only be catastrophic – in the form of a

national black out – but may also upset finely tuned budgets that would otherwise

achieve immediate and favourable results.

293 It is essential that Eskom’s management be allowed to implement its carefully balanced

plans so as to reduce loadshedding whilst also ensuring that adequate reliability

maintenance is performed and that Eskom is on the path to financial sustainability. A

court order which undermines managements’ ability to carry out the remedial action

planned, will undermine investor and supplier confidence, with potentially devastating

effects for Eskom and the finances that it has attempted to raise.

294 As explained above, it is already difficult for Eskom to raise funding on its own balance

sheet due to its deteriorating financial position and low credit ratings. Investors will

rightly be concerned about whether they will receive any return on their investment if

the ability of Eskom’s management to carry out its plans is thrown into a state of

uncertainty by external interference. Any further loss of confidence by investors will

make it more difficult for Eskom to raise the funding that is needed for Eskom to add

additional generation capacity, particularly through critical Just Energy Transition

projects. Loss of investor confidence will limit Eskom’s access to funding without

government guarantees and will increase the cost of borrowing – worsening Eskom’s

already difficult financial position.

295 Similarly, suppliers will be concerned about whether Eskom will be able to pay them

for goods and services and will rightly be hesitant to supply Eskom other than for cash

or with guarantees. This will make it more difficult for Eskom to obtain the goods and

services that are essential for it to operate. The impact of Eskom struggling to acquire

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 primary energy sources such as coal, fuel-oil and diesel as a result of loss of supplier

confidence, would seriously diminish Eskom’s ability to deal with the electricity crisis.

Loss of supplier confidence will mean that Eskom will have to pay a premium for goods

and services – increasing its operational costs, depleting its revenue and possibly

requiring Eskom to acquire debt funding from lenders in order to operate. For these

additional reasons, external interference should be avoided.

296 With that in mind, I turn to address the alternatives proposed by Mr Blom. I explain

why, in some respects, the alternatives are viable and are already being implemented

or are under investigation by Eskom. In other respects, I explain why they are not

feasible options. I refer to the supporting affidavit of Mr Conradie from Eskom’s

Generation Division in response to Mr Blom for detailed responses to Mr Blom’s

proposed alternatives.

297 I start with the options that are more feasible, although not on the scale or within the

timelines proposed.

298 Rooftop solar: Like Mr Blom, Eskom is a proponent of rooftop solar. In fact, the

incentivisation of rooftop solar is among the elements put forward in Eskom’s

Generation Recovery Plan.

299 Eskom agrees that increased uptake of rooftop solar PV will support the electricity

system. Eskom is doing what it can, within its mandate, to facilitate households and

businesses investing in rooftop solar. As explained in detail above, to incentivise

increased up-take, Eskom is working on developing a compensation mechanism so

that customers can supply surplus energy they produce to distributors. However, the

approval of the compensation mechanism is up to NERSA.

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300 Eskom supports tax incentives to make rooftop solar more accessible and attractive to

customers. However, the decisions in this regard lie not with Eskom, but with the South

Africa Revenue Service and the Ministry of Finance.

301 That said, I point out, with reference to Mr Conradie’s supporting affidavit, that Mr

Blom’s suggestion that rolling out rooftop solar to 8 million homes would add 8 000MW

within a few months has no basis in reality.

302 Mr Blom’s proposal would require a national funding mechanism for mass roll out of

rooftop solar approved by National Treasury, as on Eskom’s estimates only about

250 000 of its customers would be able to self-fund the acquisition of roof-top solar

even with tax incentives. Even if a funding mechanism were in place, which is not the

case, 1 000MW to 15000MW from rooftop solar is the most that can be added within

one year.

303 Improving coal supply: Improving coal supply is a key strategic aim of Eskom’s and a

cornerstone of its Generation Recovery Programme. I have already set out above the

numerous steps that Eskom is taking to ensure quality coal supply and Mr Conradie

addresses this in more detail.

304 Mr Blom is, however, wide of the mark in suggesting that poor coal quality causes

losses of between 1 000 MW and 6 000 MW daily or that it is responsible for 30% of

boiler breakdowns. There is simply no basis for these claims.

305 At worst, poor coal quality causes losses of 600MW per day. However, even this loss

is unacceptable to Eskom, and it is implementing its long term coal supply strategy and

intensive verification and monitoring measures to improve the quality of coal supplied.

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306 Power factor optimisation: Eskom already runs power factor correction equipment.

Each of Eskom’s large generators is equipped with an excitation control system that is

always in service and that does correct the power factor of that specific generator in

accordance with the system requirement of the grid.

307 However, Eskom does not install power factors correctors for customers. The

responsibility for this lies with the customer in terms of NERSA’s Network Code (a copy

of which is attached to Mr Conradie’s supporting affidavit). This is the most pragmatic

approach. The customer is the person who is in control of what is plugged into the

system and who has the incentive to install a power factor corrector because it will

reduce their electricity bill.

308 While Eskom accepts that installing power factor correctors would reduce demand,

requiring Eskom to do this for each customer – instead of customers doing so for

themselves – is plainly unreasonable. There are quicker and cheaper ways for Eskom

to get additional megawatts on the grid, and this would not be the best use of Eskom’s

resources or capacity. I again refer to Mr Conradie’s affidavit in this regard.

309 Procuring cheaper diesel: To mitigate loadshedding, Eskom has expended an

increasingly larger part of its budget on diesel. Diesel is an expensive fuel and

particularly susceptible to price fluctuations. The Russian invasion of Ukraine in

February 2022 has led to declining fuel availability and rising fuel prices.

310 However, Mr Blom is incorrect in asserting the Eskom pays too much for diesel. In

general, Eskom pays below the wholesale price of diesel, which is published monthly

by the Department of Mineral Resources and Energy, because it negotiates discounts

with suppliers.

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311 Nonetheless, to reduce the price that Eskom pays for diesel, Eskom has applied to

obtain a wholesale diesel licence, which would enable it to procure and import diesel

directly and pay the basic fuel price for diesel, which is about R8 per litre less than the

wholesale price. However, the Department of Mineral Resources and Energy refused

Eskom’s application at the end of last year. I again refer to Mr Conradie’s affidavit in

this regard.

312 Ghost vendors: Eskom recognises that the unlawful sale of electricity by unauthorised

vendors reduces Eskom’s revenue. The problem is one of criminality, which is outside

Eskom’s mandate to resolve and for which responsibility lies with various law

enforcement agencies. Nonetheless, Eskom has worked closely with law enforcement

to crack down on the problem and to trace and recover ghost vending machines.

313 In addition to this, Eskom has taken and is taking a number of steps to eliminate ghost

vending, including (but not limited to): facilitating reporting on ghost vending; consumer

education and awareness and using technological solutions to eliminate ghost

vending. Eskom is currently in the process of upgrading the vending system and rolling

out smart meters in order to eliminate ghost vending. Ultimately the software installed

on the offline machines currently used for ghost vending will expire at the end of

November 2023. I again refer to Mr Conradie’s affidavit in this regard.

314 I now turn to the options that are entirely unfeasible.

315 Running diesel full time: Given the debilitating cost of loadshedding to the country,

Eskom utilises its Open Cycle Gas Turbines beyond the targeted levels and despite

the prohibitive cost. If Open Cycle Gas Turbines were utilised only at targeted levels,

Eskom could generate a net profit.

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316 While running the Open Cycle Gas Turbines full time would somewhat mitigate

loadshedding, it is not an option that is available to Eskom. Eskom is not in a financial

position to carry the burden of running Open Cycle Gas Turbines full time to ensure

security of supply to the country.

317 Eskom had already exhausted its R13.3 billion budget on diesel at the end of October

2022 and has had to find additional funds to procure more diesel at high cost. National

Treasury has indicated that it is unable to provide additional cash injections or even to

lend Eskom the funds to procure more diesel. Due to a shift in the cash forecast since

September 2022, Eskom has been able to procure additional diesel from surplus

operational cash – this has been achieved by Eskom’s divisions reducing their

operational cash requirements. This comes at an opportunity cost as this cash is used

on expensive diesel instead of on Eskom’s operations. This type of budgetary

recalculation therefore requires careful consideration and, with respect, is not

something this Court can undertake.

318 In addition, Eskom has not been able recoup its full diesel costs in its Multi-Year Price

Determinations applications and Regulatory Clearing Account applications. NERSA

has consistently allowed Eskom significantly less than the amount for which Eskom

applied.

319 In any event, Eskom has been unable to source and deliver more than around R1.5

billion worth of diesel per month on open cycle gas turbines – meaning that it cannot

possibly run them full time.

320 Emergency gas procurement strategy: While the emergency gas procurement strategy

that Mr Blom proposes is theoretically possible, it is not the best use of Eskom’s limited

110
 resources and is absolutely impossible within the timeline that Mr Blom asserts, as Mr

Conradie discusses in some detail.

321 Mr Blom’s suggestion is simply unaffordable. To generate the number of megawatts

suggested by Mr Blom, Eskom would have to pay approximately R159 billion per year

to run the jet engines at 90% load factor. This excludes the initial cost of procuring the

gas turbines and transporting them to South Africa. This is the case if Eskom could

manage to source sufficient supply of gas, which is unlikely given the global shortages.

322 Mr Blom’s timeline is unrealistic. His proposal fails to take into account the regulatory

environment within which Eskom operates, which requires it to obtain exemptions and

approvals from a number of different entities in order to implement an emergency

procurement strategy. That does not even take account of the infrastructure that

Eskom would have to build in order in order to transport the gas to power plants and

connect the electricity to the grid.

323 BHP Contacts: Contrary to Mr Blom’s suggestion, Eskom cannot simply terminate its

contract with South32 SA Coal Holdings (Pty) Ltd (“South 32”), which is the owner of

the Hillside Aluminium Smelter and a spin-off of BHP. The contract is entirely lawful

and, as such, is valid and binding on Eskom. It has not been challenged by the

applicants in these or any other proceedings.

324 The contract was approved by NERSA and complies with the Electricity Pricing Policy

and the Department of Mineral Resources and Energy’s Interim Framework for Long-

Term Negotiated Pricing Agreements’ (a copy of which is attached to Mr Conradie’s

affidavit).

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325 In any event, the allegations that Mr Blom makes regarding Eskom’s contracts with

South32 are entirely false. Eskom has negotiated a price for electricity with South

32which is lower than the standard tariff levels. However, South32 pays significantly

higher tariffs than those Mr Blom asserts. Although, for reasons of commercial

confidentiality, I cannot disclose the amount, it is – as it is required to be – higher than

the cost of generating electricity, which is currently around 57c/kWh.

326 In addition, South32 consumes about 1 200MW (not 8 000MW), which equates to

roughly 5% of available supply. Eskom’s contract with South32 gives Eskom the ability

to interrupt supply to South32 when there are constraints on the grid. Eskom uses this

interruptibility benefit to avoid loadshedding by instantly reducing demand.

PART 4: INTERIM RELIEF

327 Following case management, the applicants advised that, for the purposes of Part A,

only the relief in prayers 3, 4 and 5 of the amended Notice of Motion is being pursued.

328 While Eskom’s response to all the relief initially sought in Part A will be apparent from

these answering papers, I focus in this part on responding to the relief in prayers 3, 4

and 5. I reserve the right to supplement these papers to the extent necessary for the

Part B hearing. I begin by addressing prayers 3 and 4, and then deal with the

alternative relief in prayer 5. I explain why these prayers, if granted, would impose

impossible obligations on Eskom – that is, they require Eskom to do what is practically

and legally impossible. I am advised that the court will not grant orders that are

impossible to execute.

329 I also explain why the relief in prayers 3 and 4 defeats the very purpose of load

shedding – to prevent a total blackout. It requires maintaining a level of demand on

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 the grid in circumstances where there is an insufficient supply to sustain that demand.

This presents a manifest risk of grid collapse or blackout, which is a risk that Eskom –

and indeed, the country – cannot afford to take.

330 While the applicants now say that they are limiting their part A relief to prayers 3, 4 and

5, any one of these prayers granted even on an interim basis would have far broader

implications for Eskom and the country than the applicants realise.

331 Accordingly, the applicants’ efforts to limit their relief to just three prayers does not

assist them. That is because those prayers cannot be granted without proper

consideration of the potentially devastating knock-on effects they may have on the

country in general and on Eskom in particular.

332 To give just one example, the applicants’ Part A relief is a precursor to the relief they

seek in Part B, but a quick consideration of what they seek in Part B underlines just

how dangerous their Part A relief is. Their arguments culminate in prayers 6 and 7

(Part B) of the amended notice of motion – namely, to review and set aside the

decisions to shut down the Komati, Camden, Hendrina, and Arnot power stations and

to direct Eskom to reopen those power stations. But their entire case – in Part A and

B – ignores what Eskom and this Court are not entitled to ignore. That is that Eskom’s

Just Energy Transition requirements, which underlie the decision to shut down these

coal-powered stations, are not optional. They are, in large part, required by domestic

legislation - and more particularly by Eskom's environmental authorisations - and by

South Africa's international obligations. Accordingly, if this Court were to order that

Eskom undo its decisions to shut down certain power stations, it would not be able to

comply without breaking the law.

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333 Moreover, continued reliance on the aging infrastructure of shutdown coal power

stations is not commercially viable. It would result in Eskom spending more money on

producing less electricity and, because of the international trend away from fossil fuels,

would be difficult if not impossible to fund.

334 The Part A relief thus demonstrates the fanciful and downright dangerous approach

adopted by the applicants which ignores the complexities of the electricity crisis, the

myriad legal obligations upon Eskom (including to transition to clean energy) and the

intricately poised funding that Eskom has desperately sought to secure to implement

the quickest, cleanest, and most cost-effective strategy to improve the country’s energy

supply.

335 The applicants are in no position to make that assessment. What is more, they have

not put the Court in a position to come close to that assessment, not least of all because

they have inexplicably failed to join the Minister of Finance as the head of Treasury or

the municipalities that supply almost 50% of the country’s electricity directly to their

customers.

336 Eskom has sought to demonstrate to the Court the extensive nature of the implications

of the relief in Part A – the budgetary, planning and operational consequences, and

the potential calamitous consequences if the delicate task of balancing the grid and

protecting it from a blackout were to be disrupted by ill-considered interference.

337 In what follows, I provide a summary of why, given all of those multiple factors, the

paired down relief sought by the applicants cannot be granted. As I shall show, the

relief is not just and equitable, is vaguely and arbitrarily drawn and impossible to

implement for practical and legal reasons, and entails this Court making orders that

may not only destabilise the national electricity grid, but seriously retard Eskom’s

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 recent and extensive efforts to meet the challenges of the energy crisis as quickly as

possible in the most cost-effective manner.

Prayers 3 and 4

338 In prayer 3, the applicants seek an order in the following terms:

“3. In respect of users of electricity that are supplied electricity directly by

Eskom Holdings SOC Limited (Eskom), the Minister of Public Enterprises
and/or Eskom shall ensure that there shall be no interruption of supply as a
result of loadshedding to the following institutions and/or facilities:

3.1 all “public health establishments” as defined in the National Health Act 61
of 2003, including publicly owned hospitals, clinics, and other establishments
or facilities;

3.2 all “public schools” as defined in the South African Schools Act 84 of 1996;

3.3 “electronic communications networks” as defined in the Electronic

Communications Act 36 of 2005, and the infrastructure necessary for the
operation of such networks, and any other infrastructure necessary for the
operation of mobile phone and internet networks;

3.4 the “South African Police Service” and “police stations” as envisaged in
the South African Police Service Act 68 of 1995, including facilities and
infrastructure providing municipal police services;

3.5 any entity responsible for the provision of water in terms of the National
Water Act 36 of 1998; and

3.6 “micro”, “very small” and “small” businesses as provided for in schedule 1
of the National Small Enterprises Act 102 of 1996, trading in perishable goods
such as meat and milk and which depend on electricity for storage of such
goods”.

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339 In prayer 4, the applicants seek the equivalent relief for users who are supplied

electricity by municipalities. Some 177 local municipalities are licensed to distribute

electricity. They supply approximately 50% of distribution customers in the country,

predominantly in the urban areas, in terms of bulk-supply agreements with Eskom. In

respect of these users, the applicants seek an order that –

“Eskom and/or the Minister of Public Enterprises shall ensure that any

instruction to that municipality to reduce electricity and/or commence or

continue load shedding includes an instruction to ensure the exemption on the

terms mentioned in paragraph 3 above.”

340 I have reproduced these prayers because their breadth and scope must be appreciated

to understand why it is practically impossible to implement them.

341 To give a better sense of their scope, I set out below some analysis (albeit rudimentary

in the time available) of all the institutions and facilities the applicants would have

Eskom and municipalities immediately exclude from load shedding.

341.1 “Public health establishments” are defined in the National Health Act 61 of 2003

as follows:

341.1.1 A “health establishment” is defined to mean “the whole or part of a

public or private institution, facility, building or place, whether for profit

or not, that is operated or designed to provide inpatient or outpatient

treatment, diagnostic or therapeutic interventions, nursing,

rehabilitative, palliative, convalescent, preventative or other health

services”.

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 341.1.2 A “public health establishment” is defined to mean “a health

establishment that is owned or controlled by an organ of state”.

341.1.3 Therefore, a public health establishment is the whole or part of any

institution, facility, building or place owned or controlled by an organ

of state, whether for profit or not, that is operated or designed to

provide inpatient or outpatient treatment, diagnostic or therapeutic

interventions, nursing, rehabilitative, palliative, convalescent,

preventative or other health services.

341.2 According to the Department of Health’s Annual Report for 2021/2022, there

are 3,873 public health establishments in South Africa, including 3,346 clinics,

381 hospitals and 146 other types of health establishment. 16 I attach the

relevant extracts marked “AA34”.

341.3 According to the Department of Basic Education’s Annual Report 2021/2022,

there are 23 213 public schools in South Africa.17 I attach the relevant extract

of this report marked “AA35”.

341.4 An “electronic communications network” is defined in the Electronic

Communications Act 36 of 2005 to mean “any system of electronic

communications facilities (excluding subscriber equipment), including without

limitation (a) satellite systems; (b) fixed systems (circuit- and packet-switched);

(c) mobile systems; (d) fibre optic cables (undersea and land based); (e)

16 Department of Health Annual Report 2022, at pages 34 and 69

(https://www.gov.za/sites/default/files/gcis_document/202210/healthannualreport202122.pdf (3))
17 Department of Basic Education Annual Report 2021/2022 at page 119
(https://www.gov.za/sites/default/files/gcis_document/202210/dbe-annual-report-2022.pdf). I note, however, that
elsewhere in the Annual Report, the total number reflected in a different tabulation of public schools per province is 22 589
(at page 69 of the Report).

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 electricity cable systems (to the extent used for electronic communications);

and (f) other transmission systems, used for conveyance of electronic

communications”. To give some sense of the number of these installations, I

note the following:

341.4.1 The 2022 ICT Sector Report18 indicates that there were 749 269

analogue fixed telephone line subscriptions, and 1 461 046 fixed line

subscriptions,19 and there were 1 379 207 fibre to home or building

internet subscriptions.20 Further, in 2021, there were 53 digital

satellite stations, 86 terrestrial satellite stations, and 147 content

distributors.21 There were also 1,686 transmission sites for radio.22 I

attach the relevant extracts of this report marked “AA36”.

341.4.2 Prayer 3.3 relates also to “the infrastructure necessary for the

operation of such networks, and any other infrastructure necessary

for the operation of mobile phone and internet networks”. Precisely

what infrastructure this entails is unclear.

341.4.3 While the scope of the relief the applicants seek in prayer 3.3 is

uncertain, I point out that Eskom has 11,568 supply points for what it

characterises as ‘telecommunications infrastructure’, connected to

distribution lines throughout the country. It can reasonably be

assumed that municipalities would have at least as many

18 The State of the ICT Sector Report of South Africa March 2022, available at State-of-ICT-Sector-Report-March-2022.pdf
(icasa.org.za)
19 ICT report page 40, table.
20 ICT report page 41.
21 ICT report page 59.
22 ICT report page 60.

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 telecommunication supply points across their distribution networks

(and probably more in the urban environment).23

341.5 According to the SAPS Annual Report for 2021/22, there are 1 158 police

stations countrywide.24 In addition, at least the following municipalities have

established their own municipal police services: Cape Town, Johannesburg,

City of Tshwane, Ekurhuleni, eThekwini and Nelson Mandela Bay. Precisely

which facilities and infrastructure is contemplated in prayer 3.4 in respect of

such municipal policing services is unclear. I attach the relevant extract of the

SAPS Annual Report marked “AA37”.

341.6 The scope of prayer 3.5 is also not clear: it refers to “entities responsible for

the provision of water in terms of the National Water Act 36 of 1998”. It appears

that this may encompass all of the following infrastructure:

341.6.1 In terms of the National Water Act, a “Government waterwork” means

a waterwork owned or controlled by the Minister of Water and

Sanitation, and includes the land on which it is situated; and

“waterwork” includes any borehole, structure, earthwork or

equipment installed or used for or in connection with water use.

341.6.2 The Department of Water and Sanitation controls 257 water

schemes, of which 25% (65) are schemes where raw water is

collected and transferred from one catchment to another, with more

23 Dr Minnaar’s report para 70.

24 South African Police Service Annual Report, 2022 at page 443; site:
https://www.saps.gov.za/about/stratframework/annual_report/2021_2022/Annual-Report-2021-22-latest.pdf

119
 than 5 000 registered dams (wall height over 5 m and storage

capacity over 12 000 m3).25

341.6.3 Water management and transfer require energy for pumping, and 15

525 million households (or 88.7% of all South Africans) are

dependent on municipalities and water boards for daily safe and

reliable water supply.26

341.6.4 Water supply infrastructure takes the form of: treatment works; pump

stations; reservoirs; and reticulation, and consists of a network

covering a large area and consisting of a variety of stations.

341.6.5 With regard to sanitation services, in 2022 there were: “995

wastewater networks and treatment works, comprising 850 municipal

wastewater treatment systems; 115 systems owned by the national

and provincial Departments of Public Works; and 30 privately-owned

systems”.27

341.6.6 I attach marked “AA38”, the relevant extracts of the SAICE

Infrastructure Report, 2022 that contains these figures.

341.7 It is difficult – if not impossible – to identify and quantify “micro, very small and

small businesses trading in perishable goods such as meat and milk, and which

depend on electricity for the storage of such goods”.

25 SAICE 2022 Infrastructure Report page , available at SAICE-2022-Infrastructure-Report-Card.pdf

26 SAICE report page 24.
27 SAICE report page 27.

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 341.7.1 A “small enterprise” is defined in terms of the National Small

Enterprises Act 102 of 1996 as a separate and distinct business

entity, together with its branches or subsidiaries, if any, including

cooperative enterprises, managed by one owner or more

predominantly carried on in any sector or subsector of the economy

mentioned in column 1 of the Schedule, and classified as a micro, a

small or a medium enterprise by satisfying the criteria mentioned in

columns 3 and 4 of the Schedule.”

341.7.2 The term "micro", and "small" business as provided for in Schedule 1

of the Act, for all of the sectors listed therein (including retail,

wholesale, catering and accommodation, transport and storage),

means: (i) between zero and 10 total full-time equivalent of paid

employees for micro-enterprises; and (ii) between 11 and 50 full time

paid employees for small enterprises. In addition to the number of

employees, there are turnover thresholds for micro- and small

enterprises in terms of Schedule 1 to the Act.

341.7.3 There is no readily-available register of all the micro, very small and

small businesses in South Africa, let alone one that identifies the

particular category with which the applicants are concerned.

Overall, the number of SMMEs in South Africa, as estimated by the

Small Enterprise Development Agency (in its third quarterly report for

2021) was 2.4 million.28

28 SMME Quarterly Update 3rd Quarter 2021 page 8, available at SMME Quarterly 2021Q3 (002).pdf (seda.org.za).

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 341.7.4 Eskom is not aware of any data available on the number of SMMEs

specifically trading in perishable goods in South Africa. However this

would presumably include all restaurants, cafés and spaza shops in

the country.

Practical impossibility

342 The uncertainty as to precisely which institutions, facilities and infrastructure are

encompassed by prayers 3 and 4, on its own, renders their implementation impossible.

I am advised that the orders sought in prayers 3 and 4 thus flout the basic principle

that for an order to be executable or enforceable its wording must be clear and

unambiguous. An order that lacks clarity in its wording or is vague is incapable of

enforcement.

343 But there is a far more fundamental problem. Were prayers 3 and 4 to be granted, the

sheer number of the institutions, facilities and infrastructure that would have to be

excluded from load shedding and assured an uninterrupted supply of electricity, would,

without a doubt, pose a serious and unacceptable risk of a national blackout.

344 The applicants’ relief apparently assumes that Eskom can isolate certain institutions

and facilities from load shedding. Eskom’s Dr Ulrich Minnaar (from Eskom Distribution

Solutions: Research, Testing and Development) has prepared a report to explain the

problem of the embeddedness of customers on Eskom’s transmission and distribution

networks, and how this renders it impossible, at a technical level, to isolate and exclude

particular customers from load shedding. That report is attached to this affidavit as

annexure “AA39”.

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345 As Dr Minnaar explains, the institutions and facilities the applicants seek to exclude

from load shedding, by and large, share a set of common characteristics:

345.1 they are widely distributed across the country and located as close to

communities as possible in order to serve the needs of the public; and

345.2 apart from larger hospitals, these facilities typically use small electrical loads

connected to the low voltage distribution network present in every

neighbourhood spread across South Africa;

345.3 the overwhelming majority of customers are not supplied by means of direct

feeders (distribution lines) connected to the supply station or substation with

switches (circuit-breakers) to enable their supply to be independently

controlled. Customers are, instead, “embedded” in the distribution network in

the sense that they share feeders with hundreds or thousands of other

customers without independent switching capability; and

345.4 the overwhelming majority of municipalities (all but about twenty) have little or

no remote-controlled switching capability in their distribution networks. This

means that it is impossible to instruct them to implement load shedding in any

targeted and rotational fashion, let alone the highly specific manner in which

the applicants propose. As Dr Minnaar explains in his report, Eskom’s regional

control centres have agreed, at the request of local municipalities, to implement

load shedding in their jurisdictions through Eskom’s Supervisory Control and

Data Acquisition (SCADA) system. This system enables Eskom’s national and

six regional distribution control centres to remotely open and close circuit

breakers at Eskom’s sub-stations or circuit breakers, but not along the

municipalities’ own distribution networks. Eskom has no control over the

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 municipalities’ lines. For the majority of municipalities, this means that Eskom

switches the entire municipality off during load shedding.29

346 The result is that, in the main, the electricity supply to individual users or facilities

cannot be isolated and separately controlled. To exclude one customer from load

shedding requires excluding all other customers upstream on the same feeder line

from load shedding and, for many municipalities, it would mean keeping their entire

network online.30

347 This problem of embeddedness can be no surprise to the applicants. Despite claiming

the relief they do in prayers 3 and 4 – which would wish away the difficulty – their own

papers admit that the various entities are too embedded to be excluded.

348 Mr Irvin Jim tells this Court that he “instructed an expert team of engineers skilled in

electrical engineering and energy studies to prepare a report for the purposes of

presenting NUMSA’s concerns on the technical management of Eskom to this

Honourable Court”.31 He also tells this Court that he “aligns [himself] fully with the

findings contained therein",32 and that “the experts in question have the qualification

and experience necessary”33 to draft their report. The centrality of that report to the

applicants’ case is made apparent in the main founding affidavit of Mr Holomisa, who

says at para 138 that: “In the context of this matter, Mr Jim instructed that these experts

with qualifications in electrical engineering and energy studies, amongst others,

prepare an expert report on the immediate challenges facing Eskom and the

measures that can be implemented forthwith to alleviate the energy crisis” (my

29 Minnaar report paras 29 to 36.

30 Minnaar report, para 4.
31
Para 4 of Irvin Jim’s confirmatory affidavit.
32
Para 5 of Irvin Jim’s confirmatory affidavit.
33
Para 6 of Irvin Jim’s confirmatory affidavit.

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 emphasis). It is thus plain that these experts were providing the applicants their advice

on measures that can be implemented forthwith, that is immediately.

349 While Eskom does not accept the other aspects of the experts report, for the reasons

given elsewhere in Eskom’s supporting affidavits, there is one part of the report by Mr

Jim’s experts that is aligned with Eskom’s views and evidence. Indeed, that part of the

experts’ report explains emphatically why prayers 3 and 4 cannot possibly be

measures that “can be implemented forthwith”. The experts’ report concludes as

follows at paragraphs 11 and 12 (my emphasis):

“11. Is (sic) the current high stages justifiable in relation to the operational functionality

of each power station.

• Yes the system operator has to act to protect the system from collapsing

and has to do so without interference and he has to act independently

without being interfered with. The system operator is our last line of

defence”

350 Accordingly, the applicants’ own experts’ report confirms that the system operator is

presently justifiably loadshedding to protect the system from collapsing. The system

operator – not the applicants or this Court – is “our last line of defence”. Moreover,

according to Mr Jim’s experts, the system operator must be accorded all due deference

and space to do so. The experts underlined that point three times in one sentence:

explaining that to do the job of protecting the system from collapsing, the System

Operator has to do so “without interference”, has “to act independently”, and must do

so “without being interfered with”. Yet the relief sought by the applicants in prayers 3

and 4 is precisely such interference.

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351 The applicants’ expert report in paragraph 12 goes on to explain why this is simply not

possible (I quote with emphasis):

“12. Is it possible to ensure that critical factors are not subjected to

loadshedding and to do so indefinitely. If yes, how must the grid be managed to

accomplish this?

• Eskom and Municipalities switches (sic) off large blocks of consumers

during loadshedding. The critical sectors imbedded (sic) in the blocks

cannot be shielded from loadshedding. However, Eskom, Municipalities and

Government can install standby generation at these critical sectors to shield them

from the effects of loadshedding”.

352 The applicants’ relief is thus at war with its own experts. It is incomprehensible that

the applicants would persist with their relief in the face of their own experts’ warnings.

353 I can confirm that the embeddedness problem applies throughout the country. The

number and distribution of the institutions and facilities the applicants seek to exclude

from load shedding is vividly depicted in the maps of the police stations and health

facilities in South Africa in Dr Minnaar’s report (at page 5).

354 If regard is had to the sheer number and geographical distribution of facilities and

institutions the applicants seek to exclude from load shedding, it is clear that

implementing the relief in prayers 3 and 4 (or either one) would effectively mean that

there can be no load shedding in the country.

355 This presents a dire risk for South Africa, as load shedding is implemented by Eskom

as a measure of last resort to prevent a power system blackout.

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356 Under the Grid Code34 and as a condition of its Transmission licence,35 Eskom is

obliged as the System Operator to maintain the safe and efficient operation of the

interconnected power system, which includes the national electricity grid. To do so,

Eskom must control, in real time, the amount of generation (electricity supply) that is

available versus the load (electricity demand). Supply and demand must be kept in

balance, to ensure that the frequency of electrical supply is within the limits that the

grid can sustain.

357 As is explained by Eskom’s Ms Isabel Fick, when there is a deficit in supply to match

demand – which manifests as a decline in the electricity system’s frequency – the Grid

Code specifies a number of measures that the System Operator must implement and

exhaust before declaring a system emergency and implementing load shedding. The

System Operator will declare a System Emergency and instruct that load shedding be

implemented only if, after implementing all other possible measures to reduce demand

or increase supply, the frequency of supply continues to fall.36

358 Load shedding is, therefore, a measure of last resort that Eskom, as the System

Operator, employs to prevent the cascading collapse of the grid and resulting black

out.

359 Ms Fick also describes the devastating impact that a blackout – which entails a

complete loss of electrical power that may last for more than two weeks – would

foreseeably have. 37 I have already referred to that evidence. It is no exaggeration to

say that it would, in all likelihood, be a monumental and unprecedented national

34 South African Grid Code: System Operation Code (version 10.1, January 2022), approved by NERSA. The Grid Code
is attached to the affidavit of Mr Correia as annexure “AC2”. See, in particular, clauses 2, 2.1.1 to 2.1.4 on the System
Operator’s obligations. See also the affidavit of Ms Isabel Fick at paras 4-5.
35 Clause 4.2 of Eskom’s Transmission Licence designates Eskom’s Transmission Division as the System Operator.
36 Fick supporting affidavit paras 11-18.
37 Fick supporting affidavit paras 7-9; 27 -30.

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 catastrophe that would threaten many lives. The orders the applicants seek in prayers

3 and 4, if directed, would pose a very real risk of such a catastrophe unfolding. With

respect, such orders could simply never be implemented; they would be the epitome

of orders that are not just or equitable.

360 Giving effect to what is sought in prayers 3 and 4 would, in fact, require the wholesale

reconfiguration of the distribution network in the country.

361 The distribution network would have to be reconfigured to address the embeddedness

problem and enable the controlled (switchable) supply of electricity to individual end-

users. Even if this were done, it would also not deliver results sufficiently quickly to

address the load shedding problem. The reconfiguration of Eskom’s and all 177

municipalities’ distribution networks would not yield the desired results in a shorter

period than Eskom’s existing strategy, that is, to solve the problem by addressing the

underlying causes of load shedding – i.e., by addressing the supply shortage and

performance and reliability problems at Eskom’s base-load fleet and implementing the

alternative and far more cost-effective approach of transitioning to cleaner sources of

energy supply.

362 Dr Minnaar’s report explains what reconfiguring the distribution network would entail. 38

In sum, it requires:

362.1 for larger institutions connected to Eskom’s medium voltage network, such as

hospitals, the installation of direct feeder lines – i.e., lines that feed only the

hospitals – connected to the nearest substations (with available capacity) and

with their own circuit breakers; and

38 Minnaar’s report paras 71 to 79 and 92 to 96.

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 362.2 the roll-out of an entire network of remote-controllable switches or circuit

breakers and a smart meter infrastructure on Eskom’s and municipalities’ low

voltage networks – to enable the switching off of supply to all customers

upstream on the protected user’s feeder, whilst supply is maintained to the

protected users.

363 Both options for network reconfiguration are hugely costly, technically and legally

complex processes that would require as long, if not substantially longer, to implement

than the 24 months Eskom requires to implement its Generation Recovery Plan to end

load shedding.39

364 As regards the installation of direct feeders (distribution lines), Eskom estimates that

at a minimum:

364.1 the project process required for installing a single dedicated MV feeder is

anywhere between 12 months and 36 months (taking into account project

initiation and planning, budget approvals, environmental assessments,

municipal clearances, servitude rights, procurement of long lead items such as

circuit breakers etc.);40 and

364.2 the average cost of installing a dedicated MV feeder (taking into account

hardware requirements, such as the installation of dedicated feeder bays,

circuit breakers and other essential equipment such as protection devices at

Eskom substations and the customer end, and whether overhead or

underground solutions are sought and the length thereof), is more than R2,35

39 Id at paras 80 to 91; 97 to 98.

40 Minnaar’s report paras 89-90.

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 million per kilometer for underground installations and over R1 million per

kilometer for overground installations (which is feasible in rural areas).41

365 Even if it were possible, for Eskom to implement such vast and complex changes to its

network, this would require an extensive budget and human resources that it does not

have. I have already referred to the affidavit of Eskom’s CFO, Mr Cassim, which details

the Eskom’s severe funding constraints. Eskom would have to divert and redirect its

limited human resources to implementing a vast and complex project when those

resources are required to address the underlying causes of load shedding.

366 A more feasible network solution – at least for Eskom’s network – is the roll-out of

smart meters. Smart meters allow Eskom to control (cut off) supply and to implement

load limiting at the customer level. Eskom has in fact already embarked on the

replacement of basic meters (pre-paid or conventional) with smart meters. After a

successful pilot in 2015, Eskom began installing smart meters in 2021 and has, to date,

installed approximately 150,000 smart meters on its network.

367 The current cost estimate for the complete replacement of basic meters with smart

meters on Eskom’s network (i.e., for an estimated 7 million meters) is R15 billion, with

an implementation period of 4 years. This R15bn estimate includes the costs of the

smart meters; data concentrators (or collectors); SIM cards; and customer-end

installation costs, including movement of old meters and installation of new pole-top

boxes; installation of separate earth leakage protection units where required etc. The

R15bn does not include any work on the back-end infrastructure. However, Eskom is

already advanced in the process of procuring a data management and repository

system for its network that would accommodate the large amount of data collected

41 Minnaar’s report paras 80-88.

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 from the smart meters. Importantly, the business case for the complete roll-out of

smart meters across Eskom’s network is still being finalised, and is yet to considered

and approved at Board level.

368 The roll-out of smart meters country-wide would require municipalities to embark on a

similar process, as approximately 50% of electricity customers are supplied via

municipal networkss. As Dr Minnaar notes in his report, given the state of service

delivery and the maintenance backlog in municipalities across South Africa, Eskom

has serious doubts about the national capability to roll out smart meter infrastructure

technology across South Africa’s municipal networks in a short time period.42

369 Whether implemented by Eskom or municipalities, it is clear that the roll-out of smart

meters will take several years to complete. This network solution cannot be

implemented within a timeframe that would protect customers from loadshedding over

the next two years.

370 If Eskom is to end load shedding in the next 24 months, it must be allowed to implement

its Generation Recovery Plan and focus its resources on conducting the planned

maintenance of its fleet and onboarding new sources of supply. It cannot afford to

divert its limited resources to implement such immense and complex network

reconfigurations, which would, in any event –

370.1 not resolve the underlying problem of load shedding; and

370.2 not provide relief in the time required (i.e., over the next 24 months when load

shedding is expected to persist).

42 Minnaar’s report para 98.

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371 Moreover, as noted, about 50% of distribution customers are supplied by some 177

local municipalities.43 Given the severe resource, capacity and delivery problems in

municipalities across South Africa, Eskom has serious doubts about the national

capability to implement any of these network-based measures across South Africa

within any timeframe that would protect customers from load shedding.

372 To the extent that the applicants relief in prayers 3 and 4 is predicated on the

assumption that there is a ready and immediate solution to the load-shedding problem

– in the form of an alternative source of supply – this is simply not true. The applicants

appear to place considerable reliance on Mr Blom’s assertion that there are a host of

measures readily available to Eskom to meet the gap in supply. As explained in Part

3 (and further detailed in Mr Conradie’s supporting affidavit), Mr Blom’s assertions in

this regard are uninformed and unrealistic.

373 Finally, the applicants ignore the disruption their relief, if granted, would cause to

Eskom's JET strategy, which is based on a careful and years-long calculation that a

renewables-dominant energy mix, enabled by storage and peaking capacity, is the

optimal way to expand South Africa's generation capacity in the context of Eskom's

mandatory environmental obligations and budgetary constraints. That disruption, and

the threat to Eskom’s funding to implement the JET strategy, is explained in Ms

Mkhatshwa’s supporting affidavit.

374 The applicants’ relief is aimed at short-term results, but those may well compromise

severely the plans that Eskom has already developed – and the funding it has raised

– to move towards a more sustainable solution as quickly as possible and which serves

the needs of everyone in the country.

43 Minnaar’s report para 36.

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Legal impossibility

375 Load shedding is a carefully regulated process. It is governed by two NERSA-

approved Codes – the South African Grid Code System Operation Code (Grid Code)

and the NRS048-9 Code of Practice for Load Reduction (NRS 048-09 Code). Eskom

is obliged, under its licenses, to implement and adhere to these Codes.

376 Each of these Codes imposes legal constraints on Eskom in respect of its

implementation of load shedding, which the applicants have failed to consider at all.

The relief the applicants seek would require Eskom to breach these Codes and,

thereby, to breach its licenses with NERSA. It would also require Eskom to act in

violation of section 21(1) of the Electricity Regulation Act which obliges a licensee “to

exercise the powers and perform the duties set out in such licence”.

377 The application of the Grid Code and the NRS 048-09 Code is explained in detail in

the supporting affidavits of Eskom’s Ms Isabel Fick and Mr Augusto Jose Correia, from

Eskom’s Transmission and Distribution divisions, respectively. I summarise the import

of their evidence below.

The Grid Code

378 First, the Grid Code obliges Eskom to maintain the safe and efficient operation of the

interconnected power system, which includes the national electricity grid.44 To do so,

Eskom must control, in real time, the amount of generation (electricity supply) that is

available versus the load (electricity demand). Supply and demand must be kept in

balance, to ensure that the frequency of electrical supply is within the limits that the

grid can sustain. Where all other available measures have been exhausted to maintain

44 Clause 2(1) of the Grid Code provides: “The System Operator shall be responsible for the safe and efficient operation
of the IPS”. See also clauses 2.1.1 and 2.1.2 of the Grid Code, on ‘system reliability and safety’ and ‘system security’.

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 the requisite balance, Eskom as the System Operator is obliged under the Grid Code

to implement load shedding.45

379 The relief the applicants seek would require Eskom to desist from load shedding in

circumstances where all other available measures to balance supply and demand on

the grid have already been carefully calibrated and exhausted, and thus to act in a

manner that places the safety and security of the grid and South Africa’s

interconnected power system in jeopardy.

The NRS 048-09 Code

380 Second, when it implements load shedding, Eskom is obliged to do so in accordance

with the provisions of the NRS 048-09 Code. The NRS 048-9 Code was first developed

as a sector-designed code of practice in response to load shedding in 2008, to define

the guiding principles and processes for emergency load reduction (which includes

load shedding). The second (2017) edition of the Code is currently in force, and its

implementation is required by NERSA as a condition of Eskom’s licenses.46 It is

attached to Mr Correia’s affidavit as annexure “AC1”.

381 The NRS 048-09 Code strives to balance two fundamental objectives: an equitable

distribution of the burdens caused by an electricity shortage and the imperative of

avoiding the catastrophic consequences of a blackout. It provides, among other things,

that load shedding should be equitably implemented by means of rotational, time-

based schedules;47 subject to a carefully constructed protocol for the protection of

45 This is addressed in both Ms Fick and Mr Correia’s affidavits.

46That compliance with the NRS 048-9 Code is a condition of Eskom’s licences was specifically confirmed in a directive
NERSA issued to Eskom on 18 November 2010, attached to Mr Correia’s affidavit as annexure “AC6”.
47 Clause 4.4.2 of the NRS 048-9 Code.

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 critical loads;48 and that customers should be notified in advance of load shedding

schedules and changes in stages of load shedding.49

382 As is detailed in Mr Correia’s affidavit, the NRS 048-9 Code addresses the impact of

load shedding on “essential loads” and “critical loads”.50 These are defined as follows:

382.1 An “essential load requirement” is “the minimum customer load requirement

(e.g. MW, notification time, and duration) to avoid a direct and significant impact

on the safety of people, the environment, and physical plant or equipment (or

both) for nationally critical products, and which has been (a) specifically notified

as such by the customer to the licensee, and (b) agreed to in writing by the

licensee”;51 and

382.2 “Critical loads” are “loads that are critical for maintaining the operational

integrity of the power system or for avoiding a cascading impact on public

infrastructure in the event of a system emergency”.52

382.3 The following entities and facilities are identified as “critical loads”: airports;

commuter rail and long distance rail; traffic lights; water servicing power

stations; water servicing industrial facilities; water servicing agricultural

facilities; potable water; stadiums; sewerage facilities; refineries; fuel pipe lines;

coal mines; educational facilities; police stations; telecommunications facilities;

hospitals; data centres; port authorities; government buildings; and electricity

control centres.

48 Id at clauses 7 and 8.
49 Id at clauses 4.10.2 and 4.10.3.
50 Correia’s affidavit at paras 52ff.
51 Clause 3.1.
52 Clause 8.1.

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 382.4 The NRS 048-9 Code stipulates that –

“Critical loads should as far as possible be protected from the impact of

load shedding or loss of supply. Protection measures could include the

exclusion from load shedding schedules, installing of backup facilities,

or implementing of specific protocols for interaction between the

customer and the licensee.”53

383 Load Reduction Principle 3 in the Code also recognises the need for the protection of

critical and essential loads, where possible. It provides:

“Critical loads and essential load requirements shall be taken into

consideration in order to limit the potentially negative impacts of mandatory

load reduction on safety, the environment, and infrastructure that is critical to

communities and the economy.”54

384 Given the realities of South Africa’s distribution network – and the problem of

embeddedness in particular – the NRS 048-09 Code recognises that it is impossible to

exclude all of these critical loads from load shedding without compromising the load

reduction that is required to maintain the safety of the grid.

385 The Code thus delineates exclusion protocols for critical loads per facility-type. A few

facilities with critical loads are automatically excluded from load shedding under the

Code including, for instance, bulk potable water supplies and water servicing power

stations. For others, the Code indicates where the facilities are expected to have their

53 Clause 8.1.
54 Clause 4.4.3.

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 own back-up supply (eg. in the form of generators) and are thus not excluded in the

ordinary course.

386 For example, all hospitals are expected to have a back-up energy supply, since it is

understood that in the ordinary course (and even if there were no load shedding)

hospitals must have back up supply to ensure that they can keep life-saving equipment

like oxygenators running 24 hours a day. The NRS 048-09 Code thus does not provide

for the exclusion of all hospitals. It does, however, establish a protocol for a hospital in

need of temporary and emergency supply (eg. if its back-up facility has failed) to

contact its distributor (Eskom or the municipality) for immediate restoration of electricity

supply.

387 The pertinent point is this: there is a carefully regulated scheme in the NRS 048-09

Code, which was compiled with the input of multiple stakeholders, that governs load

shedding and the protection of essential and critical loads. Eskom – and all

distributors, including municipalities – are bound by their licenses to apply that Code.

388 The relief the applicants seek in prayers 3 and 4 would have Eskom (and all other

distributors) disregard the Code entirely, and effectively set it aside. The result would

not only be for this Court to abolish the industry standard – produced after years of

consultation and input – that regulates the crucial aspects of load shedding, in order to

make way for what the applicants claim is the better approach. It would also mean that

this Court is asked to act as a super-regulator, interposing itself into the management

of the electricity crisis, overriding the experts and experienced personnel that, on a

daily basis, in real-time, seek to discharge the heavy burden of balancing the demands

on the grid, while attempting to find an overall and sustainable solution to the energy

crisis.

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389 I respectfully submit that the detail, volume and wide-ranging nature of the supporting

affidavits and reports filed in this matter by Eskom, confirms the expertise of the

officials involved, and the extensive work already done and that continues to be done

tirelessly by them. It will not have been lost on this Court that instead of continuing

with their work towards those solutions, their energies have unfortunately been

diverted for the past weeks in having to explain not only how misguided the applicants’

case is, but also the precipitous danger that the relief portends.

390 What is more, the applicants ask the Court to endorse their own rather arbitrary

selection of institutions or facilities they consider require protection above all others.

Yet those facilities cannot be excluded without imposing a greater burden of load

shedding on others. When a System Emergency is declared and load shedding is

required, a certain amount of load must be removed from the grid to balance with the

available supply. If the entities the applicants demand be protected are all excluded

from load shedding (even assuming this were technically possible), other customers

– including all the other critical loads identified in the NRS Code – would have to bear

a greater burden of load shedding to accommodate this. It is precisely this sort of

inequity that the NRS Code seeks to avoid.

391 It bears emphasis too, that the NRS 048-09 Code was developed and revised after

extensive consultations and deliberations by those fully cognisant of the technical and

practical constraints of the distribution network.55

392 As Mr Correia explains, the 2017 edition of the NRS 048-09 Code is now presently

under review by the NRS Working Group and has already been subject to wide

consultation. The NRS Working Group will soon table a revised edition of the Code to

55 Correia affidavit paras 15 -18.

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 NERSA for its consideration and approval.56 It is expected that NERSA will convene

a further round of public consultations to inform its decision in this regard. It will

presumably be open to the applicants to engage in that process, and to put forward

their proposals for how the protocols governing critical loads can be improved. What

they cannot do, I respectfully submit, is to ask this Court simply to ignore and override

the legal framework that governs load shedding, in order to enforce their own

determined priorities, which arbitrarily exclude multiple other customers who also bear

critical loads under the NRS 048-09 Code.

Eskom’s authority vis-à-vis municipalities

393 Third, the relief the applicants seek in prayer 4 presupposes that Eskom has the

authority to issue instructions to municipalities that distribute electricity in their

jurisdictions. Eskom does not have such authority and, were it to issue such

instructions, it would be requiring municipalities to breach the law.

394 While this is matter for legal argument, I draw attention to the following:

394.1 Municipalities with distribution licenses are equally obliged under their licenses

to respect the Grid Code and to comply with instructions given by the System

Operator in accordance with that Code and other regulatory instruments

(including the NRS Code) to ensure the safety and security of the

interconnected power system.

394.2 As with Eskom, were municipalities to grant the blanket exclusions from load

shedding that the applicants seek when load shedding is required, they would

56 Correia affidavit paras 19-20.

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 contravene both the Grid Code and the NRS 048-09 Code, and thus too their

licenses. Eskom certainly cannot instruct them to do so.

394.3 Moreover, municipalities are specifically obliged under section 27 of the

Electricity Regulation Act to exercise their executive authority and duties by,

inter alia, “(a) complying with all the technical and operational requirements for

electricity networks determined by the Regulator” and “(f) ensuring sustainable

reticulation services through effective and efficient management and

adherence to the national norms and standards contemplated in section 35”.

The norms and standards in section 35 include guidelines and codes of conduct

made by NERSA, such as the Grid Code and NRS 048-09 Code.

394.4 Municipalities are vested with constitutional authority for electricity reticulation

in their areas of jurisdiction. The effect of the relief the applicants seek is for

Eskom and/or the Minister of Public Enterprises impermissibly to override that

authority by issuing instructions to municipalities on how to distribute electricity

in their networks when load shedding is implemented beyond the terms

authorised by the Electricity Regulation Act (i.e., those instructions the System

Operator is permitted to issue under the Grid Code).

394.5 Even if Eskom and/or the Minister of Public Enterprises were entitled to issue

such instructions, they would have no authority to enforce them, let alone the

means to monitor if they were being implemented. Eskom has no means of

knowing how load shedding is implemented in municipalities’ distribution

networks, as it has no oversight or internal control of those networks. It is only

able to assess whether the overall load reduction required has been

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 achieved.57 Neither does this court. It is being asked to venture into this

unknown territory by the applicants through the door of prayer 4, without any

way of knowing what the effect would be on the grid overall of granting a prayer

aimed at some 177 municipalities throughout the country.

394.6 The court is in the dark about any of these impacts or on-the-ground information

about how prayer 4 would work, since the the applicants have failed to join the

municipalities licensed to distribute electricity, or the Minister for Cooperative

Governance and Traditional Affairs. Given the impact the relief in prayer 4 has

on these municipalities’ obligations under the Electricity Regulation Act and

distribution licences, and their authority and responsibility for electricity

reticulation in their jurisdiction – not to mention the practical impossibility of

what the relief would practically require of them – the applicants were obliged

to join the municipalities. In the absence of such joinder, the relief in prayer 4

cannot be granted.

Prayer 5

395 In the alternative to prayers 3 and 4, the applicants seek the following relief:

“that Eskom and the Minister of Public Enterprises must take immediate steps

to procure alternative sources of electricity and/or energy for all the

establishments and facilities contemplated in paragraph 3… including, but not

limited to solar panels and generators”.

396 The applicants do not say anywhere in their founding affidavit the legal basis on which

they contend that Eskom and the Minister of Public Enterprises are responsible for

57 Correia affidavit paras 93-94. See also Dr Minnaar’s report at para 33.

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 procuring alternative sources of energy to compensate for load shedding. I submit that

they have failed to make out a case for this relief.

397 This, too, is matter for legal argument. However, and without purporting to be

exhaustive on this issue (particularly since the applicants have not explained the basis

for this relief – a fatal error on its own), I submit that Eskom does not bear this

obligation for the following reasons:

397.1 No such obligation is imposed on Eskom under the Constitution or the

Electricity Regulation Act. In particular, the IPP Office, which reports to the

Department of Mineral Resources & Energy, is the designated procurer of

electricity. Any procurement of electricity by Eskom is subject to an approval

by the Minister under Section 34 of the Electricity Regulation Act.

397.2 No such obligation is imposed on Eskom under the Grid Code or the NRS 048-

09 Code.

397.3 No such obligation is imposed on Eskom under its Transmission licence. The

Transmission licence obliges Eskom to, inter alia, manage the national

electricity grid and interconnected power supply and to transmit electricity via

its transmission network. It must do so, inter alia, in accordance with the Grid

Code.

397.3.1 Clause 4.1.6 requires Eskom Transmission (as the Licensee) to enter

into operating agreements “with all entities connected to the

Licensee’s transmission network, defining their reciprocal obligations,

in accordance with the Grid Code” (my emphasis).

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 397.3.2 Clause 10 further recognises that, while the uninterrupted supply of

electricity is required of the licensee, there may be reasons beyond

Eskom’s control which may require such reduction or

discontinuance.58

397.3.3 Clause 15 obliges Eskom as the licensee to “comply with all

applicable laws and especially those governing the electricity supply

industry including regulations, codes, directives, guidelines as

effected from time to time”. That includes the Grid Code and the NRS

048-09 Code, which authorise and require load reduction, including

by means of load shedding, when necessary to protect the grid from

collapse.

397.4 No such obligation is imposed on Eskom under its Distribution licence.

Eskom’s obligation under this licence is to distribute and supply electricity to

consumers through its distribution network for a NERSA-approved price and

tariff.

397.5 No such obligation is imposed on Eskom under Eskom’s bulk-supply

agreements with municipalities.

398 Where public institutions and facilities are in need of state support to ensure their

effective functioning, it falls to the Departments responsible for those institutions to

provide the requisite financial and technical support. Where the facilities provide basic

58 Clause 10 reads as follows in relevant part:

“The Licensee shall also not, except for reasons beyond its control, reduce or discontinue the transmission
of electricity to a customer unless —
a) the customer is insolvent; or
b) the customer has failed to pay the agreed charges or to comply with the conditions of service delivery
and has failed to remedy the default within 14 days, or within such longer period as may be specified
by the NER” (emphasis added).

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 municipal services, it falls to the responsible municipality to provide the requisite

financial and technical support. There is no basis in law (or in reality) to impose on

Eskom a duty to “procure” such alternative sources.

399 That is not to say that Eskom is oblivious to the importance of being a good

constitutional citizen within the current crisis. As I explain below, Eskom does

endeavour to assist and support the responsible Departments in addressing the impact

of load shedding on public institutions, wherever possible, and within the strictures

placed upon it by its licence, the Grid Code, and the NRS Code. In particular, where

the solution proposed to be implemented requires work on Eskom’s transmission or

distribution network and infrastructure, Eskom will perform the necessary work, at a

cost payable by the customer or the responsible Department. Eskom will also assist

where it can to procure or make available material resources required to implement

alternative solutions for energy supply, if they are readily available to Eskom.

400 But in doing so, Eskom does not assume responsibility for funding or procuring such

work and resources, and nor has it been expected to by any Government Department

or municipality. It is appreciated, in government at least, that this falls outside the remit

of Eskom’s mandate and responsibility.

401 Without the approval and assistance of the responsible departments and National

Treasury, Eskom cannot simply procure alternative sources of energy for public

institutions. The relief sought is wholly misguided, not least and most obviously

because this Court has no idea what the budgetary implications or possibilities would

be without the responsible Departments or Treasury having been joined, and whether

the affected municipalities are willing and able to exclude the hospitals for which they

are responsible (which would mean this relief is not required).

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402 In addition, imposing such an obligation on Eskom would, again, require it to perform

the impossible. Eskom does not have the budget, material and human resources to

implement such extensive relief.

403 I reiterate that Eskom is already operating well below-cost (as a result of NERSA’s

non-cost reflective tariffs) and under severe financial and liquidity constraints. At the

end of December 2022, Eskom’s debt securities and borrowings stood at R422 billion;

and it already depends on substantial Government guarantees (R350 billion, with R323

billion already committed). I refer in this regard to paragraphs 57 to 61 of Mr Cassim’s

affidavit, which describes Eskom’s debt and liquidity problem.

404 In the limited time Eskom has had to respond to this application, Eskom has not had

the opportunity meaningfully to cost the roll-out of alternative sources – generators, PV

and BESS (battery energy storage systems), microgrids – to all of the relevant entities.

However, even on a rough and conservative estimate, rolling out these alternative

sources of supply to all the entities the applicants identify would impose a significant

financial burden on Eskom – in the order of billions of Rands – which it is simply not in

a position to shoulder.

405 Dr Minnaar’s report provides indicative costs of installing generators and PV (solar)

and BESS (battery energy storage system) technology, of various generation

capacities, on a per site basis. Any meaningful assessment of the costs of rolling out

this technology requires a detailed and site-specific assessment to determine the size

of the system required to meet the customer’s demand and energy usage. As Dr

Minnaar notes, the most common notified maximum demands for health facilities,

police stations and schools are generators sized 16 kVA, 25 kVA, 50kVA and 100kVA;

whereas common generator sizes for larger health facilities like hospitals are 200 kVA,

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 500 kVA and 1000 kVA. Roughly equivalent sized PV panels (in kWp) would supply

the same amount of electricity, but subject to battery storage capacity.

406 To give just some indication of costs, supplying a 500kVa generator to all 381 public

hospitals – without factoring in the cost of fuel – would cost approximately R400 million

(at R1,050,000 per generator); whereas supplying a 1000kVa generator to all public

hospitals would cost in the region of R762 million (at R2 million per generator). On the

assumption that the average hospital bed consumes between 35kWh and 92kWh per

day per bed, and diesel costs approximately R6 to R9 per kWh, at best it would cost,

on average, R210 per day to provide sufficient diesel for a single hospital bed.

407 To provide every public hospital with a system of PV panels of 500kWp and battery

storage of 1000 kWh, with storage capacity to cover two hours of loadshedding, would

cost nearly R5 billion (at a cost of R12 822 875 per system). These costs would

increase by 50 to 60% for increased storage capacity to cover four hours of load

shedding.

408 Another, but expensive, source of alternative electricity supply is a microgrid: a

repurposed container which holds a storage battery and has PV panels fitted on its

roof.

408.1 The micro-grids which Eskom is currently testing contain a 22kW PV panel and

an 80kW storage battery at an approximate cost of R1.8 million each.

408.2 These micro-grids might generate sufficient capacity for a police station.

However, according to the SAPS Annual Report, there are 1158 police stations

in South Africa meaning that a roll-out of micro-grids to each of these stations

would cost over R2 billion, without including installation costs.

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 408.3 An average public school reportedly uses approximately 450kWh per day,

although there are substantial differences in energy usage across schools.59 I

attach a media report by the academic authors of the study, together with a

copy of the study marked AA40. I am advised that a micro-grid with larger

generation capacity than those Eskom has currently tested would be required

to meet an energy usage of 450kWh per day, and that a 100kW PV panel,

together with the requisite storage, would be required. This would cost

approximately R5 million per micro-grid. There are approximately 23 000 public

schools in South Africa. Without taking into account the substantial variation in

energy usage and demand across schools (which would require detailed

assessment), providing micro-grids of the size required to meet average need

to each public school would therefore likely cost in the region of R115 billion

(excluding costs of installation).

408.4 Adequately-sized micro-grids for public hospitals would similarly be

prohibitively expensive and alternative solutions (such as generators or the

installation of direct feeders) would likely be more economical.

409 The above figures provide some sense of the costs – scale and variability – involved

in rolling out these alternative technologies. However, finding the optimal and most

cost-effective solution for each site requires a site-specific analysis – taking into

account, inter alia, the local electricity network, the entity’s existing back-up systems,

and its energy use and demand profile. Often a combination of technologies provides

the optimal solution.

59 Samuels et al, ‘Light Years Apart: Energy Usage by Schools across the South African Affluence Divide’ (2020) 70 Energy
Research and Social Science 101692, reported in https://www.news24.com/fin24/opinion/opinion-sas-schools-use-r5bn-
in-electricity-per-year-heres-how-they-can-save-20210202.

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410 As is detailed in a presentation Eskom delivered on 30 January 2023, attached to Ms

Mokwena’s affidavit as annexure “DM3” (also addressed below), Eskom has provided

a more detailed assessment and estimation of the costs of implementing combined

solutions to insulate all public hospitals from load shedding. It costed this at

approximately R356 million, with installations estimated to take between 12 and 36

months. For Eskom to bear this cost would require additional funding from National

Treasury.

411 There are additional, fundamental concerns for Eskom as regards this relief, which go

to its very sustainability as a public company.

412 Should the Court direct Eskom to provide this relief, it would, in effect require Eskom

management to abandon its Generation Recovery Plan to address load shedding for

the entire country, in favour of a court-directed remedy to protect the applicants’

selection of facilities. Given Eskom’s current budget and resource constraints on the

one hand, and the costs and resources that would be required to implement the relief

the applicants seek on the other hand, Eskom could not conceivably dedicate the

resources it needs to implement its Generation Recovery Plan, while at the same time

implementing the relief in prayer 5.

413 Furthermore, given Eskom’s resource constraints, its decisions about how best to raise

capital in order to ensure the most cost-effective solutions as quickly as possible to the

energy crisis, are currently delicately poised. The relief the applicants seek would

require this Court to venture into that territory at a critical time for Eskom, as it seeks

to transition from coal to clean energy in order to most effectively end load-shedding.

The entire apple cart is at risk of being upended by relief that, with respect, pays no

regard whatsoever to the complexity of the situation, or the policy decisions that have

been taken by Eskom in conjunction with the executive to deal with the energy crisis.

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414 The result is that an order directed at alleviating the short-term plight of some public

institutions and facilities (even assuming this were technically feasible, which it is not)

would compromise Eskom’s ability to bring an end to load shedding as soon as

possible, for the benefit of all South Africans and all public institutions and facilities.

This, I submit, could never be just and equitable. It is not even in the interest of the

public facilities that the applicants seek to protect. The relief is short-sighted and has

no regard to the dire opportunity costs it carries for Eskom’s capacity to address load

shedding.

415 It also bears emphasis that after years of under-funding by NERSA and an escalating

municipal debt burden, Eskom has had to rely increasingly heavily on private financing

to sustain its operations. Were the Court to grant the relief the applicants seek, it would

signal to Eskom’s lenders and investors that Eskom’s management does not control

the allocation of its resources and that no reliance can be placed on its own plans, as

they can be fundamentally altered by this Court. I have no doubt that such an order

and signalling would threaten this financial life-line, which Eskom depends on to

implement its Generation Recovery Plan and transition into a sustainable and reliable

energy company. Should Eskom lose this lifeline, the state would have to bear all the

costs of financing Eskom and maintaining it as a going concern.

Eskom’s efforts to find solutions for public hospitals and other facilities

416 The applicants unfairly suggest that Eskom has been callous about the impact of load

shedding, and the plight of public hospitals, amongst others. This is quite wrong.

417 Since September 2022, Eskom has been working with the Department of Health to find

alternative solutions for public hospitals to ensure uninterrupted energy supply. The

Department of Health turned to Eskom for assistance having identified particular

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 hospitals for possible exclusion from load shedding on the basis of, among other

things, non-availability of diesel and depleted budgets for operating generators.

418 Eskom has expended substantial time and resources to ensure that all possible

solutions are explored, and it continues to do. These efforts are detailed in the

supporting affidavit of Ms Daphne Mokwena, the Senior Manager of the Centre for

Excellence in Eskom’s Distribution Division. In short, Ms Mokwena explains that:

418.1 Eskom received a list from the Department of Health of 213 hospitals in need

of relief from load shedding. Eskom assessed the position of all of these

hospitals – taking into consideration their level of embeddedness, the potential

risk of excluding them (and their embedded customers) from load shedding on

the grid’s stability, and whether the hospital had particular network

characteristics to enable ready isolation from load shedding.

418.2 With the aim of trying to proactively and prudently find a response to the

obviously prejudicial impact of load shedding on hospitals, within a month,

Eskom had conducted its assessment and reported to the Department of

Health. Eskom found that it could exclude 25 hospitals supplied by its network,

as they were not deeply embedded in the grid. Eskom also recommended the

exclusion of 51 hospitals within the municipal areas of supply. It did so applying

the criteria outlined above, which established a rational and consistent basis

on which to make these decisions.

418.3 Even where hospitals were found to be deeply embedded in the grid, Eskom

has endeavoured to find solutions. Eskom’s proposals are detailed in a

presentation it delivered on 30 January 2023, and is attached to Ms Mokwena’s

affidavit as annexure “DM3”. It details the possible solutions, the costs and

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 timeframes associated with these solutions. It is estimated that installing

necessary infrastructure to insulate all public hospitals from the load shedding

schedule would cost approximately R356 million and that such installations

would take between 12 and 36 months.

418.4 Eskom has also received requests from 453 private hospitals and clinics for

exclusion from the load shedding schedule, and the possibility of these

exclusions remains under investigation.

419 Since about October 2022, Eskom has also been engaging with the Department of

Basic Education to consider possible solutions to load shedding at public schools in

the country. Regrettably, Eskom determined that it cannot exclude public schools as

there is simply not enough available electricity to supply 23 000 deeply-embedded

public schools during school hours. (In addition, and as with the hospitals, many of the

schools fall into the municipalities’ areas of competence, and Eskom can do no more

than make recommendations in that regard.)

420 Eskom advised the Department of Basic Education that it should take steps to procure

back-up generators for public schools. I am unaware whether such steps were taken.

The applicants have not joined the DBE and therefore this information is not before

this Court.

421 Eskom has also been engaging with the Department of Agriculture and various

stakeholders and representatives in the agriculture and food production sectors, to

address the impact of load shedding, which potentially undermines South Africa’s food

security. Eskom has already facilitated relief for some entities, such as Premier Foods’

milling plants. These engagements and efforts to find solutions are ongoing.

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422 I wish to emphasise that Eskom has not simply thrown up its hands because of the

embeddedness of certain institutions. It continues to work with the Departments

concerned to find solutions as quickly and cost-effectively as possible. However, the

time and planning involved in assessing the network conditions and possible solutions,

and the time required to implement these solutions simply does not allow for the urgent

relief the applicants seek. The appropriate course, I submit, is for Eskom to be allowed

to pursue its work with the Department of Health to find solutions, fully cognisant as it

is of the urgency.

423 Eskom has not been approached by the Departments of Police, Small Business

Development, Water and Sanitation, or Communications and Digital Technologies in

respect of the effects of load shedding.

424 If and when these Departments make such an approach, Eskom will endeavour, as it

has repeatedly, to find appropriate solutions wherever possible, alive to the

considerations and difficult balances described in this affidavit and that of Ms

Mokwena.

CONCLUSION

425 In light of what is set out in this affidavit and in the supporting affidavits and reports that

accompany it, Eskom prays that the application must be dismissed.

________________________________

DEPONENT

The Deponent has acknowledged that the deponent knows and understands the contents of this
affidavit, which was signed and sworn to before me at ___________________ on this the ______ day
of ___________________________, the regulations contained in Government Notice No.R1258 of 21

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July 1972, as amended, and Government Notice No R1648 of 19 August 1977, as amended, having
been complied with.

_________________________________

COMMISSIONER OF OATHS

Name:

Title:

Address:

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