Letters from Eskom CEO and chairman in 1999 show how the ANC destroyed South Africa

In 1999, former Eskom chairman Reuel Khoza and CEO Allen Morgan wrote letters for a time capsule to be opened on the power utility’s 100th birthday.

That day is today, 1 March 2023.

“The challenges facing us must surely have been met and overcome by the time you read this — challenges such as crime, poverty, unemployment, illiteracy and disease,” Khoza prophesied in his letter, dated 20 May 1999.

“It is our fond hope that the time needed to eradicate the fundamental causes of these painful conditions has worked its healing, and you have put them behind you. May it be so!”

The letters are a reminder of a more hopeful time in South Africa’s history.

Nelson Mandela was still technically president, although he had delegated much executive power to Thabo Mbeki.

Mbeki would only be officially sworn in on 14 June 1999, and his disastrous HIV/AIDS beliefs would only become evident in the following year.

A 2008 Harvard University study found that Mbeki’s policies killed at least 330,000 people and caused 35,000 babies to be born with HIV.

But this was just the tip of the colossal iceberg of the Mbeki administration’s failures, let alone Jacob Zuma’s.

However, so as not to fall into the trap of seeing the past through nostalgia goggles, it is useful to go through the “challenges” Khoza listed to see how South Africa performed in the 24 years since he wrote his letter.

Crime

World Bank data shows that after a steady decline between 1994 and 2011, crime in South Africa began increasing again.

South Africa’s Covid–19 lockdown interrupted this trend in 2020. However, the latest police stats show that crime is rising again.

Despite the decrease in overall crime levels, South Africa still has one of the highest murder rates in the world.

Poverty

World Bank data shows that the number of South Africans living in extreme poverty decreased between 2000 and 2010, but has started to rise again.

Unemployment

World Bank data shows that South Africa has the highest unemployment rate in the world.

Illiteracy

South Africa’s basic literacy rates improved from 82% in 1996 to 95% in 2015, ranking among the highest in the world.

Other education indicators have also improved over time, despite concerns over the quality of South Africa’s matric qualification.

Disease (HIV/AIDS and TB)

The proportion of deaths due to HIV/AIDS in South Africa remains higher than the Sub-Saharan African average.

When it comes to tuberculosis (TB), which is a bigger killer than AIDS globally, South Africa has made significant improvements. However, we still rank among the countries with the highest TB death rates in the world.

Eskom and load-shedding

Allen Morgan’s letter paints a picture of a strong Eskom, but even 24 years ago, he highlighted two challenges that have haunted South Africa — available electricity generation capacity and non-payment.

“Eskom is the fourth largest electricity supplier in the world in terms of installed generation capacity, and fifth largest in terms of electricity sales,” he wrote.

Morgan noted that at the time, Eskom had 24 mostly coal-fired power stations, the only nuclear power station in Africa, and operated a transmission system that carried over half of Africa’s electricity.

“Eskom is a proud organisation, well known and respected in power supply circles throughout the world,” he said.

“We now have some 37,000 employees, down from 65,000 in 1985.”

Interestingly, Khoza and Morgan speak about the reduced staff count at Eskom as an achievement — a sign of increased efficiency at the company.

Eskom would continue to reduce its headcount until 2002, when it bottomed out at around 30,000 workers.

Its efficiency — the gigawatt-hours produced per employee — peaked in 2005 at 7.4 GWh per employee.

However, a dramatic shift in hiring policy caused Eskom’s staff numbers to balloon from 2008, reaching 48,700 staff members in 2018.

This loss in efficiency also came with an overall deterioration in the amount of energy produced every year.

“Eskom makes a significant contribution to the South African economy in several ways,” Morgan continued.

“Perhaps the most important is the fact that we stimulate economic growth by providing electricity at prices among the lowest in the world.

“Despite being an effective monopoly electricity supplier, we have managed our costs down to the point where foreign suppliers are reluctant to compete with us.”

Eskom would continue to supply South Africa with cheap electricity until 2008 — the year after we first learned the word “load-shedding”.

A Daily Investor analysis of Eskom prices against inflation from 1950 shows that after 2008, South Africa’s electricity prices skyrocketed relative to inflation.

Morgan goes on to talk about the just-passed Eskom Amendment Act of 1998.

“This places the ownership of Eskom’s assets in the hands of the State, formalising our ownership structure,” he said.

“Many talks are being held between various stakeholders about how Eskom and the whole Electricity Supply Industry should be structured. As you can imagine, there are many different views.”

One can’t help but wonder if Morgan knew the doom this fateful decision would spell for Eskom in the coming decade.

He then lists the two major challenges Eskom faced at the time: non-payment and running out of generation capacity.

“Some people feel that they should be given electricity for nothing, regarding it as a right. This attitude obtains in the local government sector as well, with people refusing to pay rents and service fees. We are making progress but much remains to be sorted out,” he said.

Sadly, this only worsened, with Eskom now owed billions of rands by municipalities and local governments.

“The next challenge is a question of generation capacity. Since the mid–1980s we have had a surplus of generation capacity that we have managed. We predict that this will have disappeared around 2007, but you know whether this prediction was accurate or not.”

Could Eskom have been more right, and the Mbeki administration more wrong?

In a 1998 document titled White Paper on the Energy Policy of the Republic of South Africa, the Department of Minerals and Energy and Eskom warned the government that the country would need more generation capacity by 2007.

Despite the early warning, neither the Mandela nor Mbeki administrations acted.

Only after Eskom had to implement its first load-shedding in 2007 did Mbeki’s government jump into action, with tenders quickly drawn up for Medupi and Kusile — two massive new coal-fired power stations.

It has since emerged that the ANC profited from a boiler contract at Kusile.

Former Eskom CEO André de Ruyter has alleged that the design specifications were manipulated, and that this corruption has directly led to the catastrophic failure of the power plant’s flue gas desulphurisation system.

Morgan also mentioned the now-defunct PBMR in his letter.

“We are also developing the Pebble Bed Nuclear technology as a possible source of safe, economic and environmentally-friendly source of energy for the future,” he said.

“There is much interest from the power industry in countries such as China and Japan, and some opposition from anti-nuclear groups such as Earthlife Africa. I wonder if they still exist in 2023.”

Earthlife Africa still exists. China and Japan still exist. PBMR does not. Sadly the project was shut down after losing its international funding in the wake of the 2008 financial crisis.

Reuel Khoza and Allen Morgan’s letters are included below.

MyBroadband could not reach Khoza or Morgan to comment on their letters.

Former Eskom chairman Reuel Khoza’s 1999 letter

Former Eskom CEO Allen Morgan’s 1999 letter

This is an opinion piece.

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