Eskom: how corruption and crime turned the lights off in South Africa | FT Film

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Let's start with the electricity crisis. 15 years into it we are still here. I mean, the damage that load shedding has brought to this economy has been incalculable.

There's no electricity. The robot is not working.

For years the state electricity provider, Eskom, has struggled with mismanagement, with inefficiency, corruption.

Eskom was at the mercy of some very large organised crime cartels.

In the case of de Ruyter, he had been drinking coffee laced with cyanide.

Some of the most daring acts of corruption have been uncovered, and the people are being pursued.

Hello? Security?

The load shedding as a whole needs to come to an end. Whenever that's going to happen, we've got no idea.

Eskom is the economic engine of South Africa. It provides, today, 80 per cent of all of the power that South Africa uses.

And as the ageing coal-fired power stations get yet older and yet more inefficient, break down yet more often, it's really struggling to keep the lights on.

There isn't a lack of capacity. What there is a lack of is capacity that is being managed properly.

So for many years now, South Africa has been suffering from something that they call here 'load shedding'. Really, planned power cuts. These can be two hours a day. They can be six hours a day. They can even be 12 hours a day. This is when whole parts of the country are blacked out.

Load shedding is stealing time. It is stealing opportunity from Africa's most industrialised economy. It is cutting off electricity to customers who are paying for it, in order to prevent a total collapse of the grid.

The impact of load shedding on day-to-day life in South Africa is enormous. And that could be anything from traffic lights not working. You go to the shops and the card machines don't work. You can't make phone calls.

Advanced smelters, data centres, mines - they're all affected.

The South African Reserve Bank cut GDP growth this year by two percentage points to 0.3 per cent. It said that load shedding would have a half-a-percentage-point increase on inflation, because businesses have to pass on the cost to consumers. These things add up day after day, and it really does have quite an oppressive psychological impact as well.

Ultimately, Eskom is run by the government, and ultimately the government is the ANC. It's run the country for 30 years. If Eskom is failing, then in the people's minds, the ANC is also failing.

We're actually preparing the sheep tripe, called mogodu, one of our famous dishes. You know, the struggles that we're experiencing here in South Africa, which is load shedding, you understand, that will be one of the topics when people are just sitting, they will talk about, and how the country is being run.

We stock every day when it comes to meat. Because we don't want to keep meat in the fridge, in case Eskom decides to switch off the grid, and then it becomes a problem. And then it's a wastage. And meat is expensive.

This is the point of sale, right, so when the electricity goes off, we can't use the system at all. I'm taking a photo and video to post on Instagram, so that people can get hungry and come and buy.

I mean, when my battery is on 5 per cent, I can't charge, you understand. Also, the coffee machine - it won't work. Also, we cannot even use the microwave just to warm the food, so it becomes a bit of a struggle. You know, there's no music just to entertain people. So it affects us in so many ways. Yeah.

We just have to keep focused. Because we know how critical Eskom is to the economy. Priority number one is to continue on the recovery of generation and reducing that intensity of the load shedding. It builds confidence to the Eskom team and the generation staff, but more important, the positivity and confidence it gives to the economy and to the citizens of the country.

We are working very hard. We are burning the diesel. The team is having sleepless nights to make sure that we improve the energy availability.

We have to eradicate load shedding, and the only way of doing that is to ensure that generation exceeds demand, to ensure that we improve the performance of the existing fleet, which is ageing, but secondly, to introduce new generating capacity, largely from renewable sources of energy.

There is a reality. There are only 24 hours in the day. You're dealing with load shedding. You are dealing with the debt relief. You're dealing with unbundling, stability of leadership, directions, instructions from various ministers.

Eskom is as old as modern South Africa. It was effectively created in 1923, designed to foster South Africa's industrialisation, mines, steel-making.

Before 1994, Eskom had been providing electricity to 98 per cent of white people, but only 20 per cent of black households were connected to the grid. Eskom and the ANC did a remarkable job, and they did hook up something like 1.75mn houses in less than five years.

When Mandela was released from prison, people were so happy. We had that thing that South Africa has a bright future.

So into the 1990s, as democracy took hold, Eskom was still producing some of the world's cheapest electricity. But in this very monopolistic system, problems were emerging.

As far back as 1998, a white paper had said Eskom was going to reach generation capacity by 2007, which it did.

There were other spending priorities. There were huge social inequalities in South Africa that needed to be addressed. And pouring money into old power stations did not really seem the top priority.

From 1998, the ANC considered, but also procrastinated over making Eskom and South Africa's energy supply more competitive. At the same time there is a countervailing force within the ANC, which looked at state companies as Eskom, as primary drivers of the economy, and also the engines to create transformation to increase black ownership.

So by the mid-2000s the government had come to the conclusion that, yes, it did need new generation. And so it decided to build two massive new power stations, Medupi and Kusile. But from the outset these contracts were hit by delays, overspend, corruption. And to this day neither of those power stations has ever worked properly.

Because of the ANC's socialist heritage, they were very strongly opposed to the idea that something as important as electricity should be farmed out to the private sector, which was one of the ways that electricity generation capacity could have been improved. And then, you have the wreckage of the Zuma years, where the ANC became a sort of cash cow for corrupt politicians and allied businessmen who were connected to them.

I've been vilified, alleged to be the king of corrupt people.

The Zondo Commission was an inquiry into something that became known in South Africa as state capture. State institutions like Eskom were hollowed out. So in Eskom's case, somebody very close to Zuma was brought in to run the company, and contracts were parcelled out to friends, colleagues, to people, perhaps, who had paid money to the ANC. And of course, that all impacted on the efficiency of Eskom, added to its debt, and worsened the gathering power crisis.

The corruption was very much at the head, but obviously, what the head does filters down. What the Zondo inquiry showed was that the rot was pretty much at every level.

Maintenance at Eskom was neglected. Management turmoil at Eskom was increasing. And Eskom was also becoming extremely resistant to an initial boom in renewable energy outside its control. It's a bit like having heart problems. You'll have the build-up in the arteries a long time before you have the heart attack.

Andre de Ruyter was brought in from the private sector to clean the mess up.

Andre de Ruyter's time at Eskom is, in a way, a cautionary tale about the competing strands of the energy crisis. He was appointed by the ANC to fix the rolling blackouts at their most intense, but also to lead the structural change from a monopoly to separation, to restructuring, to eventually, a much more open market.

For me, taking on the job of Eskom chief executive was an opportunity to make a contribution to the country. Either I had to turn it down and forfeit my right to complain about South Africa forever, or roll my sleeves up and get stuck in and try to be a part of the solution. I was taken aback when I saw some really appalling housekeeping at a plant that was supposed to be the flagship of Eskom.

This entire place was covered in fine coal dust. Wires were hanging loose. There were pieces of equipment that had clearly been operated until the point of breaking down, and then just been abandoned. So the entire impression was one of neglect.

When de Ruyter joined Eskom a friend told him that he had just joined the biggest criminal syndicate in South Africa. He said, oh, come on. Now, when I saw him several years later, he said, well, perhaps the guy was right.

Eskom is a mega company, so it has a mega footprint. It has mega budget. There were lots of ways to get sort of your tentacles in that pot of money.

If you consider anything that Eskom might need to run a power plant, that can be very easily overpriced. So people on the inside can help those on the outside.

And in one very spectacular instance, I went into a plant, and I was shown some kneepads. We were paying 80,000 rand for one, so a pair would be double that. And we managed to effect an arrest. Within 12 hours, the individual was released on the instruction of a very senior police official who said that there was insufficient evidence.

Another favourite ruse was to deliver coal that had already been discarded as unusable, steal the good coal, and sell that abroad for a profit. The bad coal was then fed into the mills at Eskom power stations. They would often grind to a halt, needed to be fixed. Guess by who? By some of these very same companies that were, in a sense, in cahoots with people inside Eskom.

So this plant, Tutuka, once had been one of the top plants in Eskom. When I first visited I was taken aback at the state of the plant. It was clear that something was terribly wrong. So we appointed a person from the outside, a very brave man called Sello Mametja. And Sello went about dismantling the cartels that were operating into Tutuka. But then, the death threats started.

And he had to walk around on the plant with his bulletproof vest. Tutuka was consuming about half of all the fuel oil that Eskom burnt. He followed one of these trucks and figured out that the truck was not off-loading, but he was just roundtripping over the weighbridge and generating an invoice every time that there was a roundtrip, obviously with collusion from the weighbridge operator, the security guard, and so forth.

The other issue - and this was a legacy of state capture - is that the police, the prosecutors, and other key institutions were also severely weakened. That put de Ruyter and his management team in a very precarious position, because in order to tackle corruption they would need to use private investigators.

It didn't take long for the investigators to uncover bombshell information. They identified no fewer than four criminal cartels exploiting Eskom. My estimate was that at least a billion rand a month was being stolen from Eskom. And I think that's a reasonably conservative estimate.

So corruption has had a debilitating effect on Eskom. But I really want to emphasise the critical mass of men and women at Eskom are committed to the resolution of this problem. And I make the point when I engage with them. The best way of redeeming ourselves is to ensure that we resolve the load shedding problem, and we out those who are responsible for acts of corruption.

People trying to run a small business can't protect themselves from load shedding in the way that bigger businesses can. So load shedding deepens inequality as well.

I can't work without electricity. Without electricity, I'm just damned. The only thing that can help me is a generator. And it's a small business. I don't afford a generator.

I can't say I'm proud that I'm South African, because there's nothing that I'm getting from my government. You see, because there's a lot of struggle. There's crime. There's drugs.

I have four kids. They can't live here. It's is too dangerous. It's too toxic for a child to grow up in. Hence, I took them to the rural areas. The crime - it increases after the load shedding crisis. I watch TV this side. And then, this is the toilet and the bathroom.

All the friends that I grew up with... we were, like, maybe 10. Now, it's just the four of us. The six - gone, two in jail, two they're smoking this drug. They call it nyaope.

So, two dead. If you have nothing to eat, obviously, you don't have an option but to turn to crime. There's no jobs already, plus the load shedding. An old microphone and stars and birds and a rose.

So what does that symbolise?

Ush, freedom, I want freedom, I want power.

If you look at the reality facing millions of South Africans today, there is a huge underclass who are unemployed and who cannot access, not only jobs but the education and the skills that they want to access. Inequality is so high. It's not in such stark racial lines anymore, because a lot of energy was put into creating a black billionaire class. But it's still among the highest in the world, and this is an enormous risk to South Africa's economic prospects and to social stability.

When the lights go out, crime goes up. That could be petty crime, theft, bank robberies. It could be stealing cable and making power cuts worse next time round.

One of the very unusual features of South Africa is that alongside the police, especially in affluent areas, there are private security companies.

We are in the alarm industry in South Africa, looking after residential and commercial properties.

The kind of area we're driving towards now is a commercial area. Lots of warehouses, factories, and all that, where there is quite a lot of criminal activity, cable theft, copper theft. There is no electricity, so it suits them, because there's no risk to them of getting shocked or electrocuted.

One substation like this can carry electricity to look after about 600 properties. But the minute this one gets vandalised, a whole area goes out. All those cables are disconnected there. The copper has been removed already.

It often feels like you're fighting a losing battle, because you've got this box to protect. But it's another 1,400 in one area that they have to look after. It's actually a kievit. If you're lucky enough to have them in your surroundings, and you do hear them getting noisy at night, then you must know there's something happening, like an outside alarm system that they are paying for.

Hello? Security?

This is an effect of load shedding - your gate motor starts malfunctioning, because the batteries goes to low. Your gates don't close. And as you can see, there's a vehicle. There's a generator at the back. This little mini bus. That will be stolen in an eye wink.

So I'm going to start heading to the residential area, where there's also load shedding. And see what's happening that side. A petty criminal, he will jump your wall. He will steal your washing. He will steal your lawnmower. He will steal a leaf blower. He will steal a bicycle.

We were forced to start looking at protecting solar panels as well. Solar panels, obviously, goes onto your roof. So there is a market for that. There's actually syndicates targeting those houses.

They will come pretend to be subcontractors, pretend to be installers. If you find anybody in this industry that says he's doing this for salary, no, he's not. It's a passion. You want to be out there, looking after people, reaching out to people, and just make it easier for them on the end of the day.

The government is the sole shareholder of Eskom. It appoints the board. It appoints the CEO.

There has been continued political interference in the board and management of Eskom.

Certain ministers were sort of bypassing the board and making unilateral decisions, sort of opening the door to dysfunction.

So the board, too, has come and gone. There have been accusations of corruption, incompetence.

So Eskom, by not attending to load shedding, is actively agitating for the overthrow of the state.

So even before he resigned, de Ruyter had been accused of treason by South Africa's energy minister. That simply underlined how toxic political interference in the management of Eskom had become.

But they didn't like him calling the company a crime syndicate, nor did they like his emphasis on moving away from coal to renewable power.

Eskom had a revolving door of CEOs. I know for a fact that many people have been offered the job as CEO of Eskom and have laughed. It's not particularly well paid. If you can't keep the lights on, you're hated, and your prospects of keeping the lights on are minimal.

I mean, when you are facing a crisis of this nature, you need leadership, stability, and certainty. And I think it's regrettable that it took us over a year for us to find a replacement of a CEO at Eskom.

Anyone taking this job knows it's going to be a pressure cooker. You could say a poisoned chalice in the case of de Ruyter. It actually did end up being literally that.

When I got to the office, the coffee machine had apparently broken, and some people were servicing this machine. I then eventually got served a cup of coffee that looked a bit off. The froth on top of the cappuccino wasn't quite as nice as it usually was.

But apart from that, I noticed nothing strange. But then, after about 20 minutes, I was sitting with a colleague of mine. I became very confused. I was feeling very nauseous. I was sweating.

My security detail rushed me off to the clinic where the doctor examined me, did all the usual checks. Then I asked the doctor to run a tox screen. It turned out that the cyanide levels in my blood were elevated. So I guess it was a very close shave. And some people were quite serious about getting rid of me, and I'm happy to be here today.

Is Eskom a feeding trough, if you like, for the ANC?

I would say the evidence suggests that it is.

De Ruyter had already resigned when he effectively accused the ANC of feeding at the trough of Eskom corruption.

The ANC, in turn, blamed de Ruyter. They said his job was to keep the lights on, and he had failed to do so.

Those allegations, their veracity must be tested before a court of law without dismissing them. The special investigating unit has been in contact with the former CEO to substantiate, so that they get to build a case, if any, and go after the individuals who are found to be in the wrong.

I am proud to work for Eskom. No other job in this country impacts the entire 60mn people. With that comes the pressure.

Fix the problem today to keep the lights on tomorrow and for generations to come.

The most important development under Ramaphosa's presidency has been a recognition that Eskom can no longer dominate South Africa's energy supply. So Eskom itself is being separated into generation and transmission to allow more effective investment and management of the power grid. Eskom's debts have also been dealt with.

I think it's fair to say that Eskom holds the fortunes of South Africa in its hands. Because Eskom today is over 400bn rand in debt, and half of that is backed by the government.

And ultimately, he has allowed another boom in renewable energy, this time from private investment, by removing red tape and regulations that was holding this back.

There were very strict limits as to how much power a private company could produce and what it could do with it.

The cap on embedded generation was initially lifted up to 100 megawatts. And then, it was abandoned completely. In theory now, a private company can generate power at whatever scale it wants to.

And provided it can get it wheeled through the grid, which needs Eskom's permission, it can send that power to wherever it wants it consumed in the country. So almost at the stroke of a pen we've started to make it a more open, competitive, and decentralised market.

We have seen an avalanche of private sector projects, as a result of the reforms that they've been introduced on the generation side.

The fact is that renewable energy technology is now cheaper and faster to deploy than conventional energy. And in particular, when it comes to the environmental impact of coal it is clear that the choice has to be to move to cleaner, greener sources of electricity generation as quickly as possible.

Developed countries have begun offering countries such as South Africa billions of dollars of packages of concessional loans, grants, to decommission coal power stations, and speed up the rollout of renewables.

So there are sectors which are clearly going to decline. There are sectors and value chains like renewable energy, batteries, electric vehicles. These are sectors that are going to boom.

The trade-off of this boom in private investment in renewables is that it risks advancing the death spiral of Eskom by cutting off revenues. South Africa has some of the world's best solar and wind resources. The issue is incentives.

It would mean shutting down coal mines. It would mean putting coal truckers out of work. A lot of those businesses are black-owned. Coal has been one of the most successful businesses in terms of the transition to black ownership.

The idea of a just transition is to make sure that we manage those social impacts in as planned and responsible a way as possible.

The thing to remember is that load shedding is not the crisis itself. And the crisis at its roots is political.

The anti-apartheid struggle was fought in the mines. Ramaphosa was a mining union leader. That is the hinterland of many senior ANC politicians. And as the ANC's overall national majority comes into question, particularly in the elections next year, it needs that support.

What are the social impacts of not transitioning? The cost is too high. We are going to be permanently shut out of the global trading system, and we're going to lose a lot of our export markets.

If the developed world is interested in encouraging renewables to be a major source of energy within the African continent, it should rather be providing incentives. And it should be working with African countries by sharing technology and making sure that Africa can catch up with the rest of the world.

Eskom now is effectively broke. It needs to invest primarily in transmission lines, because the new power will come from the sun and the wind in different parts of the country, where the transmission network is not yet fully developed. So they need billions and billions of new investment to go into that. Unfortunately, they don't have it.

Our own computations suggest that we need US$20bn to US$25bn for us to strengthen and expand the grid by about 14,000km in the next 10 years.

We don't have sufficient generation capacity to meet demand. And government has taken a decision to delay decommissioning by a couple of years.

If we are to follow the timelines for the decommissioning of these power stations, between now and 2028 we'd have removed 9,000MW. We are short of about 3,000MW to 4,000MW. So essentially, the deficit will be 11,000MW.

I think the bottom line is this. If we can't stop load shedding in two years, extending the life of the plant by 10 years doesn't help, because it's doing more damage to the environment.

Eskom provides something like 80 per cent of power to South Africa. That number is dipping, in part because people are so frustrated with load shedding, that they are trying to get themselves off the grid.

ShopRite is the largest retailer in Africa. Its ambition is to be the most affordable and accessible retailer in Africa. We use around 5.5 per cent of renewable electricity, and that's from the solar PV panels that we have, as well as some of our landlords. Then, there's diesel as well. Diesel at the moment probably represents between 15 per cent and 20 per cent of the electricity that we use.

So the group has more than 1,800 generators, and those generators really support the stores to be able to function during times of load shedding. So it's automatically synchronised with the mains, so that it detects that the supply has stopped. There's a slight lag, about a minute. Before then, the generator starts, and we're able to have electricity in the store.

I think when it comes to renewable electricity, I think the private sector is leading the way for multiple reasons. The first one, to decarbonise their operations; secondly, to be resilient against load shedding; and thirdly, to pay a lower price for electricity. The ShopRite group uses power purchase agreements with its suppliers to instal solar PV systems on our roofs. And we buy electricity directly from the suppliers.

So the regulatory environment at the moment is not conducive enough to support the wheeling of renewable electricity. Our concern is always that the pace of change and the pace of introducing these new regulations takes a long time. Granted, there's a lot of, let's say, additional aspects and factors to take into account. Because what wheeling would mean is that the income that municipalities earn may be compromised, because you have bigger business buying electricity from other sources.

South Africa already has some of the lowest emissions standards in the world. The issue is that as these coal power stations can't be managed, Eskom needs to fill the gap by allowing higher emissions - that involves a terrible trade-off in terms of air quality.

And we feel as communities that there is a gap of engagement.

While we are in this area, we are breathing toxic air each and every day. The sad part is that we are bringing up a sick generation, suffering from these illnesses, hardship when breathing, unable to go full time in school. They are getting old at a very young age. My son, who is now 29 years old, I have seen him suffering a lot. Sometimes...

Now, we are at Kusile power station, one of the biggest power stations in South Africa. Air does not have any boundaries, you know, so everything that they do here, we do bear the burdens.

Now, for me, politics is around selfishness, greediness. We were having a lot of hope. But when time goes, da-da-da-da.

I think you could use the fact that traffic lights are off and things aren't functioning properly as a metaphor for who's at the driving seat in South Africa. It does sometimes feel like there's no one at the steering wheel.

Load shedding remains as an existential threat to South Africa. The sooner government gets on top of this, the sooner Eskom gets on top of this, the better for the economy, the better for us to be able to create jobs.

Where sun and wind are different to coal is that you can't steal sun and wind. And that is why there is significant resistance to transitioning away from the coal supply chain.

This election is crucial. Yes, it's very likely that the ANC will emerge as the biggest party, but it's also perfectly plausible that it will lose its absolute majority, that it will not be able to govern alone.

Well, it's for posterity to judge, whether our efforts collectively have been effective. And I said the best measure of that is how many hours of the day are your lights on.

Is there a light in the dark? Yes. I think so. The reforms that have been led by Ramaphosa to unleash private investment will pay off in the next two to three years. But that may come too late for the ANC itself. South African voters are furious.