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Eskom and
BHP Billiton dispute
Our winning letter to the editor
Comments by Jacob Marley on
Eskom's 90th birthday, Energize April 2013, page 15
Dear Jacob Marley
I was thrilled when I received your best wishes on my 90th birthday. I am not sure of your
age but I can gather from the things you remember that you must be close to, if not past,
your hundredth. As can be expected at that age, your memory appears to be somewhat
selective in what you remember. For example, you refer to the “new Eskom” that “was run
like a business and it began to hum. Many a holy cow was slaughtered and many a sacred
tradition scuppered.” I suspect you refer to the umpteenth “reorganisation” in 1986 when
I was 63 years of age. Some of the “holy cows” that were slaughtered were the Capital
Development Fund (CDF) and the Reserve Fund that, as far as I can remember, were
intended to cater for future expansion and replacement. Projects were to be financed
on “business principles” through international loans. This turned out to be not so easy,
considering political realities of the time (such as PW Botha’s Rubicon speech).
You also seem to have forgotten the episode when plans for new power stations were
cancelled and existing power stations were “mothballed” due to over-optimistic growth
forecasts. This happened in 1988 when I was 65 years old. As there was a glut of electricity
it was aggressively marketed to agriculture and industry, also resulting in the now infamous
contracts with the Richards Bay and Mozambique aluminium smelters in 1991. With this
abundance of electricity, new power stations and expansion were hardly on the cards.
As a matter of fact the new Eskom became lean by allowing, among others, the design
engineers to leave.
For some time there were talks of privatisation, but efforts to find a buyer were fruitless and
the trade unions were uncooperative. When I was 75 (in 1998) the Eskom Amendment
Act was passed and since then Eskom’s equity vests in the State. In 2001 (when I was 78)
the minister of Public Enterprises ignored several memoranda from Eskom to commence
planning for expansion. At the end of your memory lapse you state: “At the ripe old age of
eighty, however, things started going awry. Eskom was nationalised, stripped of its ability to
make its own decisions and interference at every level and in every aspect of its business
became the norm. Power system expansion ground to a halt, maintenance was sacrificed
to budget cuts, electrification slowed to a snail's pace”. While I agree to some extent, it
must be clear from my story above that everything was not exactly “hunky dory ” up to
that age, and that some of my ailments have their roots in the past.
Wishing you everything of the best.
Yours truly
Ol’ Man, Eskom 
WIN
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letter receives a copy of "A Symphony of Power – The Eskom Story".
Sir
I was part of the team that built,
cared for and commissioned all the
power supply to Alusaf, Hillside 1 and
2, and later 3, and then onto Mozal 1
and 2. We were on track for Mozal 3
when our mutual interests went to the
Congo River and Inga 3. Six 800 MW
smelters were planned for Inga 3 when
BHP overtook us and the whole project
was later lost.
There’s lots of history between BHP and
Eskom and they have served each
other well over time. Remember, that
without the start of Alusaf, there would
be no Richards Bay. Alusaf was an
operating smelter in Japan, bought
by the South African government
and relocated to Richards Bay, to
encourage local economic growth.
Compare this to Coega and the
poor economy in the Eastern Cape.
Had Pechiney taken up residence
at Coega, the Eastern Cape would
b e s p a r k l i n g. Pe c h i n e y d r o p p e d
their plans when they got the higher
electricity prices.
Electricity is a direct input commodity
to economic growth. The Eskom of
Dr. McRae had the right vision: position
electricity for world’s lowest cost for
national economic growth and
prosperity. Lowest cost promotes the
natural monopoly as the best supplier
of bulk electricity and delivered world
class solutions in engineering. This
was across the spectrum from power
generation to power transmission
to electricity for all to world class
environmental care. The best was in
cash flow at Eskom's 24/7 treasur y
operations. Daily cash flowed like a
tsunami and had to be invested as
more cash was coming in. Eskom
made cash upon cash and was the
world's best in all categories. The
answer is in vision and leadership.
We must return to this vision of world’s
lowest cost electricity and serve the
customers across South Africa, SADC
and continental Africa. We must just
do it. We can do it. Thank you for your
interesting reports and well done in
serving the country, its economy and
its prosperity. Let us all work collectively
towards a better quality of life for all
our people.
Pat Naidoo,
Pat Naidoo Consulting Engineers 
energize - May 2013 - Page 6