Eskom’s former maintenance policies described as “pure madness”

December 18th, 2014, Published in Articles: EE Publishers, Articles: Energize

 

Dear Editor

I write this letter as a former Eskom executive to provide some insights from the past into the problems facing Eskom today.

Eskom’s previously effective maintenance policy was dramatically adversely affected by a change during the chairmanship of Dr. John Maree, who, against opposition from some executives, introduced a unique new approach to maintenance, as follows:

Operating plant that experienced significant major failure would henceforth have all re-enstatement / maintenance costs capitalised and amortised over the planned remnant life of the power station, instead of being charged to the annual maintenance cost account for the station. Furthermore, top management at both head office and power station level would have an annual performance bonus, whereby if they reduced overall costs, they could considerably enhance their annual salary package.

The effect of this was that managers delayed and reduced planned maintenance, and only carried out significant maintenance after the plant failed and had to be taken out of service. Apart from this crazy move, they were penalised on the “store turnover time” of spares and materials, and were forced to dispose of “surplus strategic spares”. This was pure madness!

Well, these “strategic” moves achieved the short-term objectives of cost-cutting, reducing generation maintenance costs to the minimum and improving the balance sheet and income statement. Power station managers were instructed to: “Make the plant sweat!”. Station managers often ran the plant above the maximum continuous rating (MCR) to compensate for short-term outages to achieve “adjusted” (high) energy availability factors, and to consequently enhance their bonuses.

For those who drove Eskom to become the lowest cost producer of electricity in the world, they achieved their ambition and proudly took the accolades. But alas, as could be expected, a progressive decay followed, as several power companies overseas had previously demonstrated.

Ask Eskom’s major contractors today, and they will tell you about the current relative incompetence and arrogance of many of Eskom’s technical and operating staff, who have become short-term focused.

This “mad” policy may still be in place today, hence the progressive destruction of the plant. The technical integrity of generation plant today is shocking to say the least, as is being displayed by the plant’s poor reliability and declining availability.

Eskoms’ previous policy had always been long-term focused with an emphasis on its technology. Is Eskom management to blame for the progressive plant failures? In my view certainly, yes.

What set the rot?

  • The change in culture in the mid-1990s to a short-term cost reduction policy with bonus incentives.
  • The loss of experienced engineers and technicians, who were encouraged to leave Eskom to generate space for an accelerated BEE drive, which was also incentivised.
  • The promotion of inexperienced staff way beyond their levels of experience and competence.

The rest is history.

Sincerely

Miniwatt

Note: The author of the letter is known to EE Publishers but is being withheld by us.

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