In a bid to bolster energy supply through to the end of last year. Eskom, the National Treasury and the ministry of electricity hatched a plan to allow the power utility to pay power station staff performance incentives.
Business Times has been reliably informed by sources close to operations at some of Eskom’sthe power stations that Eskom loosened the purse strings for staff who improved the performances of their respective power stations.
Eskom leaders now believe the utility can improve further if staff morale is enhanced.
Eskom spokesperson Daphne Mokwena told Business Times performance-based incentives were being paid to power station employees who met predefined targets within their respective areas of responsibility.
“These incentives are awarded only to staff directly contributing to measurable structural improvements in the power system, particularly at power stations. The incentives are linked to the achievement of daily targets at station level and are budgeted for accordingly.”
She said Eskom noted “a demonstrable structural improvement in the performance of Eskom’s generation fleet” as of January, after Eskom achieved 289 consecutive days without load-shedding since March 2024. “This milestone highlights the enhanced reliability of our coal fleet and has led to substantial diesel expenditure savings of R16.28bn — a 63.4% reduction compared to the R25.67bn spent during the same period last year.
“These savings are a direct result of structural improvements in generation performance implemented by our teams. Furthermore, from April 1 2024 to January 9 2025, the total unplanned losses, or the “unplanned capacity loss factor”, for all stations combined was at 25.09%, improving from 32.86% in the same period last year.
Mokwena said from April 2023 to the end of November 2024, Eskom recorded a 5.6GW reduction in unplanned losses, further highlighting the sustained progress in reducing outages and suspending load-shedding.
Speaking to Ann Bernstein, executive director of the Centre for Development and Enterprise at a recent virtual panel, Eskom chair Mteto Nyati vouched for Eskom’s employees, saying the overwhelming majority were honest and hardworking South Africans. “The current board has yet to find evidence of mafias in Eskom. Instead, we have found evidence of corrupt individuals linked to external contractors,” he said.
“We have moved away from making generalisations about our staff as useless or corrupt. Painting everybody with the same brush is just wrong. The majority of our employees are honest people.”
Employees who do not meet targets will not qualify. The scheme is not permanent and will be reviewed to ensure it continues to promote a culture of high performance and operational excellence.
— Daphne Mokwena, Eskom spokesperson
He said the board had identified nine systemic issues, including load-shedding, debt, the maintenance backlog, corruption, the organisational culture and the lack of a proper performance-management system. “The big shift regarding this board is the strong emphasis placed on the technical competencies of the directors to tackle the problems plaguing Eskom.
“The board has six engineers, seven or eight chartered accountants and specialists in organisational culture and labour relations. The second difference is how the board engaged management to ensure that recommended changes were implemented. Ordinarily, boards convene once a quarter but in a time of crisis, a hands-on approach is needed.”
Nyati said the utility held workshops with power station managers in which the managers had discovered that ageing power stations were not the major challenge in station performance. Rather, it was the lack of maintenance, flouting of operating standards and substandard contractors at power stations.
Eskom’s annual report said its board reinstated the long-term performance incentive scheme that rewards executives in cash for meeting organisational objectives measured over three years from April 1 2023 to March 31 2026 and aligned with the 2025-2029 Eskom corporate plan and the shareholder compact. It included financial and nonfinancial targets.
Mokwena said the chosen metric of the incentive scheme focused on the long-term sustainability of plants and uses unplanned losses as an objective and measurable measure of a power station’s performance.
“Employees who do not meet targets will not qualify for incentive payments. The scheme is not permanent and will be periodically reviewed to ensure it continues to promote a culture of high performance and operational excellence.”
Mokwena would not disclose how much Eskom paid out in performance incentives but said these were governed by Eskom’s remuneration and performance management policies and were approved by the board. “These policies ensure that bonuses are tied to clearly defined performance metrics and operational achievements. As a responsible organisation, we focus on balancing fair remuneration with financial prudence.”
According to Eskom’s summer outlook from September 2024 to March 31 this year, the utility predicts a summer free of load-shedding provided unplanned losses are kept at 13,000MW and below.
The National Treasury told Business Times in an emailed response to questions that the Eskom Debt Relief Act stated that Eskom may not implement remuneration adjustments that negatively affect its overall financial position and sustainability. “Eskom is, therefore, allowed to provide performance-based incentives if they will not negatively affect its financial sustainability,” it said.
“Additionally, the importance of providing performance-based incentives to improve staff morale was also proposed by the VGBe Consortium report that was commissioned by the Treasury in 2023 to independently investigate Eskom’s coal-power stations.”
The Treasury said it had fully endorsed the recommendations of the report. Business Times sent questions to the electricity ministry but no comment was forthcoming.
South African Rewards Association president Mark Bussin, who has worked with Eskom and the government on performance incentives in the past, said any organisation’s performance incentive scheme should be designed well in advance, with key targets in mind. “The first rule of thumb is that you need to set your incentives in month one of the cycle and that you agree on the targets and that it is agreed on by the remuneration committee and the CEO. The second is that the organisation needs to perform better in order to get those bonuses.”
He said improved performance is a critical aspect of performance bonuses in any organisation. However, he said, an organisation is entitled to determine for itself which metrics in its outcomes will hold more weight in determining if bonuses should be paid. “The metrics that you pick for an incentive scheme need to cover several bases,” said Bussin.
“One is financial, one is operational, one is sustainability and the last big base is customer. When the customer sees these bonuses and says they have experienced loadshedding, the may be disgruntled. But the CEO says they have delivered on the other metrics. It is possible to get a bonus.”
“But the question we should be asking is if the customer metric in the bonus scheme should be weighted higher, because under this scenario, if there are rolling blackouts, there would be reduced or no bonus. It seems that the customer metric was not weighted very highly here.”
Bussin said when designing an performance incentive scheme, consulting can cost anything between R250,000 and R1m. Bonuses normally cost 10%-20% of payroll.
He said the money spent on a performance incentive is less important than the goals it achieves.
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