Tag: Eskom

How Eskom maimed SA’s economy

By Michael Cohen and Paul Vecchiatto for Bloomberg 

It isn’t difficult to find the main culprit behind South Africa’s biggest economic contraction in a decade: Eskom Holdings SOC Ltd., the state-monopoly power provider.

Gross domestic product slumped an annualized 3.2% in the first quarter, after expanding 1.4% in the prior three months, as a series of power cuts — courtesy of Eskom — hammered manufacturing, mining and agricultural output. The utility provides about 95% of the electricity used in Africa’s most industrialized economy.

”Eskom has a grip on the South African economy that is unlikely to be seen anywhere else in the world,” Kevin Lings, chief economist at Stanlib Asset Management Ltd. in Johannesburg, said by phone. “Eskom powers all tiers of the economy right down to the households, and so when it cannot supply electricity all sectors suffer. It is unlikely to change because there is currently no well-articulated plan to cure its problems.”

Driving downward
Eskom, which is buckling under the weight of more than $30 billion in debt, staged days of rolling blackouts, mostly in March, to prevent a collapse of the national grid as its fleet of poorly maintained power plants struggled to keep pace with demand. The outlook looks more promising for the second quarter: The power cuts have abated and the authorities have given assurances that there will be sufficient supply for the winter.

Even so, the economy’s shock performance, which far exceeded the 1.6% median contraction forecast of 16 economists, illustrates the urgency of the need for the government to diversify the power supply. The International Monetary Fund Monday said Eskom was a “major downside risk” to South African economic growth.

A program to purchase green energy from independent producers is in limbo. And little visible progress has been made in implementing President Cyril Ramaphosa’s plan to split Eskom into generation, distribution and transmission units. The proposal, designed to make it easier for other producers to supply the grid, is opposed by labor unions.

The bleak prospects of a speedy resolution to South Africa’s energy crisis are reflected in GDP forecasts for the rest of the year: The central bank anticipates an expansion of just 1% in 2019, the government 1.5% and Bloomberg Economics less than 1%. That’s well below the 3% Ramaphosa was targeting before he took power in February last year, and is a huge obstacle in way of his drive to attract $100 billion in new investment and tackle a 27.6% unemployment rate.

Zimbabwe begins loadshedding

By Crecey Kuyedzwa for Fin24

Zimbabwe has started to institute planned rotational power cuts to reduce stress on its national grid, following low water levels at Kariba Dam, generation constraints at Hwange Power Station and limited imports from Eskom in South Africa and Mozambique.

Power utility Zimbabwe Electricity Transmission & Distribution Company on Sunday published load shedding schedules for the whole of the country.

“The power shortfall is being managed through load shedding in order to balance the power supply available and the demand,” it said in a weekend statement.

While Eskom in South Africa has eight stages of load shedding, Zimbabwe has announced only two stages for now.

The power supplier divided the country into seven regions, and then further into districts or suburbs. It has given each district or suburb a numerical code.

This code is then checked against a regional table which has two time periods: Morning peak – between 05:00 and 10:00, and evening peak, between 17:00 and 22:00.

When power is cut, suburbs that fall within the time period lose power.

The same suburbs or districts will not generally have power cuts over the same day’s morning and evening peaks. When load shedding moves to Stage 2 and “increases beyond the planned limit” power to additional suburbs will be cut. The power cuts will be in five or eight hour blocks in different areas of the region or district.

Zimbabwe has had to implement power cuts, in part, due to poor rainfall in 2018 and 2019 that led to reduced inflows into Kariba Dam. The dam’s hydroelectric power stations supply electricity to both Zimbabwe and Zambia

Over the years Zimbabwe has been topping up its power supply by importing an average 100MW of power from Eskom and Mozambique, but will be forced to look for more given the current crisis.

Power imports from South Africa’s Eskom also cannot be guaranteed, with the power utility facing a fair share of its own challenges.

Analysts say the impact of the power cuts will be significant to industry, which cannot easily turn to the use of generators amid limited availability of fuel.

By Tom Head for The South African

South Africa could be set for another round of drama from Eskom, as the ailing power utility has reportedly failed to receive R7 billion in loan payments initially set to come from the Chinese Development Bank (CDB).

That’s according to City Press, who have reported that the creditors do not trust their promises over proposed maintenance work. It would be the second time in just over two weeks that one of Eskom’s promised loans failed to materialise after the Brics New Development Bank also did not part with their billions.

Why haven’t Eskom received the loan?
On Easter Friday, Finance Minister Tito Mboweni was forced to grant the power giants an emergency bailout in order to meet salary demands and diesel costs. It’s reported that the CDB has taken note of their actions, and fear that this particular instalment of their cash will be used to plug holes, rather than go towards maintenance.

The loan in question will come to R33 billion in total, and it has been earmarked for the development of the Medupi and Kusile power plants. The new builds are yet to get up to full speed, and they’re struggling to produce the amount of electricity needed to keep South Africa illuminated as more “old units” come to the end of their lifespans.

Load shedding fears resurface
Eskom is very much living hand-to-mouth at the moment. In fact, some of their biggest critics believe this will be the last week where the lights stay on: Natasha Mazzone of the DA has accused the firm of diverting funds from long-term projects in order to keep voters happy before the general election this Wednesday.

Public Enterprises Minister Pravin Gordhan has also refused to rule out the return of load shedding this winter, despite unveiling plans to nip it in the bud at the beginning of April. We’ve already seen how one defaulted payment can spark a financial crisis, so a second one within two weeks is a terrible omen for the company… and its consumers.

SA blackouts may cut growth close to zero

By Rene Vollgraaff and Londell Phumi Ramalepe for Bloomberg/Fin24

South Africa’s power cuts could bring economic growth for the year close to zero if they continue at the same severity seen in March, the central bank said.

The wave of rolling blackouts that started in November and are among the worst the country has yet experienced could knock 1.1 percentage point off economic growth, the Reserve Bank said in its Monetary Policy Review released Wednesday in Pretoria, the capital.

Expansion of close to zero would be the worst outcome since 2009, when former President Jacob Zuma came to power.

The nation’s embattled power utility, Eskom, implemented so-called stage 4 load-shedding, which removed about 10% from the grid, last month as ageing plants were offline. The company is battling with high debt levels and declining revenue after years of financial mismanagement. It was at the center of alleged looting under the previous administration that’s referred to locally as state capture.

“It has become clearer, however, that the legacy of state capture of which load shedding is one symptom will constrain growth for a longer period,” the Reserve Bank said. “The damage done by state capture is worse than previously understood.”

The country’s economy went through a recession last year and hasn’t expanded at more than 2% annually since 2013. Growth will only pick up once domestic constraints are dealt with, Deputy Governor Kuben Naidoo said in a presentation after the release of the Monetary Policy Review. Gross domestic product increased 0.8% in 2018.

The central bank pointed out that its estimates, which also show 125 000 jobs could be lost, assume load shedding will persist at high levels throughout the year, and don’t incorporate longer-term costs such as forfeited investment.

“It’s unclear to what extent firms and household have now made their own plans to manage or avoid their reliance on Eskom, which could mitigate growth costs,” the Reserve Bank said.

How rolling blackouts affected the economy

BankservAfrica’s monthly Economic Transaction Index (Beti), a broad indicator of the country’s economic health, showed that transactions declined by 0.4% from February to March.

“The March Beti declined across all measurement periods,” says Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements, in a statement. Naidoo said the numbers are a clear indication of the “deteriorating state of the economy”.

According to a recent article in MoneyWeb,  Eskom’s load shedding in March hit the economy hard. Individual transactions increased in value but decreased in number during this period.

The standardised nominal value of the Beti was R875.7-billion while the average value per transaction was R8 444. This is the first nominal rise in 23 months, said Naidoo. This rise, however, is due to VAT refunds paid in March.

“Without the nearly R20-billion worth of VAT repayments paid into the National Payments System, the March Beti would have been worse off.”

Behind the EskomSePush loadshedding app

Source: 2OceansVibe

Nowadays, load shedding is as much a part of South African culture as using “now-now” to indicate your time of arrival.

And it’s only going to get worse.

Which is why when we heard about load shedding app EskomSePush last year, we knew it was going to be big.

Now it looks like the rest of South Africa has caught up.

Moving on to MyBroadband for more on the guys behind the app, and the humble beginnings of what’s been called one of “South Africa’s favourites”.

In 2014, Herman Maritz and Dan Wells were working in the same office, building apps for banks. They both wanted to know when load-shedding was taking place so that they could plan around it.

To achieve this, they began using PushBullet – a service that allowed them to send themselves notifications when load-shedding began.

This service was soon extended to their friends and family, after which they spent a weekend writing the initial app – which they named EskomSePush.

The name was in part inspired by conference calls talking about “push notifications”.

“Some of these meetings had folks with Afrikaans accents and the word ‘Push’ always made our day,” he added.

“The name was definitely inspired by some of those banking folks. But simply put, it’s Push Notifications for Eskom. EskomSePush.”

Six weeks after the app was released, it had acquired over 100 000 users.

Since load shedding started up again last year, and again this year, and is probably only going to get worse, an app like this is bound to go from strength to strength.

As of March 28, 2019, EskomSePush had 1,2 million users.

Maritz and Wells have three pieces of advice for anybody hoping to create their own viral app.

Firstly, users should make simple choices – even if it hurts.

“When starting out you need to iterate fast to find out which ideas work best. This means some of the things you’ve built might not be perfect. But you need to try out a lot of things to see what works,” they said.

They added that when they started to encounter scaling issues, they looked at their original code and were heavily critical of it.

“But, even though we would approach the problem differently now, the code still runs,” said Maritz.

Secondly, patience is the key to success. When load shedding was suspended in 2015, Maritz thought the app would cease to be useful. Wells, however, decided to keep the servers running and we’re all really glad that he did.

The pair have now launched EskomSePush’s “Nearby Chat” feature which allows you to talk to other people in your area.

For those times when you aren’t sure if it’s load shedding or if you forgot to load electricity…

You can download the app here.

You can also find more tips and tricks for staying sane during load shedding here, and here.

By Sibongile Khumalo for Fin24

Public Enterprises minister Pravin Gordhan says that Eskom has come up with a detailed winter plan that includes several possible scenarios.

Gordhan said the first scenario was if no load shedding was implemented.

“In this instance, we will ensure that unplanned outages or breakdowns are kept to less than 9500MW and that planned outages are within this range of 3000MW to 5000MW, so that we have some flexibility.

“In scenario 2, if outplanned outages go beyond 9500MW, a maximum of 26 days of Stage 1 load shedding (will take place) throughout this whole five month period,” he said.

There was also the expectation that the coal plants, Medupi and Kusile would soon be able to contribute in a more significant way, hopefully by the end of April.

The media was also told that power plants generally performed better during the cooler conditions in winter.

Gordhan along with Eskom board chairman Jabu Mabuza was briefing the media on the state of SA’s electricity supply.

This follows a previous briefing about two weeks ago.

At the time the country was in the midst of Stage 4 load shedding, which lasted for several days.

The power supply was so constrained that Eskom also implemented Stage 2 load shedding during the night.

Gordhan could not say then when load shedding would come to an end, but said they would know more within 10-14 days after the technical review team had had the opportunity to access the power plants.

Eskom has previously blamed ageing power plants and insufficient maintenance, among other things, for the spate of load shedding.

Businesses to sue Eskom

Source: 702

Eskom – as a state-owned entity – has a legal obligation to provide electricity to the people of South Africa, says Elaine Bergenthuin, MD at De Beer Attorneys.

De Beer Attorneys is preparing to take legal action against Eskom for losses suffered by businesses and commercial entities as a result of load shedding.

If the business in question had a specific contract with Eskom regarding the provision of electricity, then Eskom’s failure to supply power will form the basis of its claim.

If a business bases its claim on delict, then De Beer Attorneys will again need to prove that Eskom’s conduct was wrongful or negligent.

De Beer Attorneys expects Eskom to argue that load shedding, per se, is neither wrongful for negligent – in so far as it is a rational, responsible response to the electricity crisis, ensuring that SA’s electricity grid will not collapse, which would be an unmitigated disaster.

The law firm, however, argues that the electricity crisis itself is something which is of Eskom’s own making – due to its negligence in maintaining the electricity infrastructure.

As such, they should still be held accountable for the losses suffered.

De Beer Attorneys will evaluate each case on its own merits.

De Beer Attorneys is calling on all affected businesses that have suffered clear, quantifiable losses as a result of Eskom’s scheduled power outages, as well as public interest groups who wish to hold Eskom to account to please contact it at eskom@debeerattorneys.com.

Source: MyBroadband

Load-shedding continued to plague South Africa this month, and one of the reasons for Eskom’s electricity shortage is the damage caused to burners by poor-quality coal.

Cosatu General Secretary Bheki Ntshalintshali recently said rocks instead of coal were supplied to one of Eskom’s power stations, which caused damage to the burners.

This damage caused unplanned outages and electricity shortages which forced Eskom to implement load-shedding.

An Eskom engineer working at a power station confirmed that poor-quality coal which contains rocks caused serious damage to their equipment.

He added that in December, four of the six turbines at the power station he works at were seized up because of this problem.

“The piping that is supposed to transfer steam to the turbines from the boilers has ruptured due to the wrong grade of coal being used, that contains rocks that have exploded,” he said.

Rocks sold as coal
SABC News recently published photos of rocks which one of Eskom’s suppliers were trying to sell to the power utility as coal.

LontohCoal CEO Tshepo Kgadima told SABC News that the photos came from trucks which tried to deliver these rocks as coal to Eskom’s Hendrina Power Station in Mpumalanga.

“That is not coal. That is a lump of crushed rock which cannot be milled and cannot combust under any circumstances,” said Kgadima.

He said these trucks were thankfully turned away, but added that it highlights the challenges which exist at Eskom’s power stations.

“How is it possible that the power plant operators do not know the geological conditions of the mines where they are supposed to get their coal from?” he asked.

These rocks are shown below.

By Ferial Haffajee for Fin24

Eskom and government have started planning for Stage 5 and Stage 6 load shedding, according to officials who say that there is a race against time to ensure that a national blackout and grid collapse does not happen.

Stage 5 and Stage 6 load shedding imply shedding 5000 MW and 6000 MW respectively.

For businesses and residential consumers, it means more frequent cuts of the same duration, depending on where you live and who supplies your power.

Eskom’s website also contains load shedding schedules up to Stage 8 but has not implemented stages beyond Stage 4.

At the first major briefing to explain the fourth day of Stage 4 power cuts, Minister of Public Enterprises Pravin Gordhan said that the government and Eskom were determined not to go beyond Stage 4 load shedding where 4000 MW has to be shed in long and regular blackouts to business and residential consumers.

But it is now clear that there is planning to Stage 5 and Stage 6 in order to ensure that there is no national blackout.

“It will be a huge struggle to overcome this crisis,” said Gordhan.

An extensive briefing by Eskom executives and the Department of Public Enterprises on Tuesday has made it clear that the national power supply is more precarious than previously understood. South Africa has bought all available diesel on the high seas (to run emergency power), maintenance of power plants is in crisis because boiler tubes are bursting at eight units across three power stations and there is a planned strike early in April.

What does this mean for you?

Load shedding is here to stay and possibly at extended lengths now being experienced across the country. In addition, Eskom is in dispute with the National Energy Regulator with SA (Nersa) on its calculation of the Regulatory Clearing Account and it wants to be able to implement higher tariff increases.

Nersa gave Eskom much lower additional tariff clearances than it requested, but these already added four percentage points to the allowable tariff of just above 9% for 2019/20. Is there light? A little.

On Thursday, a ship with diesel stocks will dock and this supply will ease the crisis; in 10 days, the government will report back with a deeper diagnosis of South Africa’s power woes.

All that government could really offer on Tuesday is that there will be better communication of the crisis with the public and an effort to design blocks of blackouts friendlier to life and the economy.

“We are very far from a point of total black-out. The system operators main task is to defend and protect the grid,” said Eskom chairperson Jabu Mabuza in a briefing designed to shed light after four days of load-shedding which has left the economy teetering and the nation seething.

“We don’t want to remain in a vicious cycle where load-shedding shifts to other crises (like a water crisis because plants go down in power cuts). We are committed to rebuilding the energy supply and energy confidence,” said Gordhan. One of the reasons for the latest power crisis is that it takes too long to buy the parts Eskom needs to maintain its power station fleet, said Mabuza.

The government will be going to the National Treasury to seek an opt-out of strict procurement laws to provide for emergency and faster purchasing.

“We are talking to the Treasury, to the Auditor-General to design processes very quickly to enable Eskom to be more responsive. (But we will) make sure no malfeasance is allowed during that process. People will try to take the gap. We will make sure it doesn’t happen,” said Gordhan who earlier revealed that 3000 staff at Eskom are doing business with the utility.

An estimated 1000 of the moonlighters have been identified.

Staff trading with Eskom is a conflict of interest which has driven up prices and is one factor in the debt pile that Eskom is carrying.

Mabuza also disputed a growing narrative by former executives of Eskom who use social media to disseminate a view that independent power producers (IPP’s) of renewable energy are responsible for the utility’s financial woes and for load-shedding.

“The board has asked me to say it is not appropriate to keep quiet about the IPP’s. In the revenue determination of what is allowable, there’s a budget of R30bn for IPP’s. In so far as Eskom is concerned, what we buy on IPP’s we recoup from the tariff. We are neutral as far as Eskom is concerned – we pass it onto the consumer. If we spend more than R30bn we get it back through the RCA (the regulatory clearing account). We have many problems at Eskom; IPP’s are not the cause of our problems,” said Mabuza.

“We fully understand that frustration and we want to apologise. At the same time, I want to appeal for understanding [in terms of] the nature of the challenges,” said Gordhan who did not give a deadline of when the deep and long load-shedding will stop.

He appealed for understanding from the country and said that South Africans should conserve as much electricity as possible. Eskom will reintroduce its programme of buying spare capacity from industrial users who may not need all the energy they are producing at private power stations.

South Africa has 48000 megawatts of installed energy but it only currently has 28 000 megawatts available daily, causing the gaping deficit that leads to ricocheting power cuts.

There are three senior fix-it teams working on the problem, said Gordhan. A presidential task team has presented one report to Cabinet; the Eskom board and management have presented their own 9-point turnaround plan and there is a team of between 12 and 14 private sector engineers combing through the Eskom power stations to present their own diagnostic report of what is going wrong.

Asked if too many cooks did not spoil the broth and whether government risked throwing structures at the problem, Gordhan said the power crisis needed more rather than fewer eyes on the problem or the risk of groupthink (where people begin to think alike and no longer question each other’s assumptions or points of view) was high.

“There is an eagerness and determination to get to the bottom of what the problems are. To answer the question: ‘How long will load-shedding last’? We will come back to you in 10 to 14 days. We have no magic formula. There is no magic wand to say load-shedding is over. It will be a huge struggle to overcome this crisis. We want to give the public as much information as possible,” said Gordhan.

In the parking lot of the hotel in which the briefing was held, a generator droned loudly. Rosebank in Johannesburg faced Stage 4 load-shedding for the entire period of the briefing – a graphic display of the crisis being described.

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