Eskom is in a ‘death spiral’

This is a week that the beleaguered power utility would rather forget.

Net losses
Yesterday the state-owned enterprise posted net losses after tax of R20.7-billion.
These losses were due to:

• Municipal debt rising to R20-billion
• NERSA only granting a 5.23% tariff increase
• Sales declining by 1.82%
• Wage settlements with unions that were above inflation

Soweto residents demand flat fee
The residents of Soweto, who combined owe Eskom more than R18-billion in unpaid fees, have demanded that prices for unlimited electricity be capped at R100 for each resident:

• Soweto residents demand that their debt be written off
• Of the estimated residents in Soweto, Eskom currently supplies 135 000 with legally connected power
• Only 12% (16 2200) of these customers pay for electricity
• Debt from the area has risen from R3.6 billion in 2014 to its current level of R18-billion
• Eskom is threatening to disconnect non-paying customers, remove illegal connections, and move more houses to prepaid electricity
• Soweto residents are fighting back, launching Operation Khanyisa which sees trained local members illegally reconnecting houses for no charge

Kusile in crisis
Construction on the coal-fire power station Kusile began 11 years ago, in 2008. However, not one unit is currently working:

• All six 800 MW generator units are offline
• Five years behind schedule, only Unit 1 at Kusile has been handed over for commercial service
• Units 2 and 3 are still undergoing testing and commissioning
• Major design, execution and operational problems are being experienced

Load-shedding looms
Based on the factors mentioned above, a number of industry experts believe load-shedding will reappear towards the end of August:

• Major issues with Eskom’s new power plants haven’t been resolved
• Debt is mounting
• Generation remains a massive challenge for Eskom, and capacity is limited
• Operational issues have not been addressed