Tag: Eskom

Eskom records net loss of R18.9bn

By Gaye Davis for EWN

Eskom has recorded a net loss after tax of close to R19- billion.

CEO André de Ruyter released the annual results for the year ending March 2021 virtually on Tuesday afternoon.

De Ruyter has also outlined the power utility’s highs and lows.

He said Eskom’s debt mountain continued to weigh on the group’s performance: “We regret that we have to report a net after tax loss of R18.9-billion, this is largely attributable to the fact that we continue to have an unsustainable debt burden, which caused us to pay in the past financial year, net debt service costs of R31.5-billion.”

De Ruyter said the Covid-19 pandemic had a significant impact, especially in the first half of the financial year, with overall sales down 6.7%.

“Headcount was reduced by 4.5% and as a consequence, we were able to contain our employee costs – we are now sitting at a staff complement of 42,749, which is down from about 44,772 at the end of the previous financial year.”

Eskom’s gross debt now stands at R401.8 billion. Its gearing ratio improved to 67%, from 71%.

Debt servicing costs of R31.5 billion contributed to the net loss, De Ruyter explained.

 

Source: IOL

An explosion at the Medupi Power Station’s Unit 4 generator caused extensive damage to the generator, Eskom said on Monday.

“This explosion has resulted in extensive damage to the generator,” Eskom said.

“The incident occurred during the activity to displace hydrogen with carbon dioxide and air respectively, for the purposes of finding an external leak. Fortunately, no injuries were sustained by personnel who were on site during the unfortunate incidents.”

Eskom said that following a preliminary investigation, it appeared that while the activity was being performed, air was introduced into the generator when hydrogen was still present.

The power utility said the hydrogen was still present in sufficient quantities to create an explosive mixture, which ignited and resulted in the explosion on Sunday night.

“It also appears that there was a deviation from the procedure for carrying out this activity,” Eskom said.

“As such, Eskom has undertaken to place those employees who were responsible to manage and execute this work under precautionary suspension pending the conclusion of the major event investigation.”

Eskom said investigations were under way into the cause of the incident and to what extent it would affect the national electricity grid.

The power utility announced on Monday morning that Unit 4 at Medupi Power Station experienced an explosion at about 10.50pm on Sunday.

At the time, Eskom said the incident was suspected to have resulted in Unit 5 tripping.

“No injuries have been reported, and all employees and contractors have been accounted for. Emergency services attended to seven colleagues requiring treatment for shock,” the power supplier said at the time.

“Eskom will continue to provide support to the employees who might have been affected by the incident through its Employee Assistance Programme,” it said.

“Unit 4 was on a short-term outage (since August 6) when the incident occurred, and all work on the unit was suspended with immediate effect. This included the suspension of all permits to work on the plant until further notice.”

Eskom said the area was secured, and once it had been cleared by the fire chief and resident engineers, inspections and assessments would begin to determine the cause of the incident and the extent of the damage.

Eskom said preparations to return Medupi Unit 5 to service were in progress.

 

Eskom spent R29m on milk, toilet paper

By Babalo Ndenze for EWN

Power utility Eskom spent R29-million in one year on items like milk, toilet paper, cleaning products and bottled water.

But in the past financial year, the power utility has managed to cut this by almost 50% to R15.6-million.

This spending on the basket of consumables has been revealed by Public Enterprises Minister Pravin Gordhan in a written parliamentary reply on Wednesday.

The debt-ridden power utility’s most costly consumable, according to Gordhan, was milk, which cost the struggling power utility R16.9 million in the 2019/2020 financial year.

But this was cut to just over R7 million the following year due to cost cutting measures at the cash-strapped parastatal.

Gordhan was responding to DA MP Ghaleb Cachalia who asked him about recurring consumables such as bottled water, toilet paper, milk and cleaning products and how these affect Eskom’s bottom-line.

Gordan said a total of 1,646 transactions were identified between 1 April 2020 to 28 February 2021.

He said the spending on the recurring products would not affect Eskom’s finances as they amounted for less than a 0.01% of spending.

Gordhan was also asked about the South African Airways spending on the same products, but said this information was outstanding and would be submitted it as soon as it became available.

 

Plan for loadshedding as cold front hits

By Tom Head for The South African

One of the top energy experts in South Africa has Tweeted an ominous 15-word warning for the country, forecasting a very tense period for Eskom in the days to come. On top of the Level 4 restrictions and the aftermath of widespread looting, load shedding may soon make an unwelcome return.

Ted Blom is something of an oracle when it comes to all things Eskom. His usually scathing takes on the load shedding situation never seem to be far from the mark, and when he says there’s a problem, it really is time to listen:

“Electricity supply going to be VERY tight again this week – plan for possible load shedding”

South Africa has been burdened by load shedding in 2021, as rolling blackouts became as bothersome as the pandemic itself. Businesses, already crippled by lockdown and illnesses, have also had to contend with one of Eskom’s worst years on record. For the past month or so, the situation has been relatively serene – but that’s likely to change soon.

Freezing cold conditions are set to blast the country this week, and that poses some severe operational challenges to the utility. On Monday, regions in Limpopo, North West, Gauteng and Free State have been hit by load reduction schedules – signalling that a national plan of action may have to take place soon.

There have been no outages since the middle of June, but it remains to be seen just how severe a potential new period of load shedding could be. For now, the experts are warning citizens to “plan for the worst”.

 

Eskom reduces debt by one fifth in a year

By Gaye Davis for EWN

Eskom’s mountain of debt has been reduced by R83-billion.

Public Enterprises Minister Pravin Gordhan said that this meant that Eskom’s debt now stood at R401-billion, down from R484-billion.

Gordhan was delivering his budget vote speech in Parliament on Tuesday.

The minister said that managing Eskom’s debt was a key priority for the government as it tried to steer the power utility onto a sustainable path.

He used his budget speech to deliver some good news on Eskom’s debt woes.

“The entity is continuing to implement its cost-reduction initiative, with a saving of R13.5 billion achieved in the 2020/2021 financial year.

“Most notably was the R83 billion reduction of debt in the 20/21 financial year from R484 billion to R401 billion due to the repayment of the maturing debt and changes in the exchange rate. Those are significant numbers, chairperson.”

Gordhan said, however, that Eskom’s consumer debt continued to rise, and that special attention must be paid to municipalities, which collectively owed Eskom billions in unpaid electricity bills.

 

Oracle cuts Eskom off

Source: MyBroadband

Oracle has cut off essential technical services to Eskom following a payment dispute, but the impact on the power producer’s operations has been minimal.

The payment dispute arose after Eskom allegedly added modules and users to their Oracle software services without paying the required license fees.

An audit by Oracle revealed abuse by Eskom and the software giant initially claimed Eskom underpaid by R7.3 billion.

Following discussions between the parties the amount was lowered to R380 million. Eskom, however, said it only owes Oracle R166 million.

Oracle threatened to cut off essential technical services to the power utility unless it settles the outstanding R380 million.

Eskom responded by launching an urgent court application to compel Oracle to continue providing technical support amidst the payment spat.

The Johannesburg High Court dismissed Eskom’s application, and shortly afterwards Oracle cut its essential technical services to Eskom.

In its court application Eskom warned of “catastrophic consequences” if Oracle withdrew its support services.

Eskom said it could affect its ability to supply electricity to South Africa which will have a crippling effect on the economy.

To date the impact of Oracle’s decision to discontinue its support services has, however, been minimal.

Eskom spokesperson Sikonathi Mantshantsha confirmed that Oracle has cut off technical support services after their legal victory.

“Oracle’s technical support services have not been available to Eskom over the past week,” Mantshantsha told Bruce Whitfield on The Money Show.

Eskom has now implemented contingency plans which it developed in preparation for this scenario.

Mantshantsha said at this stage there has not be a “very big impact” on Eskom’s operations.

This is partly because Oracle’s support was a supplement to Eskom’s internal teams who have been working with the software for more than 20 years.

“We have activated those teams and they are holding the fort at the moment,” said Mantshantsha.

This raises the question whether the Oracle technical support services were necessary in the first place.

Mantshantsha said it is undoubtedly necessary to have the technical expertise of companies like Oracle to resolve problems with their software.

“We will continue to require such services and as such Eskom has embarked on an urgent procurement process to find the technical skills to replace Oracle,” he said.

Oracle’s decision to terminate its technical support services adds risk to electricity supply in South Africa, but Mantshantsha said they do not rely entirely on the experts from Oracle.

“There is a risk which Eskom has put mitigation measures in for…but we are able to operate without their support for now,” he said.

Eskom dismissed concerns that other providers will be hesitant to work with Eskom following this debacle.

“Any supplier which enters into business with Eskom can expect that Eskom will always honour its contractual obligations,” said Mantshantsha.

Oracle has been mum on the matter, only saying “Eskom should pay the pending dues for the Oracle software that they use”.

 

Eskom moves to dispose of non-core properties

By Sibahle Motha for Jacaranda FM

Power utility Eskom has confirmed that it will finalise the sale of Die Wilge flats at the Kusile power station during the first half of the year (pictured).

Construction work at the flats began in 2008 at a budget of R160-million.

However, costs ballooned to more than R800-million by 2019 with the project now being abandoned and incomplete.

Eskom says the sale of Die Wilge and other properties form part of the power utility’s disposal of non-core immovable property.

The power utility has since managed to sell two high rise offices in Kimberley and Johannesburg, raising a total of R76.1-million.

Eskom says it aims to raise more than R2-billion from the sale of non-core property.

Oracle threatens Eskom over R400m bill

By Roxanne Henderson for Bloomberg

Eskom Holdings has taken steps to protect its operations from disruptions after a contractual dispute with Oracle Corp.’s South African unit put its technical support services at risk.

The state power utility confirmed on Monday that it’s involved in the disagreement in which Oracle initially claimed Eskom underpaid it by about 7.3 billion rand ($500 million). While the amount was later reduced between the parties, Oracle rejected Eskom’s settlement offer of 166 million rand and threatened to terminate its services, the power utility said in an emailed statement.

Eskom has “assessed the risks in the event of Oracle withdrawing” its services and put interim processes in place “to reduce the risks of its operations being disrupted”, it said.

Eskom approached a South African court to compel Oracle to continue its technical support services until April 2022 but its application was dismissed last week, it said. It intends to seek leave to appeal.

Debt-laden Eskom is already under pressure from creditors and has struggled for years to provide reliable power, leading to disruptions that ripple through Africa’s most industrialised economy.

Eskom’s power grid is in deep trouble

By Jamie McKane for MyBroadband

Eskom has provided a detailed explanation of how its low energy availability will result in an increased risk of load-shedding this year.

A recent report published by the Council for Scientific and Industrial Research (CSIR) found that Eskom’s low Energy Availability Factor (EAF) was a driving force for the record-breaking load-shedding last year.

“Eskom fleet EAF is on a declining trend and drove load-shedding events in 2020,” the CSIR noted.

EAF measures plant availability including planned maintenance, unplanned breakdowns, and energy losses not under plant management control.

The statistics reveal that load-shedding occurred for 859 hours of 2020 (9.8%) despite a reduction in demand during the national COVID-19 lockdown.

This is bad news for 2021, as Eskom’s EAF has continued to drop into 2021, which will likely result in increased load-shedding until this improves.

According to Eskom’s latest weekly generation availability report, the average EAF for the year to date is only 58.55%.

In response to questions from MyBroadband regarding the effect of its declining EAF on load-shedding, the power utility said that lower EAF figures increase the risk of load-shedding.

“It is correct that as EAF drops, all other factors remaining the same, the risk of load shedding would increase,” Eskom told MyBroadband.

Falling energy availability means more load-shedding
Eskom said that its power system was currently constrained, a state partly due to the low EAF of the generating fleet. Load-shedding is subsequently required to correct this supply/demand imbalance.

The power utility also said, however, that EAF was only one half of the equation – the other being the demand it needs to meet.

“The dispatchable generation is required to meet the residual demand,” Eskom said.

“This residual demand is the total customer demand of the country less the power supplied by the renewable generation (wind generation, solar generation, concentrating solar power generation, biomass generation etc.) ”

“The residual demand is, therefore, made up of customer demand and the contribution from the renewable generation,” it said.

Each of these factors is variable, and the variance determines the strain on the system and the risk of load-shedding.

“In the case of the renewable generation, the contribution is dependent on wind and solar radiation and there is a strong seasonal effect on the wind generation,” Eskom said.

“The customer demand is also variable changing in the range of 22GW to 34GW over the year with higher demand during the winter months.”

“In general, lower EAF combined with high residual demand will result in load-shedding. Load-shedding is also unfortunately required when the fleet availability drops even further from the average availability for more than a few days.”

Eskom added that it is the generally low EAF coupled with the unreliability and unpredictability of the plant that results in load-shedding.

“All factors must improve to significantly reduce the risk of load-shedding,” it said.

Why EAF is falling
Eskom’s EAF is continuing to decline due to a number of factors, the most prominent of which is power plant failures and breakdowns.

“The major contributors to unplanned energy losses (UCLF) are partial load losses (where units are unable to operate at full load), boiler tube leaks, trips, outage slip and other full load losses,” Eskom said.

It should, however, be noted that Eskom is also conducting reliability maintenance on its power plants, which means that a portion of its fleet is taken offline for extended periods to resolve major issues and defects.

Once this program is complete, Eskom said it expects the risk of load-shedding to decline somewhat. However, while EAF may improve, the power utility still faces a significant capacity shortfall for the next five years.

“Eskom’s generating fleet is unreliable and unpredictable,” Eskom said.

“Together with focussed attention on the areas that contribute most significantly to load losses, Eskom has been embarking on a programme of increased much-needed reliability maintenance.”

“Only once that programme has been completed can we expect the plant performance to become more reliable and less unpredictable,” it said.

Eskom granted 15% tariff hike

Source: MyBroadband

Eskom will increase electricity tariffs by 15.63% on 1 April 2021, following an agreement reached with the National Energy Regulator of South Africa (Nersa) for the 2021/2022 financial year.

The settlement was confirmed in a court order handed down by Justice Joseph Raulinga on 15 February.

Raulinga had in January 2021 heard Eskom’s application to have an earlier High Court order allowing the increases executed, pending Nersa’s appeal of the matter in the Supreme Court of Appeal.

The High Court in 2020 found that the power utility should recover R69-billion in a phased manner over a three-year period.

Nersa had reportedly negotiated with Eskom and reached a settlement of R10-billion to mitigate the risk of the court ordering a R23-billion addition, the amount the High Court had originally found Eskom was entitled to for the next financial year.

This would have resulted in an increase of 21%.

The new court order stated that “an amount of 5.44c/kWh will be added to the average standard tariff for Eskom customers in the 2021/22 tariff year making the aggregate standard tariff for Eskom customers in the 2021/22 tariff year 134.30c/kWh”.

Phased tariff increases
News of the increase comes a day after Eskom CEO André de Ruyter said the utility was working with Nersa to ensure its planned tariff increases don’t come as shock to customers.

These comments came during a recent episode of FMF’s The Free Marketeers web series, during which De Ruyter elaborated more on Eskom’s plans to reduce load-shedding, increase its operational reliability, and improve finances.

He maintained cost-reflective tariffs were required to address Eskom’s revenue shortfall, as the quantum of electricity Eskom sold had for a fairly long time remained flat, which Eskom attributed to a lack of growth in the economy.

According to benchmarking that the utility had done internationally “on a number of fronts”, it was absolutely convinced that Eskom’s electricity price was below the norm.

De Ruyter said Eskom was making good progress in negotiations with Nersa for price increases.

“We will be able, I believe, to address the electricity tariff increase issue in a way that does not cause a price shock to the economy,” De Ruyter said.

“We are at idem [in agreement] with Nersa that what we want to avoid is a sudden large increase in the cost of electricity that causes distress to households and businesses.

“What we are going to try and do within the confines of the regulatory system is to have a phased approach to this,” he added.

De Ruyter emphasised that the amounts on the bill that a business or homeowner would get differed from Eskom’s actual electricity selling price. These bills would include the additional charges that municipalities or other distribution authorities charged.

He submitted that those charges would in instances vary from justifiable, to very high, and above the norm.

 

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