Eskom – My Office News

SA could be loadshed for 81% of the year

Written by My Office News on 11th May 2022. Posted in Tech News.

Eskom has revealed that, in the worst-case scenario, South Africa will be load-shed for 295 days — or 81% of the year — between April 2022 and 2023.

What’s worse is that, in the scenario, Eskom would have to burn more than R35.9 billion worth of diesel to run its open-cycle gas turbines (OCGTs) while maintaining up to Stage 4 load-shedding.

The power utility doesn’t believe it is viable to run its OCGTs at this level.

“History has shown that it is not possible to use more than about R1.2bn of diesel in a month due to the physical limitations of moving the diesel to the OCGT stations,” Eskom noted in its State of the System presentation.

However, its worst-case scenario would see nearly R3 billion worth of diesel being burnt each month.

Eskom provided three scenarios for expected load-shedding between April 2022 and 2023 — Base Case, Base Case + 1,500MW, and Base Case + 3,000MW (or worst-case scenario).

It should be noted that Eskom has adjusted its scenarios since October 2021, upping the intervals from 1,000MW to 1,500MW.

The Base Case — or most optimistic — scenario accounts for a maximum difference between peak demand and available generation capacity of 12,000MW over the winter months. This will increase to 13,000MW in summer.

Its forecast for these scenarios paints a grim picture.

The other two scenarios were stress-tested to determine the impact should the 12,000MW and 13,000MW thresholds be exceeded.

South Africa would see a maximum of 16 days of load-shedding in the Base Case outlook, with diesel costs to run OCGTs reaching R6.2 billion over the year.

However, the country is already beyond the Base Case scenario, which showed that Stage 1 would be the highest level of power cuts Eskom would implement.

The same can be said for Eskom’s Base Case + 1,500MW — or neutral outlook, which shows that South Africa could experience power cuts up to Stage 3 at the worst. The country already experienced Stage 4 load-shedding in mid-April.

Eskom also won’t be able to run its OCGTs at the levels required for the neutral scenario. The power utility would have to use R19 billion worth of diesel through the year — or almost R1.6 billion each month.

In other words, Eskom would have to load-shed at a higher stage to make up the difference between what it can spend on OCGT diesel, and what the theoretical scenario demands.

Eskom relies heavily on its OCGTs to compensate for load losses and reduce the difference between demand and capacity.

As of 31 March 2021, the use of these plants had cost the power utility R6.4 billion. It will exceed its year-end projection of R8.5 billion OCGT expenditure at the current rate.

According to data provided by EskomSePush, South Africa is on track for the middle-ground scenario despite Eskom low-balling the maximum stage, as the country experienced eight days of load-shedding in April.

The country barely had load-shedding during April since 2020, which indicates that the system could be worse off than it was around the same time last year.

This is reflected in Eskom’s latest weekly system status report, which revealed that the energy availability factor of its fleet for the year was 58.64%, compared to 61.79% in 2021

SA set for worst year of loadshedding

Written by My Office News on 10th May 2022. Posted in Local News.

By Paul Burkhardt for Bloomberg

South Africa is headed for a record year of power cuts if the rate of station breakdowns fails to improve, particularly at coal-fuelled plants.

State-owned Eskom Holdings SOC Ltd. said it will again ration electricity on Tuesday after various generation units were shut for repairs or didn’t return to service as expected. That means nationwide cuts will have occurred on seven of the 10 days in May so far, according to data compiled by Bloomberg.

Record outages

Africa’s most industrialised nation was already on track to exceed the annual record for energy shed from controlled blackouts, a practice locally known as loadshedding that’s used to prevent the grid from a total collapse. There were 1,054 gigawatt hours cut through April versus 2,521 in the entire year earlier, itself a record, according to a report by the state-owned Council for Scientific and Industrial Research.

The crisis surrounding Eskom, which generates almost all the nation’s electricity including 80% from burning coal, causes disruption to both daily life in South Africa and economic activity. The ongoing outages have increased pressure on Chief Executive Officer Andre de Ruyter, while government programs to build new generation have faced various delays.

Wasted energy

Beyond the operational issues, the utility has a massive debt pile and the distraction of an ongoing reorganisation. Phillip Dukashe, Eskom’s group executive for generation, quit on Monday after 26 years at the company. Eskom and the government are also working on plans to utilize $8.5 billion of funding pledged at the COP26 climate summit with the aim of moving South Africa away from coal.

— With assistance by Rene Vollgraaff

Anger over proposed 7.5% electricity price hike in South Africa

Written by My Office News on 5th April 2022. Posted in Local News.

Source: Supermarket & Retailer

In a discussion document this week, the group said it would continue to use the historic method of tariff setting, but due to time pressure, there will be no public hearings on the matter.

The proposal comes after Nersa approved a 9.6% tariff increase for Eskom customers which took effect from 1 April 2022. This is separate from the proposed July increase which will apply to municipal customers.

The national energy regulator’s chairperson Nhlanhla Gumede said Eskom’s increase constitutes a 3.49% increase for the 2022/23 year, alongside legacy costs from previous years.

Gumede said this increase was decided on to balance the interests of the economy, consumers, and the utility. The price hikes take the average electricity tariff in South Africa from just over R1.33 per kWh to around R1.46.

Eskom had pushed for a 20.5% tariff increase for the 2023 financial year, warning that the hike is necessary for the continuation of its operations.

On 5 March 2021, Nersa approved a hike of 15.06% for Eskom’s direct customers, which was subsequently implemented on 1 April 2021. A hike of 17.80% for municipalities was implemented on 1 July 2021.

Not transparent

The opposition Democratic Alliance has criticised Nersa’s decision not to have public hearings on the matter, which it says undermines the concept of procedural fairness.

The party’s shadow minister of mineral resources and energy Kevin Mileham said consumers are already struggling to keep the lights on at current electricity prices cost levels.

“Due to the limited ability of municipalities to absorb costs and cushion consumers against electricity tariff increases, the costs will be passed on to the consumer. It is simply unacceptable for tariffs hikes to be imposed on consumers without any public hearings. A cloak-and-dagger operation, carried out without the input of those who would be most affected, is simply not right,” he said.

“Consumers should not be punished for Nersa’s inability to get its house in order on the electricity price methodology. The DA will fight against any attempt to impose an above-inflationary electricity increase on consumers without public participation.”

Union federation Cosatu warned that businesses and households are facing a crisis over rising electricity prices, and face further pain from coming fuel price hikes.

The union said that the 15% increase in electricity from Eskom would push people to “alternatives”, some of which could be dangerous. Meanwhile, businesses – already struggling with rising costs across the board – would struggle to survive the hikes.

“Any tariff increase will squeeze the small economy, businesses will go out of business, workers will be retrenched. People will revert to some unhealthy resources using woods, paraffin,” it said. “We may see an increase of fires in the squatter camps, so it’s a very sad story indeed.”

Loadshedding hits as energy prices skyrocket

Written by My Office News on 8th March 2022. Posted in Local News.

By Theresa Smith for ESI

Eskom will continue stage two loadshedding until 5am on Saturday, but pointed out in a press briefing the situation remains fluid and could change at any moment.

The utility had suffered multiple generating unit failures since the weekend, which reduced available generating capacity. Eskom thus instituted loadshedding at 5pm on Monday to replenish the emergency generation reserves which have been utilised extensively since the weekend.

Jan Oberholzer, Eskom Group Chief Operating Officer, said in addition to using pumped-storage the utility is relying on open cycle gas turbines right now, which is not a tenable situation.

“We are running with a system that is at high risk and that contributes to where we are,” said Oberholzer.

Generation group executive Phillip Dukashe enumerated several issues leading to high unreliability and poor performance of the system, including the age of the plants which means they need more maintenance, a dearth of skilled personnel, deferring maintenance because of late funding and a failure to catch up to necessary maintenance. “Some of the failures are coming from areas that have not been worked on and we are looking to see why those were not included. Part of that is learning as the plants are ageing,” said Dukashe.

He said they were surprised by Kusile and Medupi power plants experiencing problems that new plants should not exhibit and have embarked on a study to ascertain the exact problem. They do not see any signs of sabotage or negligence in the recent slew of tripped units which led to breakdowns amounting to 15,228MW while planned maintenance is sitting at 6,307MW. “Maintenance should have been done, but it’s not negligence,” said Dukashe.

Effect of Russia/Ukraine conflict pushing up energy prices

Eskom Chief Finance Office Caleb Cassim said NERSA caps the amount of money Eskom can directly spend on diesel in any given financial year to 1% of the time, which works out to around R1 billion. “Based on usage this financial year we would project to spend around R6 billion for the Eskom plants on diesel. Then [private sector gas plants] Avon and Dedisa are in the region of another R3 billion projected,” he explained.

While Eskom realises oil and gas prices are escalating because of the Russia/Ukraine conflict, the utility does not yet know what it will do to mitigate the fallout. “We are looking at options to hedge diesel and fuel oil prices going forward but the timing could not be worse, but we have started discussions,” said Cassim.

Oberholzer said the utility is also looking at the cost of coal and they are “concerned about the impact of the war out there on our operations here in South Africa”.

“Up until now, we haven’t loadshed to save diesel,” Oberholzer was at pains to point out. He reiterated that Eskom institutes loadshedding to ensure the utility has sufficient generation capacity and does not deplete the system to the point where it fails altogether.

“At the end of the day, Eskom, from a cash flow perspective, can only afford so much for diesel and we’ll get to the point where we won’t have funds to pay beyond a certain point. We don’t have a blank cheque to continuously spend on diesel,” said Cassim.

Chief Nuclear Officer Ridewaan Bakardien pointed out Eskom does not deal with any direct suppliers of nuclear fuel from either Russia or Ukraine, but sub-suppliers may do so, which could have an unforeseen effect down the line.

Generational capacity at Eskom remains constrained

Dukashe reminded attendees of the briefing that none of the work being done on coal-fired power stations is life-extension measures, which is only happening at Koeberg Nuclear Power station. “It’s only maintenance. Eskom has a plan for how and when stations have to be shut down. Stations approaching their end of life are faced with issues,” said Dukashe.

While totally overhauling the coal-fired power stations would ensure greater reliability, that cost is not justified when compared to how many years the plant will still be allowed to run.

“Every time there is loadshedding we look at Eskom and it should be because we are the bulk supplier of electricity. But we need between 4,000 and 6,000MW extra capacity. Without that we cannot say we have a reliable system.

“Running with 8,000MW at risk, the right thing is to shut them down and attend to the maintenance for more reliable units. But we can’t because if we shut them down that increases the stage of loadshedding,” said Dukashe.

Nersa grants Eskom 9.61% increase

Written by My Office News on 24th February 2022. Posted in Local News.

By Crispin Adriaanse for IOL

Despite the National Energy Regulator of SA (Nersa) awarding Eskom less than half of the increase in electricity tariffs it originally applied for, Cape Town Mayor Geordin Hill-Lewis believes it is still too high for Capetonians to afford.

On Thursday, Eskom said it noted the revenue determination on the increase of electricity prices at 9.61% handed down by Nersa.

“The financial implications on this decision on Eskom’s long-term sustainability will need to be further understood. It is understood Nersa considered the impact on consumers and the financial sustainability of Eskom as it made its decision,” Calib Cassim, Eskom’s chief financial officer, said in a statement.

The new increase to electricity prices is effective from April 1.

The state-owned public utility originally proposed a 20.5% increase in December last year for the 2023 financial year, Cassim confirmed at the time.

Eskom proposed a 20.5% increase in order to address financial sustainability and liquidity challenges.

If the 20.5% increase was realised, R100 of electricity would have translated to only 30 units.

However, Mayor Hill-Lewis vehemently stated on multiple occasions that the proposed increase was far too much for Capetonians to afford.

The City of Cape Town set up a petition following his remarks to challenge the proposed hike – which is closed at this time.

Hill-Lewis proposed at the time the justifiable increase in electricity tariffs would be in line with inflation.

On Thursday, despite the 9.61% increase instead of the 20.5% increase, Hill-Lewis believes it is still too high.

“This increase is less than half of what Eskom asked for, and is a clear rebuke to Eskom’s totally unrealistic request,” he said.

“While I am happy that Nersa took the voice of thousands of Capetonians into consideration, it must be noted that the increase of 9.61% is still 4.1 percentage points higher than inflation.”

“The latest announcement by Nersa will not be welcomed by Eskom. However, passing the bill on to struggling consumers should not be the default solution, and Nersa should be lauded for taking a strong stance in this regard,” he added.

A 544% increase to the average price of electricity was felt by South Africans pockets between 2007 and 2021, yet an increase in load shedding was still experienced – the worst load shedding occurred at the height of the Covid-19 pandemic in 2020 and 2021.

“Electricity tariff increases for City customers will be determined through the Budget process and increases will come into effect from 1 July 2022,” the mayor said.

Eskom to claw back another R700m in municipal debt

Written by My Office News on 22nd February 2022. Posted in Local News.

By Marelise van der Merwe for News24

Eskom has met with Merafong mayor Nozuko Best and her management team in a bid to deal with the municipality’s spiralling debt, as it now owes Eskom just under R700 million, the power utility said.

This follows a similar meeting with Tshwane mayor Randall Williams late in January in an effort to recover R635 million owed to it by the city.

Merafong’s skyrocketing account is due to “poor and irregular payment patterns”, Eskom said in a statement. The municipality has committed to managing its account, an undertaking that was reached during a meeting on Wednesday.

Eskom billed the municipality over R38 million in January, it said, but was paid R18 million.

The power utility said it anticipated a “good working relationship” with the municipality going forward.

“The municipality has pledged to put together a payment arrangement proposal which we will review, as well as pay[ing] their current account on time,” said Eskom senior manager for customer services, Daphne Mokwena.

Mokwena said overdue municipal debts had a knock-on effect on Eskom’s liquidity, financial performance and overall sustainability. The utility has been battling rising municipal debts for years, with CEO André de Ruyter flagging this as one of the state-owned company’s key concerns.

In August last year, Eskom chief financial officer Calib Cassim said while the utility had managed to reduce its gross debt by over R81 billion – a reduction of nearly 17% – the entity was still facing a significant challenge exacerbated by outstanding municipal debts. Over the financial year ended in March 2021, outstanding municipal debts rose 26% to nearly R36 billion.

Just 10 municipalities had honoured their agreements for arrears payments.

Eskom suffers engineer exodus

Written by My Office News on 9th February 2022. Posted in Local News.

Source: MyBroadband

Eskom engineers and technical staff are leaving the power utility because of affirmative action, a lack of career prospects, cadre deployment, nepotism, and a toxic work environment.

This is according to an article in Rapport, which highlighted problems in retaining skilled technical employees at Eskom.

The report said there is now a much higher resignation rate among engineers, craftsmen, and technicians than before.

Apart from the above-mentioned problems, further contributing factors include Eskom’s traumatic restructuring process and uncertainty around splitting Eskom into three units.

Staff morale has hit an all-time low, partly caused by the general negativity around load-shedding and the general negativity around the company.

The increase in resignations of engineers and skilled technical staff should not come as a surprise.

In October last year, Eskom COO Jan Oberholzer said he was “absolutely horrified” by the number of experienced staff lost at the Koeberg nuclear power station.

He said what was particularly alarming was that Eskom employees were prepared to resign without having alternative employment.

“After resigning, they get opportunities to go to Europe or the Middle East,” Oberholzer said, showing the demand for their skills.

He said the loss of skills and experience is a significant challenge for Eskom.

Skills exodus at Eskom

The exodus of skills at Eskom started more than a decade ago.

In 2008, trade union Solidarity highlighted that at least 346 engineers and artisans left Eskom in 12 months.

Solidarity said 72% of its members in Eskom — mostly people with critical technical skills — wanted to leave the company. 99% of respondents said Eskom did not do enough to retain talent.

Instead of focussing on retaining technical skills and training new engineers and artisans, Eskom drove away many white engineers and technical staff.

In 2015, media reports revealed that Eskom was planning to cut the number of white engineers and managers and decrease the number of white tradespeople.

Cutting skilled white employees was needed to comply with South Africa’s strict provisions of the country’s Equity Act.

The Department of Labour required Eskom to set numerical targets so that the makeup of its workforce would more closely match that of the country at large.

Eskom had to submit a plan to reach the demographics targets by 2020.

In 2019, another report surfaced that Eskom was planning to drastically cut the number of skilled white engineers and managers to meet its affirmative action targets.

The white employees who Eskom allegedly targeted included engineers, tradespeople, academically qualified staff, and middle management.

Although Eskom denied it had a plan to get rid of white staff, many white employees resigned as they felt affirmative action was limiting their career prospects.

Trade union Solidarity stated in 2019 that Eskom struggled to recruit and hold onto skilled engineers — particularly white employees.

“Eskom’s recruitment policy, promotion policy, EE targets and AA appointments, and procurement policy has made the environment in Eskom impossible for white engineers and artisans to get promotions and excel in their careers,” said Solidarity.

It added that regardless of race, Eskom desperately needed to keep its skilled engineers and staff if it was to turn the company around.

In February 2021, the trade union even presented Eskom with a list of experienced and skilled experts to help with its turnaround strategy.

Eskom declined this help, and a year later, the power utility continued to struggle with an exodus of skilled engineers and technical staff.

Solidarity blamed affirmative action for Eskom skills shortage.

“Many of the experts on the list are white, and Eskom merely don’t want to appoint them because of their race,” the trade union said.

Eskom slams plan to punish solar power users

Written by My Office News on 2nd February 2022. Posted in Tech News.

By Hanno Labuschagne for MyBroadband

Eskom has slammed the National Energy Regulator of South Africa (Nersa) principles document on electricity supply prices that could see solar panel users pay up to 10 times more for electricity than the country’s biggest power consumers.

The principle document is supposed to form the basis of a radical new electricity pricing methodology that the regulator wants to implement for Eskom’s tariff applications from the next financial year (2023/2024).

One of its significant proposals is that users be divided into three different types of load profiles, namely:

Baseload profiles with constant power demand likely being 100% grid-based. These are primarily industrial customers like mines.
Day or mid-merit demand profiles, supplied by own or embedded generation through solar and wind. Will be on- or off-grid.
Variable load profiles, which will include peak demand and grid-based backup.

Nersa wants the variable load profile to be distinguished from the other two as it “requires expensive sources of power generation”.

This load profile would apply to households with solar power during the day but who need to tap into Eskom’s grid during peak hours.

Nersa holds that this load profile should not be “socialised” as it would “cynically” transfer price pressures to poor households who can’t afford self-generation.

In addition, it contends the costs of supply to these load profiles are further offloaded to big industries that have baseload profiles, with consistent demand that did “not actually contribute to costs”.

“The tariff for variable load is likely to be in the order of 5-10 times the baseload tariff, depending on the economies of scale achieved, which will largely be a function of the load profile and technology used to the supply load,” Nersa said.

The regulator also contends that separating baseload and mid-merit supply from variable load would support the government in providing affordable and free basic electricity to indigent households.

Electricity connections in a township
But Eskom has said the proposed principles could not, on their own, be used to determine revenue or tariffs.

“It deviates from a well-established process of first determining revenue, based on a clear methodology, then doing a cost allocation of this approved revenue to customer classes and then designing tariffs,” the utility told MyBroadband.

Furthermore, the principles did not comply with the government’s Electricity Pricing Policy nor Nersa’s own tariff codes, which deal with cost allocation and tariff design.

It warned the changes would increase the tariffs for most customers, including municipalities who resell to households, because it assumes variability will be paid by all non-baseload customers.

Core to Eskom concerns was the splitting of load profiles, which it maintained was impossible and impractical.

It suggested that Nersa does not appear to understand the fundamental workings of electricity.

The utility said Nersa implied that certain linkages between consumers and sources of electricity were possible, which was not the case.

“An example inferred in the principles is that it is possible to follow an electron — from a power station to a particular customer: This is not at all feasible,” Eskom said.

“At its most fundamental, the entire power system is oscilliating in synchronism,” the utility explained further in its submission on the principles. “All power plants supply all [of the] consuming customers at a particular point in time.”

“As demand for electricity increases, more expensive generation must be dispatched to meet this demand.”

“The last generator dispatched does not exclusively supply the last consumer requiring power, but both now participate, simultaneously, with all other generators and consumers at that moment in time.”

Therefore, a power provider cannot assume that ‘baseload’ generation can be allocated only to apparent baseload customers.

Like Nersa, Eskom supports that tariffs should be unbundled and cost-reflective, but its approach is simpler — add a capacity charge for almost all users.

This was its argument in a tariff plan submission to Nersa made in August 2020, to which the regulator is yet to respond.

“Rebalancing of tariffs by recovering capacity based costs through capacity charges and usage-based costs through usage linked charges will ensure a fair and transparent recovery of costs and reduce unintended cross-subsidies,” Eskom explained.

The capacity charge would be levied on most customers, except Homelight users.

For smaller customers, it will be a fixed R/day charge and for larger customers a R/kVA charge.

Eskom’s tariff proposals also include a time of use tariff for residential users, which could be used to address peak demand issues, as well as a net-metering rate to compensate customers for energy exported onto the grid.

Furthermore, Eskom proposed the eradication of the Incline Block Tariff (IBT).

Because this was based on the existing revenue at the average consumption to determine a single energy rate, the average customer would pay exactly the same as on IBT, Eskom stated.

‘It’s out of our control’: Eskom fights for 20.5% hike in April

Written by My Office News on 18th January 2022. Posted in Local News.

By Carol Paton for Fin24

Eskom defended its proposed 20.5% tariff increase for 2022/23 on Monday, arguing that most of the cost increase was driven by two factors outside of its control: the requirement to increase purchases of energy from independent power producers and the increase in carbon taxes.

Together, these two factors accounted for 13.8% of the proposed price increase, while increases in operating expenditure accounted for only 7.5% and cost escalations in primary energy for 6.5%. SA introduced a carbon tax in 2019, which is to be increased gradually. IPP costs for Eskom are set to rise as more producers come on stream.

Due to large increases in these and other areas, in its application Eskom requested a negative return on assets of 6.38%, to prevent the overall increase rising too high.

CFO Calib Cassim presented Eskom’s revenue application to the National Energy Regulator of SA (Nersa) on which the utility’s annual tariff increase is based. Nersa decides the tariff on a legislated methodology, which determines how much Eskom can justifiably earn from consumers, assuming Eskom operates efficiently.

The regulator has seldom granted Eskom its full request, as its scrutiny of Eskom costs has almost always found that a large a portion of costs be ruled out due to inefficiency. Eskom, has in turn, regularly succeeded in clawing back some of the costs retrospectively through a mechanism called the regulatory clearing account. Retrospectively allowed costs are then added to future tariffs, making for a complicated and constantly changing price determination mechanism.

While the determination of Eskom tariffs is extraordinarily complicated at the best of times, this year’s application – which will put in place new tariffs on 1 April for non-municipal customers and 1 July for municipal customers – is even more complicated. This is because the application was drawn up a year ago but had not been deliberated on by Nersa.

In September, well after the application had been completed, Nersa informed Eskom that it intended to change the methodology for determining allowable revenue, requiring a new application. In December, Eskom approached a court and secured an order that Nersa consider the 2022/23 application immediately to put new tariffs in place by 1 April.

On Monday, Cassim presented Eskom’s tariff application which was compiled a year ago. However, much has changed in both Eskom and wider energy supply industry over the past year and Cassim will be given another opportunity on Tuesday to revisit the assumptions in the application.

While the balance between the various factors contributing to the price application will change, the global amount of 20.5% is expected to remain the same.

‘Not affordable’

But while Eskom tried to justify its application, stakeholders and interested parties at the Nersa public hearings appealed to Nersa to ignore its methodology and refuse to award the increase on the basis that consumers could not afford them.

Among them was mayor of the City of Cape Town Geordin Hill-Lewis who said the proposal was “unaffordable, unfair and unjust”.

“The point of departure should not be what Eskom’s maximum return on assets should be, but what people can afford. It would in line with inflation at around 5.5%,” he said.

The Nersa methodology should be set aside on the grounds that it is not rational to award high tariff increases in the prevailing economic environment, he said.

Other groups, including community, faith-based organisations and business organisations made similar appeals arguing that it was immoral to force consumers to pay for Eskom’s and government’s mistakes and excesses of the past.

Members of the Nersa electricity panel told presenters that while they sympathised with their plight, their hands were tied by legislation methodology.

Electricity price hike looms

Written by My Office News on 11th January 2022. Posted in Local News.

Source: Supermarket & Retailer

The National Energy Regulator of South Africa (Nersa) has invited stakeholders to comment until Friday (14 January) on Eskom’s proposed tariff increases for the country.

Eskom chief financial officer Calib Cassim has confirmed that the state-owned power utility has applied for an electricity price increase of 20.5% for its 2023 financial year, set to take effect from 1 April 2022.

However, analysts have raised concerns as to what increases will actually be pushed through, with Nersa’s tables showing hikes of as much as 40% depending on how outstanding debts are clawed back.

Presenting Eskom’s interim results on 15 December, chief executive Andre de Ruyter warned that the seasonality of Eskom’s performance means that there is considerable cost pressure in the second half of the financial year, driven largely by summer maintenance requirements and costs associated with ensuring the security of supply.

He said that while the phased easing of Covid-19 lockdown restrictions has led to an improvement in financial performance during the first six months of the year, ongoing risks for Eskom’s sales and revenue include supply constraints, load shedding and load curtailment, as well as a constrained economy.

The chief executive said that to achieve independent financial sustainability, remain a going concern and meet debt service requirements on a standalone basis, the price of electricity in South Africa must migrate towards a cost-reflective tariff.

“We have to emphasise that the power system is unreliable and unpredictable due to insufficient maintenance of generation plant over many years. Maintenance outages take around 24 months to plan, and take from three to six months to execute.

“The response to the pandemic prevented us from doing as much maintenance as we would have liked, while prevailing liquidity challenges continue to constrain funds available for maintenance,” he said.

“To date, we have released funding of R8.3 billion for outages during the 2022 financial year, and R8.2 billion for those in 2023, against a requirement of R10.7 billion next year.”

Tag: Eskom