Tag: loadshedding

By Sifiso Zulu for EWN

South Africans are looking to President Cyril Ramaphosa for answers after the latest round of load shedding; the most severe to hit the country.

Eskom says it had no choice but to implement stage 4 load shedding on Monday after an urgent need to shed 4,000 megawatts off the grid.

Stage 4 load shedding has never been implemented before, and this drastic measure by Eskom took the country by surprise.

But it appears that even President Ramaphosa was not expecting the latest development, saying it came as a shock and was most worrying.

Energy expert Chris Yelland agrees that this move was unprecedented and speaks to how dire the situation is at the debt-ridden power utility.

“This is uncharted territory. So, it’s much deeper than it’s ever been before, and it did come as a surprise because it was announced that six generation units shut down as a result of unplanned outages.”

Ramaphosa recently announced plans to unbundle Eskom into three entities to deal with generation, transmission and distribution.

Labour unions have vowed to fight the plan, arguing that it’s the onset of privatising Eskom.

How the ANC broke Eskom

Source: MyBroadband

Eskom was once so successful that it was supplying more than half the electricity in Africa.

However, years of corruption, incompetence and political meddling has brought Eskom to its knees, and it is now begging for bailouts to stay afloat.

The company’s growing debt burden, which already exceeds R400-billion and can grow to R600-billion in the next three years, means it is technically bankrupt.

So bad is the situation that former Finance Minister Nhlanhla Nene said Eskom is the single biggest risk to South Africa’s economy.

The image below provides an overview of how Eskom changed over the last 10 years:

Image credit: MyBroadband

Plan for further load shedding, warns Eskom

Source: News24

While consumers were spared load shedding on Monday, the power utility has cautioned South Africans to remain on the alert for further power cuts.

In a statement on Monday evening, Eskom warned that the power system continues to be constrained.

“Customers are advised to keep checking their load shedding schedules on the Eskom and their municipal websites, and plan on the assumption that load shedding will take place,” it said.

“We thank all customers for using electricity sparingly during this period, assisting us to pull through the evening peak.”

The country has since last Thursday experienced routine blackouts, as Eskom battles to restore supply challenges created by workers’ demonstrations at power plants.

The power utility has reported a significant increase in plant outages and bottlenecks in routine maintenance, because of a lack of resources to operate plants optimally.

Eskom said that blackouts can be expected for the next 10 days.

Workers had left their work posts because of intimidation and violence by fellow employees, who are demanding salary increases.

Load shedding schedules are available on the Eskom website loadshedding.eskom.co.za. Customers can also contact the customer contact centre at 0860 037 566.

Meanwhile, Eskom spokesperson Khulu Phasiwe in a tweet reminded Johannesburg City Power consumers that planned maintenance will take place in certain areas “after the Tunisia vs England match”.

Is this loadshedding, revisted?

Eskom has been dogged by allegations of corruption and mismanagement, and this is showing in its expected financial results over the short and medium term. In addition, two of Eskom’s suppliers of coal – namely, two Gupta mines – have stopped operations due to an inability to pay staff.

As the embattled parastatal’s bills mount, questions surround whether or not there will be enough coal to keep power on this winter.

Eskom’s problems far worse than expected

The Rapport reported that Eskom expects a loss of R8.1-billion in the short term, which is set to balloon to R26,5-billion in the medium term.

These projected losses are the highest a state-owned enterprise has ever experienced in South Africa.

The National Treasury described Eskom’s financial problems as the single biggest risk to the South African economy and public finances.

This echoed the views of finance minister Malusi Gigaba, who said in January that Eskom’s financial woes could collapse the economy.

“There would be no currency, and no economy for the country if Eskom went belly-up,” said Gigaba.

To address the mismanagement at Eskom, Gigaba said in his recent budget speech that the government has strengthened Eskom’s board and management with “highly-capable, ethical, and credible leadership”.

Further allegations of mismanagement
In related news, the Sunday Times reported that former Eskom executive Matshela Koko’s wife has received millions of rand from the power utility.

“Documents in the possession of state capture investigators suggest the money flowed to companies where Koko’s wife, Mosima, is a director,” said the Sunday Times.

The report stated that the money was “channelled through Eskom service provider Impulse International, where Mosima’s 27-year-old daughter, Koketso Choma, was a non-executive director”.

In March last year, the Sunday Times reported that Koko’s stepdaughter received contracts for her company worth R1 billion from Eskom.

The report stated that Choma was appointed as a director at Impulse International in April 2016, after which it received eight contracts from the division of Eskom which Koko headed up.

Third Gupta-owned mine fails to pay workers’ salaries

An employee at Shiva Uranium mine‚ a Gupta-owned company based in Klerksdorp‚ North-West‚ says they have been left in the lurch after the company failed to pay them their salaries last week.

“We have not been paid February salaries. We were told that we would be paid on the 28th. This is very frustrating as most of us live far from work and are struggling to get money for transport‚” said the employee‚ who asked not to be named.

She said the company told them on Friday that the payments were delayed because it does not have a bank. “They also told us that they have an international bank and the funds have to be converted from dollars into rands and that the process takes long.”

Koornfontein coal mine is the second Gupta-affiliated mine not to pay salaries to its workers.

They were also told that the delay was due to Eskom not paying the company.

The country’s commercial banks have cut ties with Gupta-owned companies – citing reputational risk – while the only bank which services the companies‚ Bank of Baroda‚ is to exit South Africa at the end of March.

“We know there is trouble brewing there. They are just not telling us the truth.”

She said most workers have since Friday taken leave because they either do not have money to take public transport or put fuel in their cars.

“I do not know what I would have done had it not been for my partner‚ who has helped out with the kids’ school fees and other household expenses‚” the woman said.

She said the company has denied that it is under business rescue as the workers have heard from media reports.

“We have asked them if they are under distress and they said no. They don’t want us to take action against them and have threatened us with our jobs‚” she said.

Shiva Uranium is the third Gupta-owned company to not pay its employees. Optimum and Koornfontein coal mines have also failed to pay workers their salaries this month.

Workers at Optimum downed tools on Wednesday last week‚ saying they wanted to know whether the mine would be sold following reports that the mine’s owners‚ the Gupta family‚ could no longer be found.

Koornfontein supplies coal to Komati power station‚ Optimum supplies coal to Hendrina power station and Brakfontein supplies coal to Majuba power station.

By NOMAHLUBI JORDAAN for https://www.timeslive.co.za

SA has not experienced loadshedding for some time. Eskom has certainly made a major effort to improve its maintenance and to keep the lights burning.

Several renewable energy plants have also come on line. Significant electricity price increases must also have contributed to a reduction in use.

However, the main reason for the cessation in loadshedding is that economic growth has dropped to a very low level, after it had already been on a decline since 2007. Real GDP growth for 2016 is expected to be about half a percent or less – much lower than in 2015.

The low growth is due to internal and external factors including the decline in global economic growth, and a concomitant decline in demand for commodities.

Major factories in SA – including electricity-intensive operations, such as steel plants and ferro-metals smelters – have reduced production or closed their plants in response to low demand and prices. Output in both the mining and manufacturing sector declined in the fourth quarter of 2015 and the first quarter of 2016, compared with the equivalent six-month period a year earlier. This, obviously, also had a negative effect on related economic sectors.

As a result of this decline in economic growth, the amount of electricity distributed in SA (excluding electricity sold to foreign countries), as published by Statistics SA (Stats SA), also shows a decline from 2008, with the result that electricity consumed in SA in 2015 was less than that consumed in 2007.

Electricity consumed in SA in the first four months of 2016, according to Stats SA, was 2.5% down on the consumption for the same period in 2015, as a result of a further drop in economic activity in 2016.

This reduction in demand for electricity has eliminated the need for loadshedding for quite a while, and has actually led to a small surplus in electricity supply capacity.

But SA is not yet out of the woods with regard to sufficient supply of electricity. New generating plants should have been on line in 2007 already, according to the government’s white paper on energy policy, published in December 1998. Medupi’s first unit came on line about eight years late.

There is a close relationship between real GDP and electricity consumption.

Before the late 1990s, the growth rate of electricity consumption was higher than the growth rate of real GDP. However, since the late 1990s, the situation has changed and the growth rate of real GDP is now higher than the growth rate of electricity consumption. The reason for this change is the fact that the economy became less electricity-intensive after 1997, in terms of electricity consumption per unit of real GDP.

There are various reasons for this decline in electricity intensity. As any economy matures, the secondary and tertiary sectors become more dominant, and their contribution to GDP increases relative to that of the primary sectors.

The secondary and tertiary sectors use less electricity per unit of output produced compared with that of the primary sectors. Mining, for example, is much more electricity-intensive than a factory producing finished goods.

As economies develop, they become more services based, which also contributes to a reduction in electricity intensity.

High electricity prices have also had an effect on electricity intensity through, for example, encouraging the more efficient use of electricity.

The average so-called growth margin (the real GDP growth rate less the growth rate of electricity consumption) is currently equal to about two percentage points.

While the demand for electricity is depressed, mainly due to poor economic growth in the country, this relationship between electricity consumption and real GDP also implies that insufficient electricity-supply capacity will act as a constraint on economic growth.

Electricity is often referred to as an enabler of economic growth.

When the economy starts to recover again, this constraint will soon start limiting the economic growth rate, and will lead to the country missing the opportunity to capitalise on the next commodity upturn. Loadshedding will return. It could even be necessary before then, if output from some of the large generating units is lost due to technical problems.

The relationship between electricity consumption and real GDP, as demonstrated, shows that for an average real GDP growth rate of 5% per annum, an average sustainable growth in electricity-supply capacity of 2,5% to 3% per annum will be required.

This will have to be taken into account in the development of long-term electricity plans, to enable high and sustainable economic growth. What makes this challenge even bigger is the fact that, at the same time, provision will also have to be made for the replacement of a number of old power stations, which are gradually nearing the end of their life.

By Johan Prinsloo for www.bdlive.co.za

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