Tag: power utility

By Botho Molosankwe for IOL

Eskom has hit back at allegations made against it by organisers of the Soweto Shutdown who claimed that the power utility’s bullying tendencies were the reason they had taken to the streets.

The Electricity Crisis Movement had planned to paralyse Soweto on Tuesday saying Eskom treats them terribly compared to people living in areas such as Sandton.

While the power utility is battling financially, everything was blamed on the Soweto debt and as result, the area was load shed longer and frequently compared to other areas, said the Movement’s Trevor Ngwane.

“Eskom’s problems did not start with the Soweto debt although every cent and billion counts. Eskom, just like many State-Owned Enterprises, has problems with corruption and mismanagement but they’re using Soweto debt as a fig leaf cover up.

“Another thing is that if a substation explodes or needs maintenance, they don’t send someone to repair it on the grounds that Soweto residents are not paying.

“It is a myopic strategy to let infrastructure go into disrepair; it’s the shortsightedness and arrogance of Eskom. Soweto people are not paying because they are poor,” he said.

However, the power utility came out guns blazing, saying Soweto currently owes Eskom R18-billion despite the fact that they scrapped the township’s debt twice in the past with an agreement that customers will start paying.

That, however, has not yielded the desired results hence the huge debt, Eskom said.

“We have however agreed to park the debt for those customers on split pre-paid meters on condition that they are loyal in purchasing electricity from Eskom vendors and not bypassing the meters for a period of 36 months.”

Eskom also said the government also provides free electricity to indigent people but that was a process administered by municipalities who uses their own criteria to identify deserving customers.

“In the case of Soweto, the City of Johannesburg administers this process. Customers are encouraged to partake so they can benefit as this will alleviate pressure.”

Ngwane also accused Eskom of loadshedding Soweto frequently and longer than other areas as a form of punishment for their debt, something that the power utility denies.

According to Eskom, load shedding follows a schedule on the power utility’s website. However, sometimes power outages occur due to network faults, vandalism and theft of infrastructure outside load shedding, the power utility said.

Eskom also said they have over the years tried to disconnect those who are not paying but that became unsafe for their staff as some residents resisted that effort.

“We have customers who are honouring their payments on monthly basis however most are not.

“In some cases, those that we managed to disconnect simply reconnected themselves and unfortunately this meant they had to be billed for their consumption and since it was not paid, it also accumulated interest.

“Eskom is however still disconnecting all customers found to have bypassed and bridged meters as well as illegal connections.

“It is to be noted that there has been numerous interventions supported by the Department of Public Enterprises in the past yielding no positive results on the growing debt. We are currently converting post-paid meters to prepaid as mentioned above in order to stop the debt from growing further.”

The Shutdown of Soweto that the Movement had planned on Tuesday in response to their displeasure with Eskom, however, failed to take off.

In one instance, the South African Police Services and Joburg Metro Police fired rubber bullets and teargas to disperse a group of about 30 protesters who were trying to block an intersection in Orlando.

Eskom forced to go into debt to pay interest

By Jan Cronje for Fin24

Cash-strapped power utility Eskom is needing to borrow money in order to pay interest on debt, its chairperson and interim CEO Jabu Mabuza told MPs.

Eskom leadership, together with Minister of Public Enterprises Pravin Gordhan, were briefing a joint sitting of three oversight committees on the utility’s finances on Tuesday.

Mabuza, who took over the role of interim CEO after Phakamani Hadebe resigned at the end of July, said the utility found itself in an unsustainable position. Its total debt was nearing R450bn, and it was not earning sufficient revenues from its businesses to service the interest on what it had borrowed.

“We find ourselves having to borrow to pay debt,” he said.

Electricity revenues over the past 5 years had been flat, he said, while operating costs had increased. Annual tariff increases, meanwhile, were less than what it had hoped for. He said Eskom was also owed some R38bn that it has not been able to collect.

Mabuza told committee members that the energy availability factor of its power plants had dropped to below 70%, which in turn had contributed to load shedding.

Gordhan told committee members Eskom would have run out of money by October without government support.

The utility has been granted two lifelines by the state. The first is a financial lifeline of R23bn per year (for three years) announced by Finance Minister Tito Mboweni in his February Budget. The second is a Special Appropriations Bill which allocates the utility R26bn for the 2019/20, and R33bn for the 2020/21.

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.

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