The escalating cost of diesel was a source of serious concern for Eskom because of the additional cost pressure it was placing on the already cash-strapped utility, its executives told a news media briefing on Tuesday.
Since the weekend Eskom has had to make extensive use of its emergency generation fleet, which includes open-cycle gas turbines that run on diesel, to supplement generation capacity lost due to breakdowns at its fleet of coal-fired power stations and to limit load-shedding.
CFO Calib Cassim said the spike in crude prices that had accelerated after Russia’s invasion of Ukraine could affect the amount of energy Eskom would be able to afford to produce from burning diesel.
Eskom was also evaluating ways in which the war in Ukraine would affect coal costs, COO Jan Oberholzer said.
Since the start of 2022, the price of Brent crude has increased from about $78/barrel to over $130 and coal prices have leapt from about $130 a tonne to $400. Given its funding constraints and financial commitments to its creditors, Cassim said Eskom could “get to a point where we just don’t have the funds to buy diesel”.
The utility’s debt burden stands at about R392m and the national energy regulator’s decision to approve a 9.6% tariff increase for 2022/23, after Eskom asked for a 20.5% increase, would place even more pressure on its finances.
Multiple breakdowns that started over the weekend and got worse by Tuesday forced Eskom to implement a second round of load-shedding for the year.
The state-owned power utility initially announced on Monday afternoon that it would only implement load-shedding during evening hours from Monday to Wednesday morning. But less than an hour after the first announcement a breakdown at Medupi power station prompted it to upgrade the extent of the power cuts to daytime hours as well. The situation continued to worsen and by Tuesday afternoon South Africans were told that load-shedding would continue until the weekend.
By Monday afternoon total unplanned breakdowns amounted to 14,508MW, but this was before Medupi Unit 3 broke down, pushing unplanned outages to 15,228MW. By Tuesday afternoon total breakdowns had increased to 16,505MW.
Eskom had warned during a system status and outlook briefing that there was a high likelihood of load-shedding this year. Given unplanned outages of 13,000MW to 14,000MW, the utility said stage 2 load-shedding would have to be implemented for two to 29 days up to the end of March.
There were breakdowns at Matla, Kendal, Matimba, Kusile, Grootvlei and Medupi stations but Eskom does not suspect sabotage in any of these cases.
The system was unreliable, said Oberholzer, and the breakdowns happened because Eskom had not had a chance to do proper maintenance on unreliable generation units. He said that during this round of load-shedding there was only one unit “where there were issues where we could have done better”. An investigation would be done to determine if any “consequence management” action had to be taken against any individuals.
Eskom CEO André de Ruyter said during the previous round of load-shedding at the beginning of February that the company was not satisfied with the performance of some senior executives and that it would take action against poorly performing executives.
After this, one power station manager was suspended. Eskom spokesperson Sikonathi Mantshantsha told Business Day that the station manager at Majuba power station had been suspended and an investigation was proceeding.
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