Eskom blamed the tardy approval process in bringing additional generation capacity to the grid as it imposed the worst rolling power cuts so far this year and warned of up to 100 days of outages for the year ahead in one of the latest reminders of one of the biggest factors hobbling the economy.
Persistent operational and financial problems at Eskom heap pressure on President Cyril Ramaphosa to push through reforms at the utility to lift the economy out of a decade-long downward spiral.
Eskom is choking on nearly R400bn in debt and its energy availability factor — a metric that measures the performance of its plant — has been deteriorating.
Eskom escalated power cuts from stage 2 to stage 4, meaning residents and businesses will be subjected to power cuts over a four-day period for two hours at a time, until Friday. There were plant-related problems at Tutuka and Majuba power stations. Eskom removed 5,124MW in planned maintenance off the grid, while another 16,519MW of capacity is unavailable due to unplanned breakdowns.
The news, combined with concerns about global economic growth and the economic repercussions of the floods in KwaZulu-Natal, hit the rand, pushing it to its weakest level in more than a month. At 5.40pm, the rand had weakened 1.91% to R14.9376/$, 1.99% to R16.1161/€ and 1.88% to R19.4134/£. The euro was unchanged at $1.0785.
“Coupled with global growth concerns, Eskom’s move to stage 4 and the impact of KZN’s floods on economic growth, with the specific impact of exports through the Durban harbour, weighed on the rand,” said TreasuryONE currency strategist Andre Cilliers.
While stage 4 is expected to last until Friday, Eskom’s group head of generation, Phillip Dukashe, says the persistent rain hinders the utility’s ability to manage its coal stockyards, which could prolong the implementation of the power cuts.
“We have plans to ... manage the risks imposed by the rain, particularly on coal stockyards ... but if the rain is persistent for more than five days and even after that, it is not dry, and you continue to have some rain, it poses a major issue,” Dukashe says.
The possibility of implementing stage 6 load-shedding is, however, not on the table, Dukashe said.
“In terms of where we are, we do not see that happening this week. We expect some units to come back tomorrow [Wednesday] and some big units coming online on Thursday.”
Eskom’s head of transmission, Segomoco Scheppers, said in the most extreme case scenario the utility could impose 101 days in the coming year to cope with unplanned breakdowns.
The only way to end the utility’s power woes is to add generation capacity to the tune of 4,000MW to 6,000MW to the national grid, which the government has failed to do since 2014, Eskom CEO André de Ruyter said at a media briefing.
When the decision was made by the government to build the Medupi and Kusile power stations, nine years after Eskom highlighted the need for more capacity, it was too late to adequately mitigate the power crisis. “The response of Eskom at the time was to carry out less maintenance than should’ve been carried out in order to keep the plan running smoothly.
“Calculations at the time ... show that we should’ve taken out 13% of our capacity on planned maintenance as a minimum ... This maintenance backlog is what has caused significant lack of reliability and availability that we currently see in stage 4 load-shedding,” he said.
These views are echoed by energy analyst Clyde Mallison, who says Eskom management has been “thrown in the trenches” by the government, which, despite its plans to procure emergency power from independent power producers (IPPs) in order to ensure that there is no shortage of electricity supply, has been slow to conclude the Risk Mitigation IPP Procurement Programme, an emergency programme aimed at lessening the effect of power cuts.
“Eskom is currently in the trenches, they are not the ones responsible for procurement of new electricity, that role falls squarely on the shoulders of the [department of mineral resources & energy],” he says.
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