Eskom’s declining use of original equipment manufacturers (OEMs) to provide spares, maintenance and engineering services at its coal-fired power stations has contributed to the drop in performance of these plants.
But, according to Eskom, OEMs charge “exorbitant” prices and can no longer provide their previous level of service.
The poor performance of Eskom’s ageing fleet of coal-fired power stations is one of the main contributing factors to load-shedding.
Years of poor and inadequate maintenance have seen the performance of the coal fleet decline at an alarming rate. The energy availability factor (EAF) — a measure of electricity output as a share of total installed generation capacity — declined from about 75% 10 years ago to 65% in 2021. In 2022 it dropped to 57% and it now stands at about 52% for the year to June.
Silas Zimu, a special adviser to electricity minister Kgosientsho Ramokgopa, said one of the observations that came from the tour the minister did of Eskom’s generation fleet shortly after his appointment was that there was less involvement from OEMs.
Some of these OEMs were involved in the original design and build of the coal-fired power stations. They have also, for years, been contracted to carry out and support the maintenance and upkeep of the plants.
But for various reasons their services have not been retained at stations.
“As someone who has worked in this industry it raised concerns for me — there is no way that [the energy crisis] can be resolved without involving the OEMs,” said Zimu during a webinar hosted by EE Business Intelligence on Thursday.
Load-shedding first became a problem in 2008. Though SA is not the only country that has gone through an electricity supply crisis, it is the only one that hasn’t been able to resolve the problem over such a long stretch of time, he said.
Their tour of power stations also showed that often those stations that were performing well were the ones being maintained by Eskom’s own staff, while the stations that were not doing well were mostly those where there has been a lot of outsourcing.
“We can’t ignore that the performance of our plants has worsened over the years. While we acknowledge that poor performance cannot be fixed overnight, we also cannot allow a situation where the OEMs are put on the sidelines,” he said.
However, Thomas Conradie, GM of engineering at Eskom’s generation division, said it was often because of cost that the utility has had to use the services of smaller businesses rather than OEMs.
“Eskom has made use of OEMs for decades, but we have in cases moved away from OEMs. This does not mean that Eskom doesn’t want to continue doing business with OEMs, in fact we want to increase our use of OEMs,” Conradie said.
But, he said, of these OEMs have become very expensive “charging exorbitant prices for services and goods” and this has forced Eskom to consider alternative suppliers.
“We recognise that OEMS were involved in the design and construction of plants. This information becomes more important as the plants get older and when we have to decide between replacement and repair of certain parts.”
Often OEMs have very good local and international networks that can assist Eskom in problem solving, but according to Conradie OEMs have not retained local skills preventing them from providing quality service.
“We have been experiencing delayed responses on queries and commercial inquiries from OEMs, as well as very long lead times on the delivery of spares which again negatively affect the return time of units on outage.”
Having allowed local and foreign engineering skills to diminish, OEMs were also not always able to assist Eskom with engineering decision making and in risk management when it has to operate plant that might have defect on it.
Thava Govender, CEO of Babcock Ntuthuko Engineering — one of the Eskom OEMs — said they were open to discuss and negotiate on pricing but given their structure and the expertise they deliver, OEMs are not able to compete on price with of the smaller companies.
“There have been instances where smaller suppliers that have contracts with Eskom would come to OEMs to source spares. By the time Eskom pays for those spares they can come at a markup of over 200%.”
He said they also found Eskom’s expectations to be sometimes unrealistic.
“In one of our recent experiences where we were the OEM — we built the plant — but were later replaced by someone much cheaper to do the maintenance. When we were asked to come back to fix the plant it was in a very poor state and the expectations were very high.
“Eskom wanted the work to be done immediately and under unrealistic timelines,” said Govender.
They also found the plant had inefficiencies and load losses because of modification that had been made.
Govender said that having an OEM resident engineer and engineering services on site will cost Eskom about R50m to R100m per year. Compared with the cost of running open cycle gas turbines (which cost Eskom about R21bn in 2022) to provide emergency generation capacity when there are multiple breakdowns, it made financial sense to have an OEM engineer on site to help prevent breakdowns from happening, and to resolve problems quicker when they arise.
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