No quick fix for Eskom blackouts – analyst

2015-01-09 17:58

There is no quick fix for the rolling blackouts, Eskom’s financial issues and its maintenance backlog, so South Africans will have to learn to “live with it”, says an energy sector analyst.

“There are no short-term solutions. Today we have load-shedding and we will have to learn to live with it unless Eskom does maintenance properly,” said Chris Yelland today.

“We will have to learn to accept load-shedding for the next three years at least. There is no quick fix to this.”

Yelland said Eskom’s problems included financial and operational sustainability.

Asked if Eskom’s financial issues were to blame for the rolling blackouts, Eskom spokesperson Khulu Phasiwe said: “Partly, I would say yes.

“We need money to buy parts for the maintenance, but that is not the only reason. Maintenance in the previous years, from about 2010, has been deferred.”

Today, Eskom implemented Stage 1 of load-shedding and said it was due to “high electricity demand and the unavailability” of some generating units.

Stage 1 allows for up to 1000MW of the national load to be shed, Stage 2 for up to 2000MW and Stage 3 for up to 4000MW.

“Eskom does have financial issues. It is true that we are having a financial crunch and we are currently in discussion with government to get us out of this financial difficulty,” said Phasiwe said.

Eskom had indicated in 2014 that it needed R50 billion for the work it was doing and for operational issues.

Phasiwe said government had indicated it would provide Eskom with a cash injection of R20bn to help with operational issues, but that this was not enough.

Eskom was working on a number of options to get the balance of the money it needed to complete work at the Medupi, Kusile, and Ingula power stations.

Today, the Mail&Guardian reported that Eskom was 21 days from going broke.

Public Enterprises Minister Lynne Brown confirmed the “pressure on the company’s liquidity position”.

“Eskom will run out of money by the end of January,” she was quoted as saying. “It must still be addressed.”

Phasiwe said Eskom had already issued bonds in both local and international markets and had approached other institutions for funds.

Yelland said the fundamental problem was that the Medupi and Kusile power stations were running 10 years behind – five years late on a policy level and five years on a execution level.

The white paper on energy policy of 1998 said that a decision had to be taken to proceed with building the new power stations by 1999 or the country would have shortages by 2007.

The government gave the green light to proceed with Medupi in 2004 and not in 1999 and this caused a five-year delay, he said.

Yelland said the initial completion date for all six units of Medupi to generate electricity for commercial operation was October 2013 and for Kusile was October 2014.

The reality was that the most optimistic dates for Medupi to have all six units generating electricity was the end of 2018, and end of 2019 for Kusile, which was another delay.

When the two power stations were up and running it would add 25% to Eskom’s generators.

“Many of the problems that Eskom has are a result of Medupi and Kusile running 10 years late,” said Yelland.

“This adds to the financial plan because it was costing Eskom double than what was planned. Because of the long delays – it is putting financial pressure on Eskom who have a massive cost-overrun.”

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