The worst industrial action in 28 years directly contributed to power utility Eskom having to implement load shedding, top Eskom executives told Parliament on Tuesday.
Eskom recommenced with sporadic load shedding in mid-June, sending South Africans scrambling to find load shedding schedules.
The power utility was briefing the portfolio committees on public enterprises and energy in a joint sitting about its progress in addressing governance challenges and securing coal supplies.
Eskom board chair Jabu Mabuza, the chair of its audit and risk committee Sindi Mabaso-Koyana, its CEO Phakamani Hadebe were also in attendence.
Minister of Public Enterprises Pravin Gordhan sat in on the meeting as an observer, but also later commented on the Integrated Resources Plan as well as growing municipal debt owed to Eskom.
Thava Govender group executive for generation told the committee that industrial action over the past year was the worst he had experienced in his 28 years at the power utility, describing it as “unprecedented”.
“Load shedding was a result of the industrial action, not because Eskom had a capacity constraint. The highest demand was met with existing capacity,” he said.
Stay-aways and intimidation during a period of wage negotiations with unions led to reduced production, he said. “During the period we lost quite a lot of megawatts. We had to shut units down because we could not operate them for a long duration.
Coal could not be transported to the units, he added.
Low coal stockpiles
The committee head that low coal stockpiles were a serious concern. The strike resulted in the loss of two system stock days. The average coal stock level is 28.2 days - it would have been 30.2 days excluding the strike, Govender said.
So far nine out of 15 coal-fired power stations have coal supplies below Eskom’s prescribed minimum level, and six power stations are below the National Energy Regulator of South Africa’s grid code requirements.
Eskom is also concerned about the impact of the rainy season, given its low coal stockpiles. Having stockpile days of close to 30 or 40 days ensures that even if it rains, there will still be a layer of coal which is dry if the top layers become wet.
With a low stockpile of, for example, 10 days, all the coal gets wet, making it challenging to transport and burn. This results in the high usage of open gas turbines, which are more expensive, said Govender.
Eskom has a recovery plan in place to mitigating the impact of the rainy season by covering the stockpiles, but this is challenging because the area of a stockpile could be as big as a rugby or soccer field.
The power utility is also evaluating tenders to procure coal for the next five years. Govender explained that some contracts are delayed if service providers do not have appropriate tax or VAT certificates, as Eskom is instituting a culture of compliance which was missing in the past.
Eskom's chair Mabuza said that part of its coal challenges had been created by Eskom itself. Eskom had chosen Gupta-linked Tegeta as one of its preferred coal suppliers, but Tegeta had gone into business rescue affecting security of supply.
“Our coal problem is what we have designed,” he said.
“Regrettably our preferred supplier has fallen over. They have been able to meet the quality and quantity over time.”
Mabuza said executives had made these decisions and Eskom has to own them. “These are Eskom decisions. Phakamani [Hadebe] must decide to keep these decisions or change them, but these are decisions Eskom made.”
*CORRECTION: A previous version incorrectly attributed quotes by Thava Govender to acting CFO Calib Cassim. This article was updated to reflect the changes at 13:40
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