REVEALED: Eskom spent R47.4bn on diesel in the past 10 years

2019-05-05 10:43
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Between 2009 and 2019, cash-strapped Eskom paid 48 suppliers R47.4bn for diesel that was burnt to keep the lights on.

In response to a Public Access to Information Act request, Eskom provided News24 with its diesel expenditure for the past 10 years as well as the names of the suppliers it used.

Eskom would not provide the total paid to each separate supplier, citing confidentiality reasons contained in agreements.

News24 is in the process of vetting these suppliers, and has so far found Eskom procured diesel from a copy-and-printing shop in Johannesburg, as well as some of the largest fuel and oil companies in the world.

The Sunday Times previously revealed that a former beautician and dentist are also among the suppliers of diesel to Eskom.

The data show the highest levels of expenditure on diesel occurred between March 2013 and March 2016, a total of R33.4bn, accounting for more than half of the diesel spend in the entire 10-year period in just three years.

In March, Eskom said it would set aside R50bn to maintain its ageing fleet of coal fired power stations over the next five years.

In 2014, Eskom spent R30bn on maintenance, more than the three previous years combined, which it said in its integrated results was part of key maintenance strategies. In the same financial year, Eskom recorded its highest expenditure on diesel – R12bn.

2014 was also a national election year.

The maintenance budget was slashed drastically, Eskom revealed recently.

In the 2018/19 financial year, Eskom spent R4.6bn on diesel, again in the run-up to a national election, as the budget cuts on maintenance come back to haunt the power utility.

diesel

Graphic/Kyle Cowan. Source - Eskom.

Medupi and Kusile to blame

Dentons was tasked to examine the reasons for rising costs of generation and in a report dated July 2, 2015, explained the reasons for Eskom's high diesel usage:

"Diesel costs incurred by Eskom have increased significantly over the past few years due to the higher than expected levels of operation of the open cycle gas turbines. The gas turbines, being the plants with the highest variable cost of operation, are operated only when no more generation is available from other plants, as mitigation against load shedding," the report reads.

The report lists three reasons for the increase in use of OCGT plants, which are meant to operate in an emergency contingency capacity:

  • The new build programme (Medupi and Kusile) is significantly behind schedule which means the reserve margin is at critical levels. If these projects were on time, it is expected that they would have reduced the operation of the OCGT significantly.
  • The performance of Eskom’s existing fleet of coal fired generation has deteriorated. Over the last number of years, the existing coal fleet has failed to perform some of the duties for which the OCGT plant are currently being used.
  • The OCGT plants are also being operated to create the necessary room for coal plant maintenance.

Medupi and Kusile, Eskom's two new coal-fired stations, are running far behind schedule and over budget. Costs for both stations have risen to R300bn.

Chris Yelland, managing director of EE Publishers, told News24 that the costs of diesel would have been reduced to zero had Medupi and Kusile been fully operational on deadline.

Medupi and Kusile were scheduled to be fully online in 2015, but units were meant to come online as early as 2012, which would have reduced the need to burn diesel.

Last month, Eskom CEO Phakamani Hadebe told the media it would cost an estimated R18bn to finish the power stations.

Read more on:    eskom
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