Eskom is looking to secure between 850 million tons and 900 million tons of long-term coal supply over the remaining life of eight Mpumalanga power stations via tenders that it will issue later this year.
Dan Mashigo, Eskom’s head of primary energy, said this during an interview on the sidelines of the Coal Industry Day held in Johannesburg this week.
Such tenders would be worth tens of billions of rands over the long-term.
“The tenders will be ringfenced by the power stations because the quality and consumption profile is different. The tenders will also depend on which stations are in an urgent situation. All eight tenders will come out before the end of this year,” Mashigo said.
The eight power stations Eskom is planning to issue coal supply tenders for are: Majuba, Kriel, Arnot, Kendall, Camden, Grootvlei, Hendrina and Tutuka.
Mashigo said that Majuba power station had the greatest coal supply shortfall that needed to be plugged. Majuba has an installed capacity of 4 110 megawatts and is located between Volksrust and Amersfoort in Mpumalanga.
Mashigo put Eskom’s total coal supply shortfall at 1.33 billion tons, including a 474 million ton deficit up to 2030 and an 839 million ton deficit that needed to be plugged from 2030 to 2050.
About 250 million tons of extra coal supply will come from the “cost plus extension” and “cost plus reinvestment”.
He was referring to the arrangement the power utility has with a number of local coal producers.
Eskom buys coal on a cost plus a small profit margin basis or where it invests in the extension of these coal mines and the coal mining companies involved do the mining. “We have started the long-term procurement. We are going to be hit by the market quite soon with about eight stations,” Mashigo said. “We are fully contracted for this year.
“In terms of supply, we will exceed demand. We will stockpile more than we require. That will also balance for the next financial year. From 2022, we will start to drop to 85% contracted level.
“For the current financial year, we have contracted more than we require by more than 50 million tons over what the demand is.
“We are ramping up – by the end of this calendar year – there won’t be any station below the prescribed coal stock pile level,” he said. “The total Eskom system has on average 45 days of stock – excluding Medupi and Kusile. If Medupi and Kusile are included then the average days of stock is 75 days.”
ADVERT OUT FOR A PERMANENT ESKOM CEO
This week Eskom advertised for a new group CEO in all the major news publications.
This follows the May 24 resignation of outgoing Eskom CEO Phakamani Hadebe, who finishes off at the end of this month. He cited poor health and difficult circumstances of the job for quitting.
Applications to be Eskom boss close on August 2. It is likely that Eskom will announce an acting CEO this week.
The advertisement indicates that the person who gets the job would need to restructure the power utility into three entities, a decision announced by President Cyril Ramaphosa in February this year.
One of the minimum requirements is that the applicants should have experience in leading a “complex organisation” with at least 20 000 staff and an annual turnover of more than R30 billion. The applicants should also have experience in corporate restructurings.