HomeAfrica-NewsUPDATE | Extreme load shedding as Eskom's diesel budget dries up

UPDATE | Extreme load shedding as Eskom’s diesel budget dries up

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Eskom Ankerlig Station.

  • Eskom has run out of cash to buy diesel.
  • The embattled power company says it won’t overspend like it did in the past.
  • The public companies department says it is working with Eskom to find more money.
  • For more financial news, go to News24 Business Cover.

Eskom said on Sunday that it ran out of cash to buy diesel and does not plan to order more until April 1, 2023.

The consequence of this will be extreme levels of load shedding that have not yet been experienced in SA.

In a briefing on the state of the system last week, Eskom’s COO Jan Oberholzer said that since April 1, Eskom has spent R12 billion on diesel against an initial budget of R6.1 billion. . It was later revised to R11.1 billion.

“If we continue to burn diesel like we have for the last seven months, the cost would be astronomical. But we don’t have money to spend. We could pay if the municipalities would pay us,” Oberholzer said at the time.

The implications of Oberholzer’s statement are starting to sink in as SA kicks off the week with stage 4 load shedding.

find money

Public Enterprises Minister Pravin Gordhan met Eskom’s board on Sunday evening about “serious concerns about the risk of higher levels of load shedding in the coming months.”

“The Secretary of Public Companies (DPE) is working urgently with the National Treasury and Eskom to find the money to buy diesel supplies,” the ministry said in a statement.

READ | Stage 3 load shedding and worse: prepare for Eskom’s new normal

It said it was also collaborating with Eskom to find savings within the utility’s existing funds for ongoing diesel purchase and maintenance.

empty tanks

In the past, Eskom has overspent its diesel budget, arguing that the cost of R500 million per day per stage to the economy is greater than the cost of buying diesel. So Eskom has spent heavily on diesel to keep the lights on, limited only by the amount of diesel that can be physically delivered and burned each month. This equates to about R2.4 billion of diesel per month.

But SA’s national energy regulator Nersa has refused to allow Eskom to fully recover its costs from consumers’ diesel spending, arguing that a more efficient and prudent operation would not have to resort to such excesses. This has left Eskom out of pocket and its executives under pressure from the National Treasury for overspending and failing to bolster the sinking ship.

On Sunday, in an exchange with analyst Chris Yelland posted on Twitter, Eskom spokesman Sikonathi Mantshantsha confirmed that Eskom did not plan to purchase more diesel until April 1 next year and that its tanks were empty.

In last week’s briefing, Eskom provided a statistical load reduction forecast over the next 10 months. The forecast showed that through August 2023, SA would experience Stage 3 load reduction on most days of the month, provided diesel was burned to make up the shortfall. The diesel required to maintain the system at Stage 3 ranged from R3 billion to over R7 billion per month. As burning this amount of diesel is physically and logistically impossible, the implication was that load shedding would, in fact, be several stages above Stage 4.

Eskom also noted at the time that the system was so unpredictable that there was a 4,000 MW variance at all times. In other words, the system can jump from Stage 2 to Stage 4 or from Stage 2 to zero in a short space of time.

*This story has been updated to include comment from the Department of Public Enterprises.

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