Spending millions on diesel could affect Eskom’s liquidity – energy expert

Energy expert Chris Yelland said the amount of money Eskom is spending on diesel to keep the lights on could have a strong impact on its liquidity.

The power utility said it is spending millions transporting and burning millions of litres of diesel to keep its open-cycle gas turbine (OCGT) stations operational.

The announcement was made during a virtual media briefing where Eskom management provided an update on the current system challenges.

Eskom ramped up load shedding to stage four power cuts from 9am on Wednesday morning, which will continue until Friday, before stage two kicks in until Monday.

During the briefing, Eskom chief operating officer Jan Oberholzer said the power utility has had to rely on open cycle gas turbine power stations, which are powered by diesel.

“Between Ankerlig and Gourikwa, we are using nine million litres of diesel a day to support the system. We all agree that it’s not sustainable and we need to get out of this situation, but this is where we find ourselves. For us, burning diesel and having a financial blood nose is much better than putting the country into a higher stage of load shedding.”

Yelland told 702 that while Eskom has had to spend the money on diesel to keep the lights on, it will have a strong impact on its finances.

“The way the regulatory process works is that when it comes to diesel, they have to spend the money because it forms part of emergency diesel and then claim it back from the National Energy Regulator of South Africa (NERSA) through the regulatory account mechanism sometimes a year or more, in fact, sometimes several years later. It would impact very negatively on Eskom’s cashflow.”

Yelland said that with the current war in Ukraine, the diesel price is going up.

“Even if they use the same amount of diesel, the price is going up, so the cost is going up dramatically. In the end, Eskom gets the money even if government has to bail it out. That’s the way it has been, Eskom gets a massive bail out from government who’s been doing so for years.”  

Eskom said it is considering switching over to gas in the future, which is less expensive.

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