With renewed load shedding, Eskom sheds hope
Eskom’s latest blackouts could have far-reaching consequences for SA and an expert says R1.7 trillion will be needed to restore the 'rotten' utility.
Picture: iStock
Eskom would need at least R1.7 trillion to restore it to its heyday, energy expert Ted Blom said following the surprise renewal of rolling blackouts yesterday.
Promises of no more load shedding, and “Eskom is too big to fail”, are just two statements bemused South Africans recalled yesterday when they woke up to Stage two load shedding – something Eskom has known about since at least last Saturday.
Castigating Eskom as a “rotten” organisation for not warning the country, Blom said Eskom was also between a rock and a hard place.
“They were told they can’t release bad news because of President Cyril Ramaphosa’s wooing of investors. Meanwhile, I’ve been part of Eskom’s upcoming sustainability report which shows Eskom is in a R3 trillion hole,” Blom said.
“The government has pleaded with the author of the document, of which I was a co-contributor, not to go public with it. It will be released before Friday.”
Blom said R1.3 trillion had already been “blown” in the past 10 years, while to fix the mess Eskom was in would take another R1.7 trillion.
The money would be spent on catching up with maintenance, fixing Medupi and Kusile power stations, and sorting out the water and coal shortfall.
The problem was, said Blom, SA didn’t have that kind of money which is why it would be approaching the International Monetary Fund for assistance.
Political analyst Daniel Silke noted the blackouts would have been particularly embarrassing for President Cyril Ramaphosa, given he had just been the keynote speaker in London at the Financial Times Africa Summit.
“There he had extolled the virtues of investing in South Africa, and the load shedding undermines his message to investors about SA’s broader operating environment relatively quickly,” said Silke.
“It’s a personal embarrassment in a sense.”
Silke said there was a sense the economy had bottomed out after the broader economy had shown “a little blip” in the second quarter and that the tide was turning.
“If there was a return to the instability and volatility load shedding brought in the first quarter of this year, that will absolutely undermine the growth objectives of government and set us back again in our quest to sustain higher growth,” said Silke.
“We’ve just recovered from the March load shedding, this will delay our rebooting again.”
Silke noted if the load shedding continued, it would undermine confidence in political leaders to “get things right”.
COO Jan Oberholzer said in an interview with 702 that six units had been lost to boiler tube leaks, and losing the conveyor belt which supplied Medupi Power Station with coal on October 12 had cut the plant’s power generating ability to a third.
Oberholzer also noted diesel and dam levels had run low and a decision was taken late on Tuesday night to institute load shedding.
Research by PrimaResearch’s Shamil Ismail on the state of Eskom showed the average age of Eskom’s coal-fired generation fleet was 31.5 years.
“However, this situation is not uncommon, and in the US about 74% of all its coal-fired power plants are at least 30 years old (compared to Eskom’s 46%),” Ismail found.
” While the ageing of Eskom’s fleet of power stations may seem worrying, this situation is not uncommon. In the US, 51% of the country’s electricity generating capacity was built before 1980, and about 74% of all its coal-fired power plants are at least 30 years old (compared to Eskom’s 46%).
“As an example, leading multinational energy company Enel discloses that its useful life for depreciating thermal power plants is up to 62 years, and nuclear plants up to 50 years.”
Blom said if proper maintenance had been done, Eskom wouldn’t be in the position it found itself in.
Bemusement quickly turned to anger when streets clogged due to early morning traffic with no robots and businesses were forced to stand idle until their four hours were over, instead of warning staff not to come in.
Johannesburg Mayor Herman Mashaba said in a statement yesterday he had learnt with disbelief of the rolling blackouts.
“No prior warning was issued and no engagement with the City took place to advise us of the possibility of this step being taken,” Mashaba said.
The DA warned Eskom against “using rolling blackouts as a bargaining tool for more money” and claimed the country was losing R1 billion a day.
The blackouts came shortly after Eskom announced it was going to court to reclaim its R69bn Treasury bailout from Nersa.
“When we do not have electricity, we do not have productivity. And when we do not have productivity, we have stagnation which ultimately leads to unemployment,” DA MP Natasha Mazzone said.
Blom said the idea Eskom was switching the lights off “as a bargaining tool” had little traction.
“I’ve thought about the same issue for many years now but the fact of the matter is Eskom is so broken that any issues between themselves and Nersa are bound to coincide anyway,” Blom said.
Blom said he had known Oberholzer personally for 30 years and believed it was unlikely he would use blackouts as a bargaining tool.
“Such a thing would be terrorism,” Blom said.
Eskom said yesterday in a statement load shedding would stop at 11pm last night, however Oberholzer said “realistically”, the load shedding could last as long as a week.
Ismail said Eskom still had the potential to return to its former “blue-chip” status.
“Our analysis shows that the issues experienced by Eskom are mainly due to an inadequately capitalised balance sheet which cannot support its capacity expansion, as well as rising primary energy costs driven by the increased sourcing from more expensive IPP energy,” Ismail said.
“The short-term actions implemented by management to rein in costs could have long-term consequences as the technical skills in plant operations could be lost.”
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