No crisis, says Eskom boss

Johannesburg. — The leader of South Africa’s sole power utility sees no crisis at his company even as it struggles to meet demand and forecasts a high risk of rolling blackouts in February and March.

Eskom Holdings SOC Ltd “is not a company in crisis; we may have a crisis with electricity available in the country, it’s a big problem”, Chief Executive Officer Tshediso Matona said in Johannesburg yesterday.

“You need to distinguish between the two.” Sometimes the way the company is reported on “gives a sense of crisis; there are challenges galore,” but for each one the company “has a plan”, he said.

Eskom, which supplies more than 95 percent of the country’s power, intensified managed blackouts yesterday because the system deteriorated following cable cuts at the weekend at Majuba, its second-biggest plant, where it lost almost all capacity.

Households and businesses have had to endure supply disruptions this year as delays in new plant openings strain its aging fleet that’s becoming more susceptible to breakdowns.

The company may run out of money to pay for diesel to fuel gas turbines that it uses to meet demand from the continent’s second-biggest economy, Mr Matona said.

“We’re using a lot more diesel than would have been normal,” he said.

“The problem now is availability of diesel. All the majors had run out of diesel. We’re hoping the situation this week will be different.”

The utility, which relies on expensive gas turbines to generate power when the system is constrained, used about 140 million litres of diesel in November alone and is “fast exhausting” the budget for the fuel, he said. Eskom spent 10,6 billion rand ($971 million) running the turbines in the year ended March 31, 2014, more than the 3,6 billion rand it had budgeted, and will spend a similar amount this year, Matona said.

Over the past three days, Eskom carried out its most aggressive cuts in nine months to prevent a collapse of the grid after some plants ran out of water and diesel, reducing power supply by as many as 4 000 megawatts. While more blackouts are probable on December 11 and 12, the risk of reductions over Christmas is low, Matona said.

The company will probably miss its December 24 deadline for synchronisation of the first of six units from its new Medupi plant, Matona said.

Linking Unit 6 of the 4 764-megawatt facility, which has been delayed for more than two years, is set for early January, he said.

Eskom is struggling to fill a 225 billion-rand cash-flow gap after the nation’s energy regulator granted it only half the average percentage increase in annual tariffs sought for the five years through 2018. The country announced a 20 billion rand rescue plan for the utility in October.

The company sells power below cost and needs to move to a cost-reflective price, Matona said. Breaking up the monopoly would be “catastrophic”, creating “enormous complications”, he said. — Bloomberg.