Cash-strapped Eskom can’t pay for diesel

Loadshedding has become an almost permanent fixture in recent months, with Eskom management warning of continued loadshedding for at least the next six to 12 months due to a chronic shortage of generating capacity, persistent breakdowns at its ageing power stations and little additional capacity coming onto the grid in the short term. To make matters worse, Eskom has no money to pay for diesel in its open-cycle gas turbines (OCGTs) until the start of its next financial year on 1 April 2023 — and won’t start the OCGTs until then unless it gets billions of rand from somewhere. The loss-making, indebted utility already spent more than R11 billion on the fuel in the 10 months through to October, chief operating officer Jan Oberholzer said last week. Loadshedding may get worse if the funds to buy the fuel run out, he warned. “The DPE is urgently working with the National Treasury and Eskom to find the money to buy supplies of diesel,” the Public Enterprises department said on Sunday. The government is also “looking for savings” within Eskom’s existing funds. – Asime Nyide

South Africa urgently seeks cash for Eskom to buy diesel

By Paul Burkhardt

(Bloomberg) – South Africa’s government said it’s urgently seeking funds to buy diesel needed to fuel auxiliary power plants after the state electricity utility said outages will intensify this week.

Public Enterprises Minister Pravin Gordhan met members of Eskom Holdings SOC Ltd.’s board on Sunday amid “serious concerns” about the risk of increased nationwide blackouts in the months ahead, his department, which oversees the utility, said in a statement. The outages are expected to deepen this week.

Africa’s most-industrialized nation has been subjected to record power outages this year, mainly due to breakdowns at Eskom’s old coal-fired units plants that make up the backbone of its generation capacity. The utility has been forced to run turbines that run on diesel — intended for use during peak-demand periods — in order to mitigate unprecedented power cuts that have curbed economic growth.

The loss-making, indebted utility already spent more than 11 billion rand ($634 million) on the fuel in the 10 months through October, Chief Operating Officer Jan Oberholzer said last week. The electricity shortages — locally known as loadshedding — may get worse if funds to buy the fuel run out, he warned.

“The DPE is urgently working with National Treasury and Eskom for it to find the money to buy supplies of diesel,” the Department of Public Enterprises said Sunday. The government is also “looking for savings” within Eskom’s existing funds.

An Eskom spokesman and its media desk didn’t immediately respond to requests for comment.

President Cyril Ramaphosa’s government has announced measures to tackle the energy crisis, but those efforts haven’t bolstered security of supply, despite commitments made by officials. Gordhan in September said electricity shortages would not decline to previous levels.

South Africa this year more than doubled the amount of outages that were implemented in 2021, according to the Council for Scientific and Industrial Research. The cuts this week are scheduled to reach Stage 5 — the equivalent of removing 5,000 megawatts from the grid — though the overall situation is erratic and subject to change, Eskom said Sunday.   

(Updates throughout with detail from DPE statement)

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