Eskom sees diesel costs rising to R20.9bn as coal plants stumble
Company sees the costs of operating diesel-fed turbines almost tripling as it struggles to keep up with maintenance
16 March 2022 - 19:41 Antony Sguazzin
One of Eskom's diesel-fed gas turbines. Picture: BLOOMBERG
Eskom expects running costs for its diesel-fed turbines, which are used to keep the lights on when coal-powered plants break down, to almost triple as it struggles to keep up with maintenance.
The state-owned company sees about a third of its coal-fired capacity being unavailable at any one time under a most likely scenario, it said last week in a presentation to the National Economic Development and Labour Council, which groups business, government and labour union representatives.
That would require it to spend R20.9bn on operating its open-cycle gas turbines in the 13 months through April next year, or almost three times what it spent in the financial year ended March 2021.
Eskom has forecast that its debt will rise to R416bn by the end of March and the unplanned expenditure will add to its financial woes. The utility, which supplies almost all of the country’s power from ageing and poorly maintained coal-fired plants has subjected the country to intermittent power outages for more than a decade because it can’t meet demand.
“The system is volatile and dynamic and hence this is the best indication Eskom had at the time,” the company said in response to queries, confirming the presentation. It didn’t say what fuel price it used to make its assessments in the presentation.
Under its most likely scenario, about 12,000MW-13,000MW would be unavailable at any time due to breakdowns and some missing capacity would need to be replaced using turbines. Even then, 25 days of power cuts should be expected as it would struggle to replenish diesel supplies fast enough and there would be financial constraints in paying for the fuel, the company said in the presentation.
Expenditure could rise to R35.9bn rand and 36 days of power cuts could be expected under a less likely, more pessimistic scenario when even more generation capacity was offline, it said. The turbines usually run at times of peak demand when coal-fired plants are not producing enough electricity.
The number of days of power cuts forecast is conservative compared with Eskom’s performance in the current financial year. Between April 1 2021 and February 8 there were 58 days of power cuts, the utility said.
Bloomberg. More stories like this are available on bloomberg.com
Eskom sees diesel costs rising to R20.9bn as coal plants stumble
Company sees the costs of operating diesel-fed turbines almost tripling as it struggles to keep up with maintenance
Eskom expects running costs for its diesel-fed turbines, which are used to keep the lights on when coal-powered plants break down, to almost triple as it struggles to keep up with maintenance.
The state-owned company sees about a third of its coal-fired capacity being unavailable at any one time under a most likely scenario, it said last week in a presentation to the National Economic Development and Labour Council, which groups business, government and labour union representatives.
That would require it to spend R20.9bn on operating its open-cycle gas turbines in the 13 months through April next year, or almost three times what it spent in the financial year ended March 2021.
Eskom has forecast that its debt will rise to R416bn by the end of March and the unplanned expenditure will add to its financial woes. The utility, which supplies almost all of the country’s power from ageing and poorly maintained coal-fired plants has subjected the country to intermittent power outages for more than a decade because it can’t meet demand.
“The system is volatile and dynamic and hence this is the best indication Eskom had at the time,” the company said in response to queries, confirming the presentation. It didn’t say what fuel price it used to make its assessments in the presentation.
Under its most likely scenario, about 12,000MW-13,000MW would be unavailable at any time due to breakdowns and some missing capacity would need to be replaced using turbines. Even then, 25 days of power cuts should be expected as it would struggle to replenish diesel supplies fast enough and there would be financial constraints in paying for the fuel, the company said in the presentation.
Expenditure could rise to R35.9bn rand and 36 days of power cuts could be expected under a less likely, more pessimistic scenario when even more generation capacity was offline, it said. The turbines usually run at times of peak demand when coal-fired plants are not producing enough electricity.
The number of days of power cuts forecast is conservative compared with Eskom’s performance in the current financial year. Between April 1 2021 and February 8 there were 58 days of power cuts, the utility said.
Bloomberg. More stories like this are available on bloomberg.com
Nersa confirms Eskom tariff increase of 8.6% for municipalities
EDITORIAL: How can we tell if Eskom really is not tolerating poor performance?
Petrol looks set to hit R24 a litre from April
Ministers mull suspension of fuel taxes as one route to cheaper petrol
Would you like to comment on this article?
Register (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.