Eskom’s R30 billion plan to avoid stage 10 load shedding: report

Eskom will renegotiate its diesel budget with the National Energy Regulator of South Africa (Nersa) as it needs more money to burn fuel to accommodate the electricity minister’s winter plan and the exemptions ordered by the nation’s High Court, reported Bloomberg.

On Friday (5 May), the Pretoria high court ruled in favour of 19 interest groups who sought urgent relief for specific sectors to be spared from load-shedding.

According to the court papers, load-shedding was against South Africans’ constitutional rights. The judge ordered the minister of public enterprises, Pravin Gordhan, to ensure that Eskom provides alternative sources of electricity to these institutions.

Eskom’s interim spokesperson, Daphne Mokwena, said the utility was studying the judgment and had plans to challenge it but added that there were also plans to “renegotiate the diesel plan with the treasury and Nersa to ensure the utility can cover for the shortfalls that will be experienced,” reported the Mail & Guardian.

“The utility is also working on the winter plan and is awaiting confirmation from Nersa to enable us to increase the diesel price from R8 billion to at least R30 billion in accordance with the minister of electricity’s plan,” Eskom said.

“There was R8 billion dedicated to purchasing diesel, and out of the R254 billion relief funds for Eskom, R22 billion would be directed to buy diesel,” said electricity minister Kgosientsho Ramokgopa.

The utility uses the fuel to power open-cycle gas turbines ( OCGTs) when outages and breakdowns occur at its coal-fired plants. The OCGTs make up for a shortfall in generation capacity and help Eskom prevent the need for higher stages of power cuts.

This plan follows Ramokgopa’s presentation in April, in which he proposed to stave off deeper power cuts by increasing the use of diesel turbines, building more storage capacity to store the fuel, and extending the use of coal-fired units set for decommissioning over the next few years.

State-owned utility Eskom will need to increase its budget for diesel, said minister Kgosientsho Ramokgopa, according to a copy of a presentation seen by Bloomberg. The plan showed that a special dispensation could reduce costs by allowing Eskom to purchase the fuel directly.

According to the Mail & Guardian, Ramokgopa told the National Council of Provinces on Tuesday (9 May) that the utility’s plan to burn R30 billion of diesel and more is needed to keep the lights on. “The question is not whether the fiscus can afford [a blackout] but whether the South African economy can afford it”.

“We have a choice of saving the billions to run open-cycle gas turbines and save the economy, or choose not to spend and allow the South African economy to collapse.

“Our principal occupation is saving the South African economy, especially the poor, who are disproportionately affected by load-shedding,” added Ramokgopa.

The utility’s winter plan is mainly based on its diesel plan, which it is updating to accommodate the court ruling. If it does not get approval from Nersa to increase its diesel budget, South Africa could see the utility implementing stage 10 load-shedding, said the Mail & Guardian.

Ramokgopa argued that money was available for the utility to use, but Nersa stood in the way.

Read: Eskom employees arrested after spending R940,000 on a container worth R20,000

Eskom’s R30 billion plan to avoid stage 10 load shedding: report