Eskom is using nine million litres of diesel a day to run its gas turbines, which come into operation as an emergency measure amid generation capacity failures. This comes as fuel prices are set to soar amid the war-induced oil price shock.
Should Eskom run out of diesel at its gas turbines, a further three stages will be added to the load-shedding schedule, said chief operating officer Jan Oberholzer during an emergency briefing on Wednesday morning.
The briefing was held after Eskom announced it would move to stage four load-shedding from 9am, which is set to continue until 5am on Friday — the result of additional generating units failing.
He said stage four was implemented so that Eskom’s diesel supplies would not be depleted. The gas turbines use 14 litres of diesel a second. “In order to protect and ensure the integrity of the electrical system, proactive implementation of load-shedding is required,” Oberholzer said.
Eskom generation group executive Phillip Dukashe said rainy weather in parts of the country adds to the risk of load-shedding but the utility’s rain-readiness plans have mitigated the prospect of wet coal.
On Tuesday, after the country was moved to stage two load-shedding, Eskom flagged the effect of the Russian invasion of Ukraine — and the rapid escalation of commodity prices that has followed — on South Africa’s power supply. Coal prices have soared from about $130 to $425 a tonne.
By Wednesday crude futures were priced at $126 a barrel in the wake of the decision by the United States to impose an immediate ban on Russian oil and other energy imports. Britain said it would phase out Russian oil imports through to the end of 2022.
Oberholzer said that Eskom is evaluating the effect of the war on South Africa’s energy supply.
Calib Cassim, Eskom’s chief financial officer, noted that the utility has been using diesel-fuelled turbines as an emergency measure during generating unit breakdowns. This could lead to cost overruns amid the spike in oil prices. “We only have a certain amount that we can afford from a liquidity perspective. So this will put pressure.”
Cassim said Eskom, which has a R3-billion budget for its open-cycle gas-turbines, is looking for options to hedge its diesel prices. “I guess the timing couldn’t be worse, but we have already started those discussions.”
On Wednesday, Oberholzer clarified that it currently costs R4 700 for one megawatt of electricity generated by the diesel-powered turbines. Eskom is using an “awful amount” of diesel, he added.
“We all agree that it is unsustainable and we need to get out of this situation. But for us, burning diesel and having a financial blood nose is better than putting the country into a higher stage of load-shedding.”
Cassim said Eskom has only so much liquidity to meet all its other operation and debt-service commitments “so there will have to be trade-offs”.