Eskom has announced a staggering loss of R23.9 billion for the financial year ended March 2023. (Waldo Swiegers/Getty Images)
As public pressure mounts for Eskom to announce its winter plan, the power utility is considering how to allocate a portion of its budget to diesel because the treasury has refused to give it more money.
“The treasury would not be giving the utility any more money, and that any additional expenditures would have to come from the utility’s own budget,” treasury spokesperson Mfuneko Toyana told the Mail & Guardian on Tuesday.
This comes after the treasury in February, allocated Eskom R254 billion in debt relief over the next three years. The debt relief, which amounts to almost as much as Eskom has received in bailouts since 2008, will come in the form of about R168 billion in capital and R86 billion in interest.
Diesel is used for powering the open-cycle gas turbines at the Ankerlig and Gourikwa power stations, which have a combined energy generation capacity of 2 000 megawatts, which is equivalent to two stages of load-shedding. The gas turbines make up for a shortfall in generation capacity when there are outages and breakdowns at Eskom’s coal-fired power stations.
The contribution of diesel-powered electricity generation is important for Eskom to prevent the need for higher stages of load-shedding during winter’s evening peaks.
Eskom said it was still finalising its winter outlook and would brief the media in the “next week or two” on the level of frequency at which the utility was likely to implement load-shedding during the cold months.
A source in the utility told the M&G that one cause of the delay was Eskom had to allocate money for diesel that is within an acceptable amount stipulated by the National Energy Regulator of South Africa.
“What this means is that we have to stay within the allowable budget as approved by the National Energy Regulator of South Africa, which allows us to only budget less than R9 billion,” the source said.
Nersa’s limit is set at not more than R2.5 billion a month because there are physical and logistical constraints in transporting it to the gas turbine plants.
Eskom said it has spent R1.2 billion on diesel since the beginning of April, and was still finalising its diesel budget for the year.
Eskom’s diesel solution
Eskom’s plan to ease load-shedding over the next six months, starting in May, includes ramping up the use of emergency diesel-powered generators and improving the performance of the worst performing power stations — Tutuka, which has a 2 256 megawatt shortfall, Kendal, which has 1 613 megawatt offline and Duvha, which has 1 139 megawatts unavailable. It also plans to exempt some places, such as hospitals and schools, from load-shedding.
Electricity Minister Kgosientso Ramokgopa said the contingency plan that will prevent the utility from asking the government for another bailout relies on improving its generating capacity.
“This means generating an additional 2 800 megawatts from at least three units at Kusile power station that are expected to enter commercial operation between December 2023 and February 2024. Then we hope to make improvements on the generating capacity and we will burn less diesel,” he said.
He added that all other possible solutions — such as getting renewable energy up and running and procuring electricity from nearby countries — have a longer lead time of at least two years.
Last year the utility overspent its budget for diesel by three times more than the planned amount. The utility had budgeted for R6.1 billion but spent R21 billion on diesel to run the Gourikwa and Ankerlig gas turbine power stations.
In November last year, Eskom ran out of money to buy diesel for these power stations to decrease levels of load-shedding. It was rescued by the treasury early this year when it ran out of budget to buy more diesel from PetroSA.
Ramokgopa said Eskom would raise R30 billion to buy diesel directly from wholesalers, cutting out the middleman. The utility procures diesel from PetroSA which has been flagged by energy experts, including Chris Yelland, for overcharging Eskom.
Ramokgopa said Eskom has set aside R8 billion for diesel and acquired another R22 billion after Finance Minister Enoch Godongwana gave it fiscal relief.
He told the ANC’s national executive committee that Eskom is negotiating with Mozambican officials to purchase additional power. “We are hoping that the deal will be sealed soon and that the energy will be with us in the next six months.”
Mandisa Nyathi is a climate reporting fellow, funded by the Open Society Foundation for South Africa