Monday, January 24

Eskom failures leave SA ready for years of power outages

The deepening South African energy crisis appears to persist for at least two more years, with operational problems at the state power monolith showing no signs of abating and plans to add new generation capacity caught in legal disputes and red tape.

The collapse at Eskom, which supplies more than 90% of the country’s electricity, is a legacy of chronic mismanagement and rampant corruption during former President Jacob Zuma’s tenure, along with a lack of proper plant maintenance and investment in new ones. . Andre de Ruyter, who took over as CEO in January 2020, has fallen short on his promise to alleviate ongoing blackouts, and the rot penetrates much deeper than he initially anticipated.

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This year’s record cuts have undermined efforts to revive the coronavirus-hit economy, and President Cyril Ramaphosa has said they contributed in part to the worst electoral performance of the ruling African National Congress in this month’s municipal vote.

“We are not seeing the results we expected” from Eskom, Fanele Mondi, CEO of the Energy Intensive Users Group, whose members, including Anglo American Plc and Glencore Plc, account for roughly 40% of the country’s electricity consumption, said in an interview. . He warned that the country faces “some serious challenges” in energy supply in the coming years.

Eskom’s largest union and some business groups have called for De Ruyter to take the blame and resign or be fired. He responds that the problems at the utility, whose CEOs have lasted an average of a year over the past decade, predate their tenure and more help from the government is needed to improve their performance.

The extent of Eskom’s problems is evident at its Tutuka power plant, which was built in the 1980s to generate around 3,600 megawatts, but is currently only capable of producing about a third of that.

A cooling tower at Eskom Holdings SOC Ltd. Tutuka coal-fired power plant in Mpumalanga.

When Seal Mametja arrived at the plant to take over as general manager earlier this year, he discovered that the ground floor stairs were knee-deep in ash and inaccessible. His predecessor ordered the debris to be viewed there, a shortcut to keeping units running and meeting his short-term metrics. However, more ash was discarded in what was supposed to be a water reservoir at the site about 160 kilometers (100 miles) southeast of Johannesburg, trapping a dirt bulldozer and blocking drains as it hardened.

Several plant officials have been suspended and their conduct is under investigation. A supplier and two Eskom employees were arrested earlier this month and charged with theft, fraud and corruption related to the disappearance of parts worth hundreds of millions of rand.

Eskom’s other coal-fired power plants, including the newly built Kusile and Medupi plants, have also repeatedly malfunctioned, and maintenance at some sites has been compromised by funding uncertainty. A unit at its Koeberg nuclear plant had to be shut down last year after one of its seawater pumps became clogged with jellyfish.

While fraud, theft and waste have been reduced, it is far from being eliminated, according to De Ruyter. It also alleges that the company is under attack by spoilers who oppose management’s efforts to turn it around. Some supports of the transmission towers were deliberately cut, he told reporters last week, presenting photos of the damage as evidence.

Eskom intends to accelerate the closure of some of its oldest plants to reduce emissions and move to producing more green energy with the help of a $ 8.5 billion financing offer made by rich nations at the COP26 climate summit in this month in Scotland. However, concessional loans and grants will be made within three to five years and the terms have yet to be finalized.

The government is also trying to get private investors and companies to build new plants to fill a generation gap that De Ruyter estimates can be as high as 6,000 megawatts. Its aim was to cover about a third of the shortfall with an emergency procurement program to bring new capacity online in 18 months, but that has been delayed by a legal dispute.

The bidders have been selected separately to supply another 2,583 megawatts of renewable energy to the grid and are expected to secure financing early next year and complete their projects in 24 months. The rules have also been relaxed to allow companies to generate their own power (they no longer require licenses to build plants producing up to 100 megawatts), but they will also take time to complete.

The South African Minerals Council, which represents the country’s largest mining companies, said its members are in various stages of planning and building plants that could generate 3,900 MW of renewable energy.

Obstacles include truncated environmental impact assessments and uncertainty about the use of Eskom’s transmission lines, the council said.

© 2021 Bloomberg

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