Res­i­den­tial users to share brunt of main­te­nance as paras­tatal dumps ‘lights on at all costs’ ap­proach, writesDe­wald vanRens­burg

CityPress - - Front Page -

Eskom has fi­nally aban­doned its “lights on at all costs” pol­icy – and not a mo­ment too soon for its be­lea­guered, ag­ing power plants.

For the fore­see­able fu­ture, the state-owned power util­ity will have to shrink the coun­try’s power sup­ply be­fore it can be re­stored to any­thing like its the­o­ret­i­cal ca­pac­ity.

Heavy power users, or­gan­ised as the En­ergy In­ten­sive User Group (EIUG), are pleased with Eskom’s new ap­proach.

“The most pos­i­tive thing is that they are now telling the truth,” EIUG spokesper­son Shaun Nel told City Press.

The EIUG has long called for load shed­ding to be im­posed in a more business-friendly way.

That means hav­ing res­i­den­tial users take more of the load shed­ding bur­den in­stead of go­ing di­rectly to power-hun­gry smelters for ad hoc de­mand re­duc­tions.

Now that re­ally doesn’t mat­ter any more, said Nel.

“The mag­ni­tude [of the pro­posed load shed­ding] is such that no one will be spared. It is go­ing to af­fect ev­ery­one.

“What you had be­fore was se­cret load shed­ding. Since 2013, Eskom has been mak­ing sig­nif­i­cant calls for vol­un­tary cut­backs. They said they were keep­ing the lights on, but that just wasn’t true,” he added.

In the past seven years, es­sen­tial main­te­nance work on power sta­tions has been pushed back or rushed, cre­at­ing an in­evitable down­ward spi­ral.

From now on Eskom will in­stead carry out main­te­nance “at all costs”. That was the crux of new Eskom CEO Tshediso Ma­tona’s first “state of the sys­tem” brief­ing on Thurs­day.

The long-over­due decision fol­lows a rapid es­ca­la­tion in plant break­downs from last year

(see graphic).

On a good day Eskom can now only de­liver about 71% of its 43 300 megawatt in­stalled ca­pac­ity. On a bad day that falls down to 65%.

Good days are be­com­ing in­creas­ingly rare. “Un­planned out­ages” have es­ca­lated to take down as much as a fifth of the sys­tem on any given day.

Eskom has to find the wrig­gle room for re­pairs and has only two op­tions: get more power, or en­force more load shed­ding.

The wrig­gle room needed is 5 000MW – enough power for 1 mil­lion mid­dle-in­come house­holds and about a sixth of Eskom’s en­tire cur­rent gen­er­a­tion.

It is in­ci­den­tally almost ex­actly what the long-de­layed Medupi sta­tion will gen­er­ate when it is even­tu­ally com­pleted.

In his pre­sen­ta­tion this week, Ma­tona im­plic­itly tried to de­fend the Medupi de­lay, which is now reach­ing three years.

He said de­lays were prac­ti­cally the rule for big power sta­tions, even in so-called ad­vanced economies.

For in­dus­trial power users, the new sit­u­a­tion is ac­tu­ally worse than the ini­tial power cri­sis of 2008, when Eskom tried to im­pose a sys­tem of power ra­tioning.

Then, Eskom pro­posed that users should phase down their power de­mands to 10% be­low 2007 lev­els.

Seven years on, it’s no longer pos­si­ble to be that pre­cise. Sup­ply is wildly fluc­tu­at­ing be­cause of the un­planned out­ages, which makes it hard to plan for any­thing, ex­cept the worst-case sce­nario.

EIUG’s Nel said the next step would be the fast-track­ing of co­gen­er­a­tion agree­ments to al­low var­i­ous fac­to­ries to sell power that they gen­er­ated us­ing waste gasses into the grid.

An in­crease in pri­vate power gen­er­a­tion was very likely, Nel said.

With the blame now be­ing laid on the “lights on at all cost” pol­icy, Ma­tona re­mained cau­tious about point­ing fin­gers. He is not “judg­ing” his pre­de­ces­sors. At the brief­ing, Eskom chair­per­son Zola Tsotsi said that the pol­icy was al­ready dropped in prin­ci­ple by the util­ity in 2013, an act of de­fi­ance against the gov­ern­ment.

Eskom’s fi­nances are in a sim­i­larly dire state and the finer de­tails of the gov­ern­ment bailout an­nounced last year are yet to be fi­nalised.

As things stand, gov­ern­ment is due to re­veal all man­ner of in­ter­ven­tions.

In Septem­ber last year, Trea­sury an­nounced a fi­nan­cial support pack­age, in­clud­ing new eq­uity that will be raised by “lever­ag­ing non­strate­gic as­sets”.

An an­a­lyst at Bar­clays this week caused a stir by sug­gest­ing the gov­ern­ment can col­lect R86 bil­lion in cash to shore up Eskom by sell­ing all the listed shares in pri­vate com­pa­nies it still owns.

Th­ese were the “non-strate­gic as­sets” to sell, the bank sug­gested in a re­search note.

The prob­lem with this idea is that th­ese shares are mostly held by the In­dus­trial De­vel­op­ment Cor­po­ra­tion (IDC) and are cru­cial to its self-sus­tain­abil­ity.

The Bar­clays pro­posal in essence means sink­ing the IDC to but­tress Eskom. The IDC, un­sur­pris­ingly, rub­bished the idea this week.

A sec­ond tranche of state in­ter­ven­tions is planned, un­der the banner of Cab­i­net’s five­point plan an­nounced last month.

This in­cludes a new plan to source 2 500MW from pri­vately gen­er­ated coal power as well as co­gen­er­a­tion from other in­dus­tries that cre­ate gas that can be used for power gen­er­a­tion.

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