Eskom leav­ing us in the dark: The ex­tent of its rot

Finweek English Edition - - INSIDE - BY MAR­CIA KLEIN AND TINA WEAVIND

Five years of black­outs and an 18 0 0 0MW short fall in elec­tric­ity sup­ply by 2030. That is what South Africa has to look for­ward to, ac­cord­ing to the South African I nstit ute of Race Re­la­tions (SAIRR).

Re­cent board­room shenani­gans at Eskom, where four ex­ec­u­tives – in­clud­ing the CEO – were suspended, re­in­forced the ex­tent of the en­ergy cri­sis fac­ing SA, the chaos at Eskom head of­fice and gov­ern­ment’s con­tin­ued lack of un­der­stand­ing of the ex­tent of the cri­sis. It is now in­ves­ti­gat­ing is­sues like cost over­runs and de­lays, things it should be acutely aware of by now.

As ex­pected, the SAIRR calls for pri­vati­sa­tion to help solve the cri­sis. But so far this year, a num­ber of events show that gov­ern­ment’s dilly-dal­ly­ing has largely killed the chance to em­bark on pri­vate part­ner­ships.

So far this year, An­glo Amer­i­can in­di­cated that it was look­ing at sell­ing its lo­cal coal busi­ness and BHP Bil­li­ton has started the de­merger of its lo­cal coal as­sets. Shell re­cently scaled down its lo­cal pres­ence cit­ing low en­ergy prices and years-long gov­ern­ment de­lays in is­su­ing shale gas ex­plo­ration li­cences.

All of th­ese make a mock­ery of what was sup­pos­edly a se­ri­ous at­tempt by gov­ern­ment, through its In­te­grated Re­sources Plan ( IRP), to en­sure that the coun­try could work it­self out of the en­ergy cri­sis. Apart from the Medupi and Kusile power sta­tions, which are un­der con­struc­tion but are both long over­due and hugely over bud­get, gov­ern­ment seems to have no plan.

In fact, just about the only thing that is still on the agenda ap­pears to be a top-se­cret nu­clear plan, which is in di­rect con­tra­dic­tion to the IRP, which pro­posed de­lay­ing nu­clear. The re­draft of the IRP, that was due early last year, has still not been re­leased.

Eskom may strug­gle to rely on some of its ma­jor coal sup­pli­ers. An­glo CEO Mark Cu­ti­fani said ear­lier this year that the group may sell its South African coal busi­ness. “We are re­spond­ing to both the gov­ern­ment re­quire­ments to have more than 50% in lo­cal hands and, from our point of view, the do­mes­tic sup­ply has been a good busi­ness, but it is not ma­jor in the port­fo­lio.”

BHP Bil­li­ton is de­merg­ing some as­sets in­clud­ing coal mines in SA.

Last week, Shell an­nounced that it is de­fer­ring shale gas ex­plo­ration in SA due to lower en­ergy prices and be­cause it has waited un­suc­cess­fully for years for gov­ern­ment to is­sue ex­plo­ration li­cences

MA­TONA HAD TOLD A BUSI­NESS CON­TIN­GENT “ONE UN­EX­PECTED EVENT” COULD RE­SULT IN ESKOM LOS­ING CON­TROL AND THAT IT COULD TAKE UP TO TWO WEEKS TO RESTART THE GRID.

As Eskom strug­gles to keep the lights on...

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