What SA’s doing to keep the lights on

Eskom is mired in debt and isn’t selling enough power to cover all its costs, leaving it scrambling for money to replace aging plants.

1. What caused the power shortages?

Theoretically Eskom should be able to generate about 47 000 megawatts (MW) of power, but output slipped to as low as 26 000 MW last year when several plants were being serviced or broke down.

Less than three quarters of installed capacity has been available this year, in part because a lack of money forced it to cut back on maintenance. It also lacks key technical skills to carry out the work. Plants that produce more than half Eskom’s power are at/ nearing retirement age.

2. How did this happen?

SA was able to produced more electricity than it needed in 1994, but the government didn’t foresee how sharply demand would spike as the economy expanded and previously neglected areas were connected to the grid.

Eskom announced a series of multi-billion dollar investments in the mid-2000s, but they came too late and took too long to build.

The first wide-scale outages occurred in late 2005. The Medupi and Kusile coal-fired plants, which were supposed to add almost 9 600 MW to the grid and be fully operational in 2015, are still years away from completion. Their projected costs have more than doubled to R292.5 billion.

3. How precarious is Eskom’s financial position?

Very. It’s in a “death spiral.” It’s saddled with R419 billion worth of debt that it’s battling to service, and it anticipates showing a loss of about R20 billion for the year ended March. Sales volumes are at a decade low and continue to falls.

Increasing numbers of businesses and middle-class consumers have moved off the grid as renewable energy prices drop.

4. What’s being done?

Ramaphosa has announced plans to split Eskom into separate generation, distribution and transmission businesses under a state holding company.

He says this will enable each unit to manage its costs more effectively and make it easier for them to raise funding. Details on financial support will be released in the annual budget. Eskom has floated a proposal for government to take over some of its debt - an option not favoured by Finance Minister Tito Mboweni. – Bloomberg

Moneyweb

In an effort to expose alleged document tampering by the state and lies by its first witness Jack Milne, Tigon-accused Sue Bennett on Friday implicated her co-accused Gary Porritt in fraud and raised serious questions about her own role in the events.

Porritt and Bennett are on trial for more than 3 000 charges of fraud, racketeering and contraventions of the Income Tax Act, the Companies Act and the Stock Exchange Control Act.

The charges relate to the collapse of financial services group Tigon around 2002.

Due to numerous applications and appeals by the accused the beginning of the trial was delayed until late in 2016 and it has been dragging on since, with Milne now being cross-examined by Bennett.