Eskom de­nies coal sup­ply cri­sis

Power util­ity brushes off claims of a call made for an ‘emer­gency’ to be de­clared over coal stock­pile short­ages

The New Age (KwaZulu-Natal) - - Inside - THELMA NGOMA thel­man@the­

ESKOM has de­nied claims of a coal sup­ply cri­sis af­ter re­ports emerged of alarm­ing coal sup­ply prob­lems at coal­fired power sta­tions in Mpumalanga and that it rec­om­mends that a coal sup­ply “emer­gency” be de­clared.

Eskom said yes­ter­day that stock­piles at seven power sta­tions, Arnot, Cam­den, Hen­d­rina, Ma­juba, Tu­tuka, Kriel and Ko­mati are low – and that ad­di­tional coal con­tracts for all these sta­tions are be­ing con­cluded.

Ron­ald Chauke, Outa’s en­ergy port­fo­lio man­ager, said the civil rights or­gan­i­sa­tion was con­cerned over coal sup­ply prob­lems at Eskom, while the util­ity is ap­ply­ing for a R66.6bn claw­back from the en­ergy reg­u­la­tor.

“SA couldn’t af­ford the in­creases re­quired by Eskom over the past decade, all due to poor lead­er­ship and mis­man­age­ment,” Chauke said.

En­ergy ex­pert Chris Yel­land said no in­di­ca­tion was pro­vided on how many days of us­able coal were in the stock­yard

“The re­ports in­di­cate that the coal in the Matla stock­yard is un­us­able,” Yel­land said.

Eskom spokesper­son Khulu Phasiwe brushed off sug­ges­tions the util­ity is in­ca­pable of sup­ply­ing enough coal.

A re­port by Yel­land said Eskom de­nied that a call was made to of­fi­cials that a coal sup­ply emer­gency should be de­clared. “It would be highly ir­reg­u­lar and ir­re­spon­si­ble if the board, the min­is­ter and the reg­u­la­tor could learn any­thing about this com­pany through me­dia re­ports. Eskom will re­lease all its op­er­a­tional and fi­nan­cial in­for­ma­tion once all the cor­rect pro­to­cols have been fol­lowed,” Phasiwe said.

Chauke said that in Outa’s pre­sen­ta­tion in op­po­si­tion to the grant­ing of the R66.6bn by the en­ergy reg­u­la­tor, that Eskom over­spent on pri­mary en­ergy to the tune of al­most R100bn over the past seven years.

“Eskom’s pri­mary en­ergy costs grew from R18bn in 2007 to more than R82bn in 2017, while elec­tric­ity gen­er­a­tion has de­clined.”

Ac­cord­ing to the en­ergy ex­pert, the coal sup­ply prob­lems at Eskom arise from de­clin­ing pro­duc­tion vol­umes from a num­ber of “tied” coal mines that are linked with and sup­ply coal di­rectly to spe­cific Eskom power sta­tions in Mpumalanga.

The coal sup­ply ar­range­ments with tied col­lieries re­quire that Eskom bear all cap­i­tal ex­pen­di­ture costs for the es­tab­lish­ment, de­vel­op­ment and ex­pan­sion of a tied coal mine.

Eskom then con­tracts with a coal miner to op­er­ate the mine and de­liver coal to the tied power sta­tion on a “cost plus” ba­sis, with the con­tract price for coal de­liv­ered cov­er­ing only the en­gi­neer­ing, fixed and vari­able op­er­at­ing costs, plus a man­age­ment fee.

How­ever, for the past five years or so, Eskom has been fail­ing to meet its capex com­mit­ments for the on­go­ing de­vel­op­ment and ex­pan­sion of a num­ber of tied col­lieries, which re­sulted in mas­sive de­clines in the pro­duc­tion of coal de­liv­ered from these tied mines to Eskom, in some cases to as low as 20% of planned lev­els.

The re­sult has also seen mas­sive as­so­ci­ated price in­creases per ton of coal de­liv­ered, be­cause the fixed over­head and man­age­ment fees are then re­cov­ered off a much lower pro­duc­tion vol­ume.


‘NO COAL CRI­SIS’: Eskom says sug­ges­tions it is in­ca­pable of sup­ply­ing coal to its power sta­tions in Mpumalanga are un­true.

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