Task team to work with Eskom on challenges
ESKOM has until September to come up with a plan that makes “logical sense” and will address cash flow problems and energy security at the struggling power utility.
Yesterday Eskom painted a bleak picture of the various challenges plaguing the power utility, from under-investment, ageing power plants, threats of further ratings downgrades, continued load shedding and the ever increasing municipal debt.
Public Enterprises Minister Lynne Brown told yesterday’s joint energy and public enterprises committee meeting that a draft report with options had been shared with the cabinet. “We are going to be receiving the final proposal soon, after which we will take this to cabinet subcommittee and cabinet, ideally before end of September,” said Brown.
She said in the light of the various challenges, President Jacob Zuma had announced the members of the energy security cabinet subcommittee that would look at these matters, among other things.
“An intergovernmental task team has been working with Eskom and the regulator (National Energy Regulator of SA) to formulate a solution to the immediate challenges,” said Brown. She also said the new permanent chief executive officer of Eskom would be appointed within weeks.
Eskom had until September to come up with a plan that made
“logical sense”. She was confident that the construction of the delayed Medupi power plant would be completed by December.
Eskom financial director Tsholofelo Molefe said the power utility was currently faced with the dilemma of balancing financial sustainability and operational sustainability to make sure that it ensured security of supply as well as delivering on its capital expansion programme.
“Our challenges regarding the financial sustainability really emanate from the multi-year price determination (tariffs) which were lower than expected, but also as well as declining volume that we have seen,” said Molefe.
She said Eskom had lost close to 9 000 gigawatthours which translated to about R5.8 billion of revenue. Eskom was “highly dependent” on borrowing and also ran the risk of a further ratings downgrade, which meant the company would pay more interest when borrowing money.
Acting chief executive Collin Matjila said another challenge was that of ageing infrastructure. “(A total of) 60 percent of our power stations are older than the recommended design life of 30 years and you’ll see that the groupings under coal three, those are way beyond their life cycle,” said Matjila. “Load shedding remains a risk.”
Board chairman Zola Tsotsi said it had got to the point that the reserve margin “was so low that the power system became constrained by the time we began a new build programme”. “Municipal debt has also had an impact,” said Tsotsi.
Energy committee chairman Fikile Majola said the two committees would be working closely with the departments of Energy and Public Enterprises “on issues relating to electricity in particular”.