Eskom’s finger on purse strings unlikely to reduce load shedding
ESKOM’s windfall announced on Friday that it will be able to short-circuit Public Finance Management Act (PFMA) procurement processes which are likely to help the utility to move faster, but there remain concerns that continuing corruption and the need for extensive maintenance may take more power off the grid for longer.
Eskom announced on Friday that the National Treasury’s relaxation of some procurement and supply chain management rules and processes contained in the PFMA will assist it in speeding up critical and urgent procurement.
The amendment, which is outlined in an instruction note that became effective in April, will also empower it to engage directly with original equipment manufacturers (OEMs) and maintenance suppliers. This is as Eskom, which has long bemoaned that it needs at least 77 days just to get financial approval from the National Treasury for procurement, also revealed plans to in-source more maintenance to OEMs, which will free the hands of its technicians to focus on core functions like generation and transmission.
“It is a two-edged sword and we really have to be careful about this, on one hand we have seen the abuse of funds in the past, which leads to the reality that the rules are there for a reason. But on the other, the focus on maintenance might actually be worse for power supply as systems have to be taken down for longer to do planned or unplanned maintenance which may leave us even worse off,” said Energy specialist Chris Yelland.
According to the “relaxation notes”, Eskom would have to report to Parliament‘s standing committee on public accounts (Scopa) at least 14 days after a transaction has been made to ensure there was accountability in the spend.
The utility announced over the weekend that stage 3 load shedding would be implemented from today, up from stage 2 over the past month or so, as the system became more constrained with the increasing demand over the winter season. Numerous breakdowns from its various generating units have forced up the Open Cycle Gas Turbine diesel bill, which is hovering around the R1 billion mark in the two months since the beginning of the current financial year, as it battles to maintain reserves and keep the lights on.
Chief procurement officer Jainthree Sankar said the amendment will “give Eskom back control over the most critical and urgent of its procurement”.
“In the plan to drive efficient procurement and engage with OEMs and maintenance suppliers, this measure supports the efforts for Eskom power stations and operating units to work faster and more efficiently on procurement of what they need at an operating level,” Sankar said in Eskom’s announcement.
Yelland said Eskom’s priorities, with a quicker finger on the chequebook, would be maintenance and spend on development of the transmission grid, both of which had been sidelined in favour of keeping the lights on.
“It will help maintenance and speed things up a bit, but I do not think maintenance on its own is the ultimate solution. The more maintenance done, the more load shedding as generation systems are shutdown.
“There are no safety measures. Investment in the grid is also a priority, a lot of the IPP procurement has been delayed because of access to the transmission grid,” Yelland said