Eskom’s coal crisis worsens

There are 10 power stations with less than 20 days of supply and five of these have less than 10 days of supply.

Information received by EE Publishers indicates that Eskom’s coal crisis is worsening, with at least four of Eskom’s 15 coal-fired power stations having less than 10 days of coal.

Eskom advised that it requires an additional 1.3 million tons of coal per month to recover all power stations to the required stock level by March 2019.

However, Eskom’s emergency plan to start trucking coal from its Medupi power station in Limpopo to power stations in Mpumalanga in August appears to have stalled following various objections raised by municipalities and other authorities.

Eskom also advised that while transportation of coal by rail is preferred, development work with Transnet Freight Rail is under way and rail transfer of Medupi coal hasn’t started.

Eskom’s emerging coal crisis was first revealed in an EE Publishers article in April.

Eskom then advised that seven of its Mpumalanga coal-fired power stations faced shortages and that coal was being transported by truck from other Eskom power stations in the province to alleviate the problem.

Eskom CEO Phakamani Hadebe told parliament on August 28 that nine of its Mpumalanga power stations had “very low coal stockpile levels”. He added that “to manage this during the rainy season is going to be a challenge”.

Nersa confirmed Eskom reported that “there are currently 10 stations with less than 20 days of coal and five of these with less than 10 days of coal”.

Eskom also indicated that it’s in the implementation phase of moving coal from Medupi to Kusile and Kendal power stations.

Eskom told EE Publishers that two major tender enquiries issued in 2017 are in negotiation. However, some 18 million tons of coal has been contracted from urgent requests for proposals and a further 12 contracts are in the pipeline to be concluded following Eskom board approvals.

Eskom believes these contracts will stop the decline in coal stock levels, aggravated by Tegeta going into business rescue and its mines failing to deliver coal.

Eskom may have set over-ambitious price targets and requirements in its coal procurement process, based on the alternative option of transporting coal by road from Medupi. Eskom now acknowledges that exporting coal, and coal’s current export spot price, is making it difficult to conclude coal contracts affordably.

Eskom’s “Plan B” – to truck coal from Medupi in August to its Mpumalanga power stations – has also stalled.

But is there any likelihood of some power stations running out of coal and any risk of load shedding as a result?

While Eskom acknowledges that “the current situation is not ideal”, it believes that “barring unforeseen events and circumstances, the current coal supply plan and forecast is for no stations to run out of coal”.

However, as in the 2007-08 load shedding, the weather during the approaching rainy season may be the deciding factor.

Chris Yelland is EE Publishers’ investigative editor. This was first published on www.ee.co.za

Eskom acknowledges that exporting coal, and coal’s current export spot price, is making it difficult to conclude contracts.