More money for diesel would have reduced load-shedding — De Ruyter

Outgoing Eskom boss Andre de Ruyter on Tuesday said if the power utility had more money to buy diesel for open-cycle gas turbines, the stages of load-shedding would have been reduced.

“Because of a lack of liquidity, because of Eskom’s constrained finances, we were unable to run our open-cycle gas turbines (OCGT) to their maximum capacity. Bear in mind, these plants were never designed to be operated as base load generators and it would be very inadvisable to consider them as such,” De Ruyter told parliament’s standing committee on public accounts (Scopa) on Tuesday.

“But if we had more money available for diesel, the stages of load-shedding would have been reduced,” he said.

MPs appeared keen on the utility using more diesel as they asked whether the cost of buying the fuel exceeded the cost of the rolling blackouts, which included job losses, dying chickens and closing down of businesses.

“If you had enough money to buy diesel for open-cycle gas turbines to be used during the peak period, that’s an option available at our disposal to reduce load-shedding and you are giving that option to us,” said ANC MP Bheki Hadebe. “How much will it cost for you to get what you want and what have you done about it?

“Is that cost less than the current burden imposed on South Africans economically in terms of their livelihoods, the rate of crime that’s escalating during load-shedding and if that option is viable why haven’t we implemented it?”

De Ruyter said they had applied to the department of mineral resources & energy and energy for a wholesale licence which would enable Eskom to procure diesel at a basic fuel price to save costs.

Eskom is funding the diesel from internal savings and reallocations from other priorities, he said, while a diesel funding model is still being worked on.

CFO Calib Cassim said the company has far exceeded its budget on diesel.

It has spent R18bn, R10bn more than the budgeted R8bn for the financial year ending in March and at an average of about R1.8bn a month. Cassim expected that they will spend another R2bn in February and a further R2bn in March, totalling about R22bn for the year.

Cassim expected further shortfalls in the next two financial years.

Eskom applied to the National Energy Regulator of SA (Nersa) for revenue to operate open-cycle gas turbines.

“For the next two years, our load factor assumption in the Nersa application was 12% costed at about R17bn each year.”

Nersa limited the OCGT load factor to 6%, so effectively allowing for about R8.5bn worth of diesel spend for the two coming financial years.

Cassim said he expected a shortfall of about R16bn over these financial years based on the R2bn spend per month and depending on oil prices.