Departing Eskom CEO Andre de Ruyter expects municipalities’ debt to the power utility — now more than R57bn — to rise even higher before the 2024 general election.
Requests for this debt to be paid have been unsuccessful, he said.
In a wide-ranging presentation to three parliamentary committees, De Ruyter highlighted the cash needs of Eskom and said municipalities’ debt trend was showing no signs of abating and, “based on our previous experience”, is expected to accelerate before the 2024 elections.
This acted as a constraint on Eskom’s short-term ability to lower the load-shedding that has crippled the economy and caused a public uproar, eating away at the support of the ANC, which is expected to fall below 50% in the 2024 election.
De Ruyter also emphasised it would be “catastrophic” to postpone the planned maintenance of Eskom’s power stations to stop load-shedding immediately. There has been speculation that to lower the level of load-shedding ahead of the 2024 general election and shore up support for the ANC, Eskom would forgo short-term maintenance.
De Ruyter said such a step would maybe buy six months without load-shedding but what would happen after would be “far more catastrophic” because the units would then break down completely. “We must guard against the temptation to again postpone maintenance. We need to look after these plants if we want them to be reliable.”
De Ruyter told MPs Eskom’s gross expenditure on independent power producers (IPPs) would increase significantly in the period up to 2027, demonstrating the growth in the contribution of the private sector to the country’s electricity generation.
Gross IPP spend is to increase 18.2% from R29.7bn in the 2020 financial year to R95.5bn in the 2027 financial year. He said the costs for renewables had come down substantially, and the costs being offered for bid windows five and six for wind and solar — between R400 and R500 per MW hour — are comparable to coal and other technologies.
The expedited return of Kusile units 1, 2 and 3 (rendered inoperable as a result of a damaged flue duct) could add over 2,100MW to the grid, which would reduce load-shedding by two stages.
— Outgoing Eskom CEO Andre de Ruyter
In his briefing De Ruyter also indicated the targeted 60% energy availability factor (EAF is the percentage of installed capacity available for generation) by the end of the 2023 financial year would not be achievable and that 57% would be more realistic. This implies continued load-shedding.
The Medupi power station was working well, he said, with a 90% EAF.
The most immediate solution to the load-shedding crisis, De Ruyter said, was to get cash to buy diesel for the open-cycle gas turbines at their maximum capability, but to date National Treasury has refused this request. Being able to do this would reduce load-shedding by two stages.
Obtaining funds for OCGTs to generate 2,000-3,000MW would stabilise the grid.
“The expedited return of Kusile units 1, 2 and 3 (rendered inoperable as a result of a damaged flue duct) could add more than 2,100MW to the grid, which would reduce load-shedding by two stages. Indications are that it will take at least a year, but an expedited solution is being investigated. That would, however, require a relaxation of minimum emission requirements.
“The roadmap to recovering EAF focuses on six priority stations [Duvha, Kendal, Kusile, Majuba, Matla and Tutuka — the main contributors to load-shedding] while sustaining performance on the rest of the fleet. The plan addresses 10 focus areas to improve people, plant and process performance,” De Ruyter said. This could add 1,862MW to the grid by March 2023 and 6,000MW over the next 24 months.
De Ruyter said improvements of the six stations would result in “massive gains” in the EAF.
Repair and maintenance of the coal fleet is expected to cost R12.3bn in the 2023 financial year.
De Ruyter noted there had been a significant increase in law enforcement, with 25 arrests made and three illegal coal-blending sites shut down. These sites are used to divert good-quality coal away from Eskom’s power plants, replacing it with low-quality coal that damages the plants. A further 30 sites have been targeted by SAPS.
He said it was cause for concern that 33 sites had been operating with impunity, and called for intelligence agencies to ramp up their ability to penetrate the criminal syndicates responsible for the sabotage of the power plants.
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