The Eskom CEO Brian Molefe has said that though the department would be continuing with its maintenance programme, there would be no form of load shedding for the rest of the summer, autumn and winter.
Molefe who said this to the Parliament of Public Enterprises Committee on Wednesday, withdrew his previous statement that the lower tariff hike granted by the National Energy Regulator of South Africa (Nersa) would lead to load shedding this year, adding that they will do all it takes to avoid possibilities of load shedding;
We did indeed warn that the lower tariff hike could result in problems keeping the grid stable, however, we as management went on a three-day retreat to look at the implications of Nersa’s decision and I’m happy to report we put measures in place to make sure load shedding doesn’t happen.
“We will avoid load shedding at all costs but we are not out of the woods yet,” he said in a briefing to the public enterprises committee. There have been 217 days without load shedding to date and Molefe added that the lights are likely to remain on over the holidays and possibly into November next year.
One of the main reasons Nersa didn’t want to grant Eskom’s application of an additional R22 billion in tariff hikes was Eskom’s reliance on diesel-powered open cycle gas turbines – by far the biggest item on the utility’s expense account.
“The decision of Nersa to grant less than Eskom had applied for, related to the use of diesel in 2013 to avoid load shedding. That means if diesel is used to avoid load shedding, it will punch a bigger hole in our balance sheet. But we’ll find ways to deal with it,” he said.
Molefe therefore came out in support of the government’s planned nuclear build programme saying “we do not think that it is possible to continue with an energy mix that excludes nuclear.”
In addition to this, the CEO said Eskom had been successful in reducing the use of diesel and to the extent that its use was necessary, it would deal with the financial implications. “We are confident that we will be able to survive without load shedding and without Eskom going bankrupt,’’ he said.
Diesel usage had reduced from R854m in October last year to R40m in February, Mr Molefe said.
Addressing the question raised by the DA’s MP Natasha Mazzone about how her party plans to press criminal charges against municipalities which owe Eskom a total of R6bn in outstanding debt. Molefe said, laying criminal charges wouldn’t be the best action to take.
“We believe in a more constructive approach and we’re discussing the matter and putting solutions on the table.
“At least at provincial level Eskom is stepping in and we’ve started installing pre-paid meters and collecting the money on behalf of municipalities who are prepared to pay pre-paid,” Molefe said.
Meanwhile, Eskom chief financial officer Anoj Singh told MPs the utility had already secured R85bn of the R324bn required for its build programme over the next five years. The R85bn for 2016 and 2017 was 95%-100% signed and committed, with R20bn coming from domestic private placements, R23bn from government equity, R6.2bn from swap restructuring, R23.8bn from development finance institutions and R11.8bn from export credit agencies
Eskom group executive for generation Matshela Koko on his part said Eskom planned to reduce the usage of the costly open cycle gas turbines, which run on diesel and have added largely to operational costs over the past few years.
The open cycle gas turbine usage declined 80% between October 2015 and January 2016, and spending on it was R360m less than forecast in February.
He further reported that Eskom had made significant achievement in its maintenance programme without experiencing load shedding. He pointed out that Plant availability increased by an “impressive” 7% between October and February this year, compared with the 5% decrease in the same period the previous year.
“The reduction in unplanned breakdowns contributed to improvements in availability whilst reducing open cycle gas usage,” Mr Koko said. He added that the plan was to limit open cycle gas turbine usage to a maximum load factor of 6%.
For those municipalities are in arrears because they are not able to adjust the increase in electricity tariffs, Molefe said “We are helping them and proposing to act as a sub-contractor to help them with revenue collection.”