Business / Business News

Antoinette Slabbert
4 minute read
17 Nov 2015
1:22 pm

Eskom has turned the corner – Ngubane

Antoinette Slabbert

Operations and finances stabilised.

Picture: Michel Bega

South Africans can look forward to a summer without load shedding as Eskom’s new maintenance strategy has started to pay off, with the reduction of unplanned outages to below 7 000MW.

Eskom chair Dr Ben Ngubane congratulated Eskom’s new executive under the leadership of CEO Brian Molefe and Eskom employees with this “dramatic improvement” at its Quarterly System Outlook Briefing on Monday, evidenced by 99 days with all but two hours and 20 minutes of load shedding.

Key industrial customers were subjected to load curtailment only once in the same period, namely for five-and-a-half hours on October 9.

Before the introduction of the new strategy, known as Tetris, unplanned outages went up to as high as 13 000MW.

Molefe said Medupi’s first unit, that started commercial operations in August, added 720MW to the utility’s generation capacity. Eskom is fast-tracking the balance of Medupi and the other new build projects, Kusile and Ingula.

He said a warmer than average summer may lead to increased demand but although the system is tight, Eskom expects no or very limited load shedding.

Molefe said thanks to the Tetris programme Eskom has been able to maintain its maintenance budget of 4 500MW. He said a balance had to be struck between two extremes of “maintenance at all cost” or “keeping the lights on” and sacrificing maintenance in the process.

By following the current strategy Eskom is doing enough maintenance and keeping the lights on, he said. It will take longer to eradicate the maintenance backlog, but it will happen eventually.

Eskom group executive for generation Matshela Koko said plant availability is trending upwards, standing at 74.4% on the day, as opposed to 73% at the previous briefing. Eskom is however still some distance from its aim of 80% plant availability.

Koko said Eskom would be generating at a level of 33 000MW on Monday, which is the highest in several months. He said the use of diesel-gobbling open-cycle gas turbines (OCGTs) has been reduced from a load factor of 12% to 5%.

Capacity outlook until August 2016

Screen Shot 2015-11-16 at 4.23.44 PM

Source: Eskom

Molefe denied reports that lower demand was the only reason Eskom was able to avert load shedding. He said the electricity demand from August to October was very similar to the two previous years. He said the stable electricity supply is reflected in improved manufacturing and factory output data.

The Majuba power station has been at full production since February this year, following the collapse of one of its coal silos which also affected its coal conveyor system. Molefe said a temporary conveyor belt system has been in place since last month, which has led to the reduction in the number of coal trucks from 1 060 to 90 per day.

He said a tender would be awarded next month for the reinstatement of the silo and conveyor system as well as the reinforcement of two other silos. Molefe said the investigation into the incident found no negligence in the design or construction. Koko said the coating of the silo was not appropriate for the conditions, although it was common at the time Majuba was constructed.

Negotiations with the insurer are at an advanced stage with regards to the damage to Duvha unit 3 due to an over-pressurisation event in March last year, Molefe said.

The boiler has to be replaced and issues about the technology and cost are still being finalised.

According to the latest time frames, Eskom expects the next 794MW unit of Medupi to commence commercial operations in March 2018 and the last of the six units in May 2020. The first 800MW unit of Kusile is expected to commence commercial operations in July 2018 and the last of six in September 2022. All four units of pump storage scheme Ingula are expected to begin commercial operations in the first half of 2017. Each will have a generation capacity of 333MW.

Koko said Eskom’s dams are 58% full despite of the current drought, which is the level it expected to be at now.

Talking about Eskom’s funding gap, which the utility calculated at R225 billion for the five years of the current tariff period ending 31 March, CFO Anoj Singh said the utility would be comfortable in the current financial year, thanks to government’s R60 billion equity injection. It expects to end with a R10 billion – R15 billion cash balance.

He said the R47 billion requirement in the next financial year has already been reduced to R30 billion and if the tariff adjustment Eskom applied for last week is approved, that will assist. Eskom has submitted an application to National Energy Regulator (Nersa) to recover R22.8 billion that it said it under-recovered from tariffs in 2013/14. Other possible sources of income that may assist, is an insurance payout from the Duvha incident and a R10 billion private placement, he said.

Molefe said Eskom executives held a nine-day road show in London recently and investors seemed receptive for an international bond issue in the light of the progress Eskom has made in its recovery.

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