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Having spent a whopping R7 billion in 12 months on their own diesel supplies and about R3.5 billion on independent power producers (IPPs), Eskom’s crisis is rapidly turning into a disaster, an energy analyst says.
Clyde Mallinson said Eskom’s situation depicted a cry for help and should be treated as crisis before it actually became a disaster.
“We should be worried sick about the state of electricity supply and the expenditure on diesel,” he said.
According to Mallinson, if the money on diesel wasn’t already spent, it would not necessarily have been used for maintenance.
The diesel is needed to provide bridging power to prevent even worse load shedding.
“Maintenance is an issue all on its own and if you do proper maintenance, it takes a very long time to plan for it,” he said.
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“The problem Eskom has with maintenance is that many of the parts they need for their plants requires a long procurement pipeline,” he said.
He said even if Eskom had unlimited money, they would not be able to get to all the maintenance that is needed done quick enough.
With April not even over yet, Eskom revealed it had spent R626 million on about 48.5 million litres of diesel.
Mallinson added that now was not the time to be “picking” away at little things because it was important to understand that this was a crisis which needed to be addressed by President Cyril Ramaphosa.
“That’s the level that we are at – and that is what we need to put across,” he said.
CEO and chief economist at Antswisa Transaction Advisory Miyelani Mkhabela said energy was the oxygen of every economy and South Africa was unable to breathe because of persistent power cuts.
Mkhabela said Eskom strategy was operationally reactive as a result of an inability to manage the power utility properly and this was not a new problem as it had been happening for about 15 years.
“The CEO and his team have failed to turn around Eskom and I think they are wasting public funds now as they have no plan to turn around the power utility,” he said.
“The procurement strategy can be reviewed for a cost-effective solution on IPPs and diesel, as the operating cost of the power utility is too high now.”
However, Eskom chief executive André de Ruyter said there was a “distinction” between operational maintenance and engineering maintenance.
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De Ruyter said Eskom was indeed supplementing its own skills by insourcing contractors to look after maintenance of their plants and planned to extend this to ensure Eskom would free up more of its limited resources in order to look after units at their plants.
“The strategy is currently under development and being consulted on with our partners in organised labour. What we are looking at is to bring in original equipment manufacturers to look into engineering and maintenance,” he said.
Dr Lumkile Mondi, University of the Witwatersrand lecturer at the School of Economics and Finance, said a more competitive market was the answer.
“We need more and other players coming in the market because we cannot allow Eskom to fail,” he said.