The Investor SA

26 March, 2015

Martin Barwise

 

Just over 2 months ago, Eskom's CEO Tshediso Matona gave South-Africans some clarity on the current electricity crisis. They (Eskom) have indicated that  they  need  additional  funds  to  keep  buying  diesel, which  is  running  the  open gas turbines to keep the lights on. Eskom's former CEO, Jacob Maroga, said that funding has always been a main concern for this power utility. Maroga said that without a stronger funding policy, it will not be able to secure capacity or operate without cut outs. "I think the big issue has always been what  the  funding  strategy  is  for  Eskom. It started when we had to build the new power stations. How will they be funded?" Maroga said in a  statement  on  the  24th  of  March  this year. He also added: "Will they all be funded through tariffs? Or is it going to be partly shareholder injection? That  issue  hasn't  been  fully  resolved. Hence, Eskom  has to continuously go through these funding shortfalls".

 

Eskom confirmed that they were in the process of  applying for a short term loan  worth R4-billion. They have thus far spent over R2- billion a month on diesel  supplies  after  deciding  to  increase  its  use  of gas turbines  since October 2014, as some of its coal fired power stations have been expecting technical faults. Chris Hart, an Investment Solutions  economist  said  that Eskom shouldn't experience any difficulties in applying for the R4-billion loan. But he questioned Eskom's need for  the  loan. Surely  diesel  is  not  a  long-term solution for Eskom's problems. "Diesel prices have been going down

while electricity prices have been going  up. How the  hell  are they not making a super profit? We've got to see how Eskom puts its operating efficiency on line" said Hart. Some business leaders have indicated  that Eskom's CEO, Tshediso Matona, have admitted that there is an energy emergency, and that there is a real possibility of a national blackout.

 

Businesses and industry leaders are calling for suggestions on how to survive the power cuts, which have been proposed by Eskom to avoid a national blackout. Eskom  says  load  shedding  will  be  a  reality  for  the  next  few  months  as power cuts will help protect the nation's power grid and avoid a

complete national blackout. Eskom has indicated that unless they receive  additional  funds  from Government, they will run out of money to buy diesel, which, since of mid February, were used to run open gas  turbines. This  is a  momentary  solution  to  generate  needed  power  after a  coal  silo  had collapsed at the Majuba Power Station on the first of November last year.

 

President Jacob Zuma addressed in his State of Nation  address  earlier this year that the government would inject R23- billion into Eskom to help fund

their utility funding gap of R225 billion. But there has still not been any  action  from  Government. The  only  thing  we  can  say  to businesses is that it

would be wise to take a look at the benefits of installing a generator, or start looking at solar solutions.