Eskom Warns of 8,000-Megawatt Power Cuts If Maintenance Delayed
Eskom Warns of 8,000-Megawatt Power Cuts If Maintenance Delayed
Eskom Holdings SOC Ltd. warned that its maintenance plan must be supported by the government or South Africa can expect regular blackouts from power cuts of 8,000 megawatts by mid-2021, a move that would cripple the economy.
Shortly after taking up the role in January, Chief Executive Officer Andre de Ruyter said more planned power outages, known locally as load-shedding, will be necessary for the next 18-24 months so the company can catch up with deferred maintenance.
“We have to conduct these maintenance programs if we are to avoid worse load-shedding in future. The time for an intervention is now,” he said in an interview in Cape Town on March 4. “The notion that we can keep the lights on at all costs simply means we will be kicking the can further and further down the road until the inevitable day of reckoning when the system really falls over will approach.”
De Ruyter took over Eskom at a time when the state-owned company is saddled with 454 billion rand ($29 billion) of debt and isn’t generating enough revenue to cover its costs. Regular outages due to plant breakdowns have pushed the economy into a recession.
“If we do nothing, Stage 8 will be a regular event by June 2021,” Eskom said, referring to an outage of 8,000 megawatts, in documents submitted this week to the Standing Committee on Public Accounts, parliament’s financial watchdog. Outages at the moment are normally between stages 1 and 4, or 1,000 to 4,000 megawatts. The country consumes between 25,000 and 35,000 megawatts, depending on the time of year.
Plants at Risk
The Kendal, Duvha and Tutuka power plants -- which have a combined generation capacity of 11,370 megawatts -- are in particular need of maintenance, according to the documents.
If allowed to proceed, the program could end power cuts within two years, catch up delayed maintenance by fiscal 2023 and save 9.27 billion rand a year in costs by that date, it said. By the end of the 2022 financial year, Eskom could increase the amount of generation capacity it has available on average by between 4,521 megawatts and 6,000 megawatts.
Risks to the company’s generation capacity if nothing is done are partly due to the plants’ failure to comply with emissions rules. Plants could have their atmospheric-emission licenses revoked temporarily, risking capacity of 4,470 megawatts, and a total of 9,000 megawatts is at risk if pollution-abatement equipment isn’t installed at a number of facilities, Eskom said.
In order to mitigate the effect of power cuts, Eskom is implementing a number of measures including less power cuts during periods of heavy traffic, and reducing availability more frequently between 9 p.m. and 6 a.m. In the short-term. more power cuts are expected in the South African winter months, June through August, this year as “repairs take effect.”
The company also suggests cutting power first to areas where few consumers pay their bills, a politically explosive suggestion, as most of those would be in townships where some of the poorest South Africans reside.
In Soweto alone, 133,236 customers owe Eskom 16.9 billion rand, Eskom said. Around the country, a number of municipalities are in arrears to Eskom.
To contact the reporters on this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net;Paul Vecchiatto in Cape Town at pvecchiatto@bloomberg.net
To contact the editors responsible for this story: John McCorry at jmccorry@bloomberg.net, Paul Richardson, Mike Cohen
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