UPDATE | Extreme load shedding ahead as Eskom diesel budget runs dry

Eskom's Ankerlig station.

Eskom’s Ankerlig station.

  • Eskom has run out of money to buy diesel.
  • The embattled power company said it will not incur costs like in the past.
  • The public enterprises department says it is working with Eskom to find more money.
  • For more financial news, go to News24 Business front page.

Eskom said on Sunday it had run out of money to buy diesel and had no plans to order more until April 1, 2023.

The result of this is extreme levels of load shedding never seen in SA.

In a state of the system briefing last week, Eskom Chief Operating Officer Jan Oberholzer said that since April 1, Eskom has spent R12 billion on diesel against the initial budget of R6.1 billion. This was later revised to R11.1 billion.

“If we continue to burn diesel the way we have for the last seven months, the cost will be astronomical. But we have no money to spend. We can pay if the municipalities pay us,” Oberholzer said at the time.

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The implications of Oberholzer’s statement began to sink in as SA began the week of Stage 4 load shedding.

Earn money

Public Enterprises Minister Pravin Gordhan met with the Eskom board on Sunday night about “serious concerns about the risk of higher levels of load shedding in the coming months.”

“The department of public enterprises (DPE) is urgently working with the National Treasury and Eskom to find this money to purchase diesel supplies,” the department said in a statement.

READ | Stage 3 load shedding and worse: Prepare yourself for Eskom’s new normal

It is said that it is also involved with Eskom to find savings within the current fund of the power utility for the continued purchase of diesel and maintenance.

Empty tanks

In the past, Eskom has overspent its budget on diesel, arguing that the R500 million daily cost to the economy is greater than the cost of buying diesel. So Eskom spends a lot on diesel to keep the lights on, with the only cap being the amount of diesel that can be physically delivered and burned each month. This amounts to about P2.4 billion of diesel per month.

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But SA’s National Energy Regulator (Nersa) has refused to allow Eskom to fully recover diesel fuel costs from consumers, arguing that a more efficient and prudent operation would not require such use. excesses. This has left Eskom out of pocket and its executives under pressure from the National Treasury for overspending and failing to tighten the sinking ship.

In last week’s briefing, Eskom gave a statistical forecast of load shedding for the next 10 months. The forecast shows that until August 2023, SA will experience Stage 3 load shedding on most days of the month, provided diesel is burned to make up the shortfall. The diesel required to maintain the Stage 3 system varies from R3 billion to over R7 billion a month. As burning this amount of diesel is physically and logistically impossible, the implication is that load shedding will in fact, be many stages above Stage 4.

Eskom also warned at the time that the system was unpredictable with a 4000MW difference at all times. In other words, the system can jump from Stage 2 to Stage 4 or from Stage 2 to zero in a short time.

*This story has been updated to include comments from the public enterprise department.


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