Eskom power problems next 5 years

Because Eskom handled the past seven years so badly, South Africa should brace itself for load-shedding for the next five years, the CEO of the power utility, Tshediso Matona, admitted yesterday.

This despite President Jacob Zuma having blamed the electricity emergency on apartheid and Matona himself having denied last month that there was a crisis.

Yesterday he told The Times: "Eskom has since 2008 been burning diesel instead of shutting down units and doing maintenance …The vulnerability of our equipment is the price that we are paying.

"For the three months that I have been here, I have come to appreciate how deep that reality is. If you have not maintained your car, it is bound to break down," Matona said.

He said the reasons given for inadequate maintenance – such as keeping the lights on for the soccer World Cup and elections – were weak.

It would take as long to recover from the mess as it had taken to create it, he conceded.

Matona admitted that any loss of 1000MW or more forced Eskom to cut power to some users because it did not have reserves. To recover, it needed to get 5000MW into the grid, which is not readily available. A total of 26 independent power producers were already delivering 700MW to the grid a day, a fraction of what Eskom needed to get "head room" and do the required maintenance.

This has forced the company to change its strategy and take the nation back to load-shedding to deal with the backlog in maintenance.

Matona’s predecessor, Brian Dames, boasted in March last year – while defending bonuses Eskom employees had received – that the company had not implemented load-shedding throughout his tenure as CEO. He asked reporters how many days of loadshedding there had been since 2008 and then answered "only one". That, he said at the time, was an achievement.

This week Eskom had to make do without 13000MW of generating capacity – about 8000MW of this was lost to technical problems caused by a lack of maintenance.

It will take years still for new power stations Medupi and Kusile to generate the shortfall.

The first of six units at Medupi is expected to become operational only in June and construction of Kusile has been delayed as Eskom has concentrated resources on getting Medupi up and running.

The rest of the units in both power stations are scheduled to go online at eight-month intervals until completion, perhaps in 2019.

And addressing the maintenance backlog will not come cheap. Electricity prices will rise as Eskom tries to recoup some of the billions spent in desperation on diesel to keep old power stations going.

Tariffs are expected to be raised by between 2% and 5% in April, on top of the 8% a year hike granted in 2013 for five years.

Eskom spokesman Andrew Etzinger admitted that the load-shedding nightmare would be long.

"It depends on what demand for electricity is going to be. The higher the demand grows, the longer it will take. If demand were to decrease, it would be quicker.

"The most likely scenario is between three and five years."

Eskom says it has to embark on load-shedding to prevent a total blackout which is a "possibility" for any power system. In a blackout, the load exceeds supply and generators slow down. They end up tripping and all capacity is lost resulting in a total shutdown of the grid. It take at least two weeks to get everything back to normal after a blackout.

Political analyst Dirk Kotze said the reasons Eskom had not focused on maintenance might have been political.

"The government’s priorities were definitely not infrastructure. It wanted to see quicker results and investment in building of houses and electrification, which would make people see results quicker and meet the expectations. The focus was to improve the quality of life for the poor people directly."

In December, government assigned Deputy President Cyril Ramaphosa to oversee a turnaround plan for the country’s most embattled state-owned enterprises, Eskom, SA Airways and the Post Office.

Ramaphosa was at Eskom ahead of the media briefing yesterday but details of the discussion were not disclosed by Eskom executives.

The financial health of the company is not good.

Acting chief financial officer Caroline Henry said R24-billion was due to Eskom. About R8-billion of this was overdue, R6-billion by Soweto and municipalities.

To address serious shortages in cash, Matona said, Eskom would apply for more tariff increases in the future.

"There is recognition that it [the price of electricity] is not a cost-reflective price and that has to be addressed. The way to deal with it is not to introduce a price shock to the economy by having sharp rises in prices. We can correct that by having a smooth and phased approach. That principle is accepted," he said.

Kotze said load-shedding would not be a game-changer in the 2016 local government elections but would contribute to the general dissatisfaction of the public.

Source: http://www.timeslive.co.za/thetimes/2015/01/16/eskom-five-years-of-pain

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