Taxpayers will have to fork out extra bucks to pay Eskom’s diesel bill

Cash-strapped taxpayers will have to fork out more money to finance Eskom’s additional purchases for diesel for it to keep the lights on until the end of this financial year.

Eskom’s outgoing CEO André de Ruyter yesterday told Parliament that the struggling power utility would need a lot more money if the country hoped to ease power cuts.

Eskom has paid between R1.3 billion and R1.5bn each for three tranches of 50 million litres of diesel since November after blowing R14.7bn for diesel in the previous fiscal year, more than double its annual budget.

Briefing Parliament on measures to end load shedding, De Ruyter reiterated that Eskom’s medium- to long-term plans included planned maintenance to boost generation capacity, but using open-cycle gas turbines (OCGT) to their maximum capacity was the short-term solution.

“If we look at required actions to end load shedding, we need three things. We need a recovery in the energy availability factor, we need additional capacity, and we need certain government enablers,” De Ruyter said.

“These are all medium- to long-term levers, and our generation recovery plan is a 2-year plan. If we talk about what the most immediate lever is that is available, it is to have more cash available to buy diesel (so) that we can maximise the use of our open-cycle gas turbines.

“We are looking at opportunities to relieve the logistics bottleneck that constrains our ability to run our Ankerlig open cycle gas turbine on a higher load factor than it is currently the case. But where we are right now we need more cash.”

De Ruyter said Eskom needed debt relief in combination with tariff increases to survive.

However, these are concerns that are going to be addressed by the finance minister in his Budget Speech later this month as the government has committed to shoulder a bigger portion of Eskom’s R400bn debt.

De Ruyter said that Eskom was struggling to raise the required additional funds in light of defaulting municipalities, which it still had to supply with electricity.

“One of the key sources of cash that we have been requesting but have not been able to successfully achieve is the payment of accounts by municipalities,” he said.

“Municipalities now owe Eskom in excess of R57 billion and the trend shows no sign of abetment and it is likely that in the run-up to the general election, that will increase more quickly based on our previous experience.”

Two weeks ago, Eskom chairperson, Mpho Makwana, presented Eskom’s turnaround plan which said it will take at least two years to improve the Energy Availability Factor (EAF) from the current 58% to 70%.

Makwana said the journey of the turnaround will see a stretch target EAF being driven toward 60% by March, 31, 2023, then 65% EAF by March, 31, 2024 and 70% by March, 31, 2025.

However, De Ruyter yesterday admitted that Eskom’s generation’s target of 60% EAF for 2023 financial year ending March 31 was not achievable.

De Ruyter said the current year-to-date EAF was 56.6%, and there were only two months left in the year.

“Assuming a Planned Capability Loss Factor of 10.5% and an Operational Capability Loss Factor of 1.5% for the remaining 2 months, Unplanned Capability Loss Factor (UCLF) would need to be limited to 10.85%,” he said.

“This equates to a UCLF of around 5 000 MW and a total unplanned of about 5 700 MW which is unrealistic considering the current situation.”

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