On Sunday, Eskom announced that it was out of money to purchase diesel and had no intention of placing another order until 1 April 2023.
As a result, South Africa will see unprecedented amounts of load shedding.
Eskom Chief Operating Officer Jan Oberholzer stated that since April 1st, Eskom had spent R12 billion on fuel versus an initial budget of R6.1 billion during a status of the system briefing last week. Later, it was changed to R11.1 billion.
“The expense would be prohibitive if we kept using diesel in the same manner that we have for the last seven months. We do not, however, have the money to spend. If the towns were paying us, we could pay “Oberholzer said at the time.
As SA begins the week with Stage 4 load shedding, the consequences of Oberholzer’s statement are starting to seep in.
On Sunday night, Pravin Gordhan, the minister for public enterprises, met with the Eskom board to discuss his “deep worries about the prospect of increasing levels of load shedding in the coming months.”
The department of public enterprises (DPE) said in a statement that it is “urgently working with National Treasury and Eskom to obtain the money to buy supplies of diesel.”
It added that it was working with Eskom to find savings within the power utility’s current budget for ongoing diesel purchases and maintenance.
Eskom has historically overspent its diesel budget, claiming that the R500 million a day cost to the economy each stage outweighs the cost of purchasing diesel. The sole restriction on Eskom’s use of diesel is the amount that can be supplied and burned physically each month. As a result, Eskom has spent extravagant amounts of money on diesel to keep the lights on. This amounts to almost R2.4 billion in diesel per month.
The National Energy Regulator of SA (Nersa), however, has rejected Eskom’s request to recoup all of its diesel-related expenditures from customers, claiming that a more efficient and responsible organization would not be required to engage in such excesses. Eskom is now in the red, and its management are coming under fire from the National Treasury for excessive expenditure and neglecting to tighten up the ship, which is sinking.
Eskom presented a statistical prediction of load shedding over the following 10 months at the briefing last week. The estimate indicated that, as long as diesel was consumed to make up the shortage, SA will endure Stage 3 load shedding on the majority of monthly days until August 2023. The amount of diesel needed each month to maintain Stage 3 ranged from R3 billion to more than R7 billion. The inference was that load shedding would actually be several stages above Stage 4 because burning.
At the time, Eskom also issued a warning about the system’s extreme unpredictability, which resulted in a constant 4000MW variance. In other words, the system is capable of making a quick transition from Stage 2 to Stage 4 or from Stage 2 to zero.