Eskom’s big money hole
The intensity of load shedding may be waning, but Eskom still finds itself in a financially challenging position.
Over the last two weeks, there has been a significant drop in the intensity of load shedding as generation capacity improved and demand declined.
However, speaking at a media briefing, the electricity minister, Kgosientsho Ramokgopa, said that everyone had not felt this improvement, as several municipalities are facing widespread blackouts due to illegal connections straining the grid.
Not only is this causing more blackouts that are not linked to load shedding, but it also impacts Eskom’s revenue, as municipalities – who are struggling to collect revenue – owe the utility R64 billion, with a year-to-date increase of R4 billion.
For instance, last week, Eskom said that the City of Tshwane and Ekurhuleni Municipality jointly owed R4.7 billion as of 31 August 2023, threatening the utility’s financial stability.
“This undermines the liquidity of Eskom because it has to recover the cost associated with the generation and the reticulation or distribution of electricity,” the minister said.
“And once they are not able to collect, this is a major hole in Eskom’s revenue.”
“This undermines Eskom’s ability to invest in additional infrastructure to improve generation, transmission and distribution infrastructure.”
The non-payment of electricity is also impacting municipalities that are unable to cross-subsidise the building of additional infrastructure, including clinics and roads, threatening the financial viability of many of these municipalities.
The minister said that SALGA, Eskom and other stakeholders are thus working to ensure that payment for electricity occurs from residents, which should keep Eskom and several municipalities from collapsing.
Short-term pain but long-term gain
The minister also noted that the improvement in load shedding was also due to an increase in planned maintenance.
With a reduction in demand, Eskom has increased its planned maintenance from 3,000 MW in May to roughly 5,300 MW over the last week and plans to increase this figure to 7,000 MW over the summer months.
Eskom’s summer plan states that it wants to keep unplanned outages below 15,400 MW, potentially keeping the maximum level of load shedding under stage 4.
According to Ramokgopa, the last week saw unplanned outages stand at 14,100 MW, with several days seeing less than 14,000 MW due to the increase in planned maintenance.
“There’s a correlation between planned maintenance and the rate of failures of the units. The team is seeing when they return the units; these units remain on load for longer periods… their efficiency and reliability are improving,” he said.
He noted that the sudden increase to stage 6 in August following an increase in planned maintenance was an example of how short-term pain can ultimately lead to long-term gain.
He added that outage slips are improving, meaning that units are returned to service on time, limiting the amount of generating capacity out of service.
Eskom is also working to reduce partial losses, which are only 200 MW better than in May 2023. “We are not out of the woods, but we have turned a corner,” the minister said.
Loading ...