Eskom ordered to fix problems
PUBLIC Enterprises Minister Lynne Brown has given Eskom – which announced it had lost almost R8 billion in revenue – until September to come up with a plan that makes “logical sense” to address cash flow problems and energy security.
Yesterday, Eskom painted a bleak picture of the various challenges plaguing the struggling power utility – from underinvestment, ageing power plants, threats of further ratings downgrades, continued loadshedding and an ever-increasing municipal debt.
Brown told a joint energy and public enterprises committee meeting that a draft report with options had been shared with the cabinet.
“We are going to be receiving the final proposal soon, after which we will take this to cabinet sub-committee and cabinet, ideally before end of September,” said Brown.
In the light of the various challenges, President Jacob Zuma has tasked members of the energy security cabinet sub-committee to look at these matters, among other things.
“An intergovernmental task team comprising my department, the Department of Energy and the National Treasury have been working with Eskom and the Regulator to formulate a solution to the immediate challenges that Eskom is facing,” Brown said.
Mounting challenges
The new permanent chief executive of Eskom would be appointed within weeks. She was confident that the Medupi power plant would be completed by December.
Eskom financial director Tsholofelo Molefe said the utility was faced with the dilemma of balancing financial sustainability and operational sustainability to ensure security of supply as well as delivering on its capital expansion programme.
“Our challenges regarding the financial sustainability really emanate from the multiyear price determination (for tariff increases) which was lower than what we expected, but also as well as declining volume that we have seen.”
She said Eskom had lost close to 9 000 gigawatt hours which translated to about R5.8 billion of revenue. She noted Eskom was “highly dependent” on borrowing and also ran the risk of a further ratings downgrade which meant it would pay more interest when borrowing money.
Acting chief executive Collin Matjila said another challenge was that of ageing infrastructure.
“The ages of our generation fleet, 60 percent of our power stations are older than the recommended design life of 30 years,” said Matjila.
He said the issues that arose from this reality were that there was an increase in “unplanned failures” of the units.
“Load shedding remains a risk we are going to have to live with,” said Matjila.
Board chairman Zola Tsotsi said as a public company Eskom belonged to the people of this country. He said things had got to a point that the reserve margin “was so low that the power system became constrained by the time we began a new build programme”.