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Billions blown — Eskom on track to overshoot emergency diesel budget for year

Billions blown — Eskom on track to overshoot emergency diesel budget for year
Illustrative image: Minister of Energy Kgosientsho Ramokgopa. (Photos: Rawpixel | iStock | Per-Anders Pettersson / Getty Images)

The monopoly energy utility is devouring diesel to run its emergency generation fleet — which was intended only for dire emergencies or use during peak demand periods — forking out R24.3bn in eight months.

Eskom has only about R3.6-billion left of its diesel budget for the 2023/2024 financial year, which ends on 31 March 2024. Considering the power utility has blown, on average, R3-billion a month on diesel this year, it seems Eskom is on track to deplete its diesel coffers before the year is up.

To stave off higher stages of rolling blackouts between 1 April and 28 November, the power utility spent R24.3-billion of its total diesel budget on its emergency diesel-powered generation fleet, Eskom confirmed to Daily Maverick this week.

In May, Daily Maverick reported Eskom had blown R12.4-billion on diesel in just four months. To put this into perspective, it took eight months for Eskom to spend R12-billion on diesel last year. With R24.3-billion blown as of 28 November, this means its diesel expenditure has more than doubled for the same period this year. 

Read more in Daily Maverick: Billions blown as Eskom burns through its emergency-use diesel

In the past few years, Eskom has been forced to rely increasingly on its open-cycle gas turbines (OCGTs) because of a rising number of breakdowns within its ageing coal-fired power fleet. This year is no different, and it seems Eskom is well on track for another year of overspending on diesel to run its OCGTs. 

Electricity Minister Kgosientsho Ramokgopa has repeatedly defended spending billions on diesel to keep the lights on.

It’s been the worst year for power cuts by Eskom. On Thursday, South Africa was 334 days into a year that had had 322 days of load shedding.

Load shedding in October was less intense than it had been for a very long time. But November was particularly dim, with the return of crippling Stage 6 power cuts. And the forecast doesn’t look good. Ramokgopa’s statement that there will be fewer blackouts over December is not borne out by the data, Daily Maverick’s Ray Mahlaka reported. 

Read more in Daily Maverick: Eskom contradicts Ramokgopa – forecasts more crippling blackouts over the coming months 

 

December is usually dicey for the electricity outlook because the hot summer conditions make Eskom’s ageing power plants and their parts more susceptible to overheating and breakdowns.

The grid has required power cuts at stages 4, 5 and 6 this week. Stage 4 load shedding was implemented from 8pm on Thursday to 5am on Friday. Stage 3 will be implemented from 5am to 4pm on Friday. 

From 1 to 28 November, Eskom blew R4.1-billion on diesel to keep the lights on.

Energy analyst Chris Yelland told Daily Maverick: “In November, Eskom hit record figures for diesel usage… It was very high in April and May, but it’s even higher now. 

“Eskom was hoping that in the last months of the year — from November, December, January, February, March — that diesel usage would significantly drop because of the units coming back on stream from Kusile, as well as the synchronisation of Kusile Unit 5 to the grid … which is scheduled for the end of the year.”

Kusile Unit 1 returned to service last month and followed the recommissioning of the power station’s Unit 3 at the end of September. On Tuesday, Eskom announced that Kusile Unit 2 had been synchronised to the grid, two days before the planned return date. This means a combined 2,400MW has been added back to the grid, which is equivalent to about two stages of load shedding.

“It doesn’t seem to have helped. We’re sitting at stages 3, 4, 5 and 6 even with units 1, 2 and 3 at Kusile on, so there are clearly other problems that are worsening the situation,” Yelland said. 

“Although we’re getting extra [megawatts], something else is dragging things down again so that, overall, the situation hasn’t improved, and they’re still using high levels of diesel.”

Monique le Roux at Stellenbosch University’s Centre for Renewable and Sustainable Energy Studies told Daily Maverick that the limited remaining diesel budget put South Africa in a concerning situation when it comes to load shedding levels. 

“We had the same situation last year over December (when they ran out of their diesel budget as well) and had to implement near continuous Stage 6 load shedding, so it looks like we are in the same boat this year as well,” Le Roux said.

“[Eskom is] very dependent on diesel to keep load shedding in check. They were probably hoping their other plants would perform better with the addition of Kusile units but this is not the case,” she added. 

“Eskom generated around 1,200GWh from OCGTs more than in 2022 (from April to November), so it seems like they are burning more diesel every year to keep the lights on.”

Yelland said it appeared Eskom would overshoot its diesel budget for the 2023/2024 financial year. 

“That means Eskom is going to go cap in hand, as it did last year, to try and get extra money — and it’s going to have to find it probably from its own resources as well — and it’s going to put a lot of stress on Eskom’s financials for the year,” said Yelland. “If they carry on at this pace — R3-billion a month — they would have about a R9-billion overshoot.”

In response to Daily Maverick’s questions, Eskom said it “cannot borrow more money as per the conditions of the National Treasury’s Equity Support. However, overruns on the budget for Eskom and IPP OCGTs will be funded from other budgets if required.”

Festive season demand

At his weekly press conference on Sunday, Ramokgopa maintained that bringing back Kusile units 2 and 5 would have an impact on available capacity. He projected electricity demand for the festive season to be lower, saying: “What we also know about December is that the energy-intensive major industry is closing, so you’re going to have a demand that is going to dip.” This, he said, should ease load shedding. 

However, in a response to Daily Maverick, energy analyst Lungile Mashele said that although there would be a dip in demand, South Africa should expect load shedding throughout the festive season. 

“Industry will slow down from 14 December. This will result in lower demand; however, this does not mean a reduction in load shedding, as Eskom may use this time to ramp up maintenance. Bar a few days of no midday load shedding, we will most likely load shed in the evenings only,” she said. 

Eskom is indeed ramping up its summer maintenance. Its latest system status report shows that it plans to take out as much as 8,977MW on planned maintenance on Christmas Day — probably because it expects demand will be low.

‘They hold us to ransom’

The OCGTs have become a vital lifeline in the face of the loss of generation capacity at Eskom’s coal-fired power stations. It’s a double-edged sword because, without them, the cost of increased load shedding is far greater.

“They hold us to ransom in the sense that the cost of not running the open-cycle gas turbines is increased load shedding,” Yelland said. At a political level, this is what the ruling ANC wanted to avoid. The blackouts which kneecap South African businesses and livelihoods will be a key voting point in next year’s polls. 

Read more in Daily Maverick: ANC support plummets to 33%, but it is still likely to form a government next year, new study finds

“To have this increased load shedding in the weeks before the election is exactly what they didn’t want,” Yelland said. DM

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Comments - Please in order to comment.

  • Johan Buys says:

    is Eskom still buying diesel from intermediaries and CEF at higher prices than it could import at? This is just shuffling deck chairs on the Titanic and in this case some of the deck chairs are on an adjacent superyacht for tenderpreneurs.

    • Caroline de Braganza says:

      Agree!

    • Peter Dexter says:

      I love your comment – and the intermediary is selling new deck chairs bought in China for R11.99 at R2m each – even though no new deck chairs are required, because all the passengers have jumped overboard.

    • Karel Vlok says:

      Eskom is buying diesel from PetroSA. At about R 1 000 000 000 for 50,000 cu. m., PetroSA gets the wholesale margin ±R 300 000 000 – per ship, give or take. Then there is demurrage, at about R 1 000 000 per day these ships lie in wait for the cargo to be paid. They no longer offload without payment. But moenie worry nie, Gazprom, our Russian friends, will soon own PetroSA.

    • Craig Monckey says:

      What a perfect analogy! Every time we hit stage 0 or 1 or even 2, I am convinced its a show for (their) own devious purposes and NOT progress. I know a great tattoo artist who would gladly tattoo “LIAR”on many of these (officials) foreheads, just for those fooled into believing >>> “It’s getting better”.

      • Johann Olivier says:

        Like the petrol price. Every so often it’s taken down a few cents, then it increases by many cents. Then the same cycle … Effectively, the price is on a perpetual upsurge, but the ANC knows how to pretend that it is doing something. Eish!

  • Zed Buchler says:

    Johan, this is the best description of Escom’s and the government’s way of operating I have heard all year!!

  • Denise Smit says:

    Gwede Mantashe would think that Ramaghopa is “sabotaging” the ANC/EFF and Eskom

    • Francois Smith says:

      Come Gwiedie, please speak up! Why have you not given Sputla your 6 months complete turnaround plan? Why is Treasury allowing Eskom to blow money on OCGT in excess of their budget now, but when De Ruyter asked for it, it was denied? Why, Sputla, is the maintenance not delivering the necessary uptime for the generating fleet? Why, Sputla, do you lie to us and smile whilst doing so? (Apart from it being in your ANC DNA, do you have another reason?)

      • Geoff Coles says:

        Ramokgopa is one of Ramaphosa’s blue-eyed boys, like that Ntshavheni…… Ministers in the Presidency, special deceitful individuals

        • Kenneth FAKUDE says:

          where have you seen a minister of electricity anywhere in the world? power generation needs engineers irrespective of political affiliation they identify with, Elon musk must stop fiddling with twitter whilst the lights are out at home

          • Bill Turner says:

            I can tell you now that the employment policies in SA doesn’t want Elon Musk.

            He has offered to help btw also with Starlink. But the government said not unless they get a slice of the pie, so he said no.

  • Iam Fedup says:

    These fools inherited a business that was incredibly efficient and gave SA the second cheapest electricity in the world. But while the power failure catastrophe is perhaps the most visible and obvious failure, the same repeats itself in every single government department bar none. Whatever they touch turn to dust, and we pay a heavy price for that. Go ahead, my fellow citizens: vote the ANC in again and let us all dive into the pit of despair together.

  • Heinrich Holt says:

    OCGTs can fail too….

  • Charles Butcher says:

    Soo whats to be expected when the criminal is put in the position of the JUDGE in a law court,obviously hes not guilty,it was someone else’s fault in this case even apartheid

  • Hermann Funk says:

    He is not the Minister of Electricity. He is the Minister of BS.

  • Kev 1 says:

    I just hope this diesel bill is properly audited as to source of supply and pricing – a mere fraction hived off to the feeding trough could be hundreds of millions.

  • Rob Glenister says:

    In war (or to win an election) anything is permissible. Votes at the cost of the economy sound reasonable. And we can grease the tenderpreneur gravy train at the same time.

    We all knew, or at least guessed that a diesel overspend was being used to keep the lights on (sometimes).

    A Win (ANC), Win (Thieves and Corrupters), Lose (South Africans including the voting fodder who know no different) situation. (Maybe the first two categories are the same.)

  • Jens Kerneck says:

    There have been no comments that I have seen regarding the switching off of the other Koeberg Unit for repairs etc. – has that happened? What is the monthly cost of shutting down the grid vs the running of the OCGT – and when will they have to be shut down for maintenance for running extended periods?

  • Lynda Tyrer says:

    Get rid of the middleman they are making a fortune from the sales and order directly from a supplier, this should be done with all orders for anything needed.

  • Middle aged Mike says:

    We are doomed. The available tax revenue to fund the looting is finite and it’s being substantially overshot.

  • Geoff Coles says:

    Did I not read that Ramokgopa wants to pay bonuses to Eskom employees, the monies to come from Diesel underspend….. this guy opens his mouth too much!

  • Willem Boshoff says:

    Come on DM, please get an investigative journalist onto the diesel procurement contracts at Eskom. The public need to know if and what kind of mark ups is being added to the millions of litres bought and burned.

  • D'Esprit Dan says:

    R36bn a year on diesel? For how many years? Last financial year was around half of that, and the projections seem to be that next financial year will be similar to this, so somewhere between R90bn and R100bn over that period, in which Gwede Mantashe has deliberately delayed and sabotaged the introduction of thousands of MW of renewables into the grid. A treasonous viper, who should be thrown in prison and never released!

  • Wayne Holt says:

    Trying to buy an election billion by billion month by month … ANC way of doing things

  • llewellynhigh says:

    I didn’t expect anything different.It seems as though nothing has changed, they need to start employing the people
    Who are more than qualified to do the job, and move away from
    The previously disadvantaged
    Narrative.There are highly qualified professionals unemployed due to the work equity act 😞

  • Beyond Fedup says:

    So much for being part of brics! What advantage is there for SA, besides being a putrid coalition of the bitter, twisted, hypocritical and wounded, and a hot air & anti West vitriol platform? We should be getting oil at 30% discount from our Russian “friends” and masters like India. China etc. are doing. Damn – I forget myself, we probably are but also highly probable that the some anc elite and tender-preneurs are scoring handsomely indeed and filling party coffers as well whilst Eskom, with our tax money, are paying top dollar.

  • Marco Savio Savio says:

    Sounds like Exkom and Ramokgopa are running amok! So much fir blaming De Ruytet on Exkoms ills…. chickens coming to roost. ANC fo not have the answer, they still guessing (with tax payers money) yet taxpayers have no say.

  • Graham Shillington says:

    With the majority of the ANC’s voter base not paying income tax, there seems to be a sense that they are spending other people’s money. I don’t feel like the outrage of misspent money is felt by the majority of South Africans. Wouldn’t it be great if everyone paid income tax, no matter how small, and then held the government accountable for its spending? More South African need to feel like they have some “skin in the game”.

    • Frans Flippo says:

      It is felt, but what can we do? I’m paying ludicrous amounts every month to the City of Johannesburg for non-existent service delivery and even more ludicrous amounts to SARS so that ministers that have the intellectual capacity of ten-year-olds can live lavishly with zero accountability or value to the country.

      In both cases they’ve got you by the cojones because if you stop paying your city’s rates and taxes, you won’t be able to sell your house, and PAYE means your employer’s already given your money to SARS without you having any say in that.
      If employers were to massively stop PAYE and real estate attorneys would assist in transferring property ownership even when there is an amount outstanding to the city, then maybe things might change. Money is they only language the ANC understands.

      Those who can, leave the country, which means that eventually there will be no one left in SA to pay income tax and the whole house of cards will come tumbling down.

  • Fuad XXX says:

    Good morning Mr R37million energy minister, perhaps you should admit the solution escapes you & get expert advice in. E.g. Mr Andre de Ruyters would be a good start. Kindly stop with the bulldusting it is very, very expensive & battering our economy even more.

  • Frank Fettig says:

    I wonder when SA finally implodes with this entirely inept “government”. Hurts to watch a country go down the drain by utter stupidity and incompetence.
    Actually unbearable considering that everybody – except those thieves – knows what should be done!

  • Gerrie Pretorius says:

    Very soon the OCGTs will be in the same state as all power stations. When a facility is over-run there is no time for maintenance (not that pravin worries about that!) and we all know what the rest of Eskom’s plants look like. These OCGTs will be run into the ground, if that’s what it takes to attempt to keep the anc in power.

  • Middle aged Mike says:

    Generating a reliable supply of electricity isn’t a priority for the ANC floaters deployed into ESKOM. They are primarily focused on pumping money out of the fiscus and converting it into gravy for the troughs and buying votes.

  • Andries Gouws says:

    Victoria, could you please remind us how the price of electricity generated by burning dieself compares to the price when it is generated by a coal fired plant, or a nuclear plant?

  • Mario Cremonte says:

    AND the beat goes on, on, on………….!

  • Gordon Bentley says:

    Our Minister of Electricity is not a bright Sparky.

    Whenever he can’t keep the lights on he falls back on diesel – billions upon billions of litres of diesel is burnt by his OCGT’s.
    He should know that this is not the most economical form of generating electricity but government ministers are not known or picked for their intelligence.

    The increased demand for diesel in SA kneecaps all agriculture and business who have to pay the increased prices. Apart from the prohibitive cost of Diesel, he drives up the demand for diesel and all consumers have to suffer.

    Surely his mandate was not to increase prices and demand for diesel but to consider and implement innovative new ideas for generating electricity? I do not know of any schemes he has introduced to save costs and improve the shortage of eneergy in the beloved land.

    What a disappointment. He should be fired as a complete failure.

  • David Crossley says:

    Having just come out of a 24 hour total electricity blackout which was maintenance related for 12 hours and the balance presumably due to incompetence, I have lost all faith in the ability of Eskom to improve the situation. If only the ANC had listened to the pleas for additional power plants when it was presented 15 years ago!

  • golden1 says:

    How can this be so with so much load shedding and the units being off or operating at reduced demand. Less working hours less fuel used & principally less maintenance and less expenditure on spares and labor etc. It seems as if there are other financial variables at play like diesel prices & possibly politics & Turkish Power ships contracts. Next years cost drivers are being built for yet another unearthly price increase are being prepped now!

  • David Mark says:

    Listen to the music he says, while the ship is sinking. Maybe try stop the sinking ship instead of playing another song.

  • Dave Wilson says:

    I worked for Eskom from 1976 to 1990. I was then told that I couldn’t get a promotion because my skin is not black (in those words). I resigned and started on my own.
    Cadre deployment started around that time.
    Eskom doesn’t work because cadres are appointed for the colour of their skin, not for their technical knowledge or ability.

    • Waheed Mahomed says:

      I am sorry that you had to experience that Dave. I am sure there were many competent people like you that have the same story and we need them to all come forward. DM should get all their stories together and publish a collage of how this employment strategy has contributed to the situation we find ourselves in.

    • Kenneth FAKUDE says:

      Dave i am a bit confused because the ANC only took power in 1994 but lets view this as a technicality, the ANC of 1994 is gone no more to be seen, if you look at the comments there no support here for them, i hope the elections next year will be different we are suffering in this country and the mess is so problematic that a new government will need our patience otherwise we will set them for failure where do you start sorting this mess?

  • Sean Hammon says:

    BILLIONS…. with a prerequisite corrupt ANC comraderie scum conveniently stationed between supply and demand. Africa’s finest.

  • David Hill says:

    DM please conduct an audit on the price Eskom pays per litre of fuel. I have heard that the procurement process of diesel involves more than a few Ministers or their cohorts and that the priec is more than the pump price in Gauteng! How can this be possible? Surely their price should be on a cost plus basis and less all the road taxes, vat and other levies which would more than halve the cost and extend Eskom’s ability to keep the generators running? I’m not going to name the Minister who I have heard is behind the scam, suffice to say her name comes up more often than not in many of the scams you have unearthed!

  • Tony Fisher says:

    “Eskom-on-track-to-overshoot-emergency-diesel-budget-for-year”… This is NEWS ??

  • Something that I find quite puzzling & very unfair is that there are some areas that almost never have load shedding & some that are subjected to much longer hours of load shedding.

  • Andre Swart says:

    The cadres that supply the diesel sabotage Eskom?

    And get stinking rich!

  • Llewellyn Curlewis says:

    Mr Happy just keeps dancing

  • Robert de Vries says:

    The cost of rampant corruption, poor decisions and rolling blackouts is killing our businesses. Resulting in very few employment opportunities, disinvestment and a less than 2 percent growth.
    Sadly, if we don’t get this under control, it will spill over into political instability.
    This election is arguably our last chance to stem the tide of this political destructive force called the ANC.

    • Prav Tulsi says:

      Eskom and the ANC are jokes.
      Eskom buggered
      Prasa stuffed
      Transnet ANC ministers swiss bank
      Denel Used to export ,now has no money to import
      Telkom U make me laugh
      Post office ??????? what PO
      Municipalities : ANC ministers se lokal bank
      Potholes : ANC legacy gift of the Non Givers
      SAP : Cant compare to FBI or others
      NAVY : Chinese puppets
      Local Police : ANC jokes wont help citizen being robbed while writing a ticket

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