Due to the current lockdown, citizens can expect a three-day blackout during the winter, a sizeable decrease from the envisaged 31 days of stage 1 load shedding.
“We don’t see any stage 2 or 3 during winter,” Eskom’s Generation Group Executive, Bheki Nxumalo, said on Thursday.
According to Eskom’s Chief Operating Officer Jan Oberholzer, while the power utility has recovered some partial losses and made improvements, the country is still not out of the woods yet.
“You can only get sustainability and reliability in these units when you have done proper reliability maintenance and that we haven’t done aggressively yet.
“Until the end of July next year, the risk of load shedding will remain because of the unreliability and unpredictability of the system,” he said.
He said this was due to the neglect of the system for the past decade.
Eskom’s executives were speaking at a virtual media briefing where the management outlined the details of the operational performance.
Eskom dealing with challenges
Eskom CEO André de Ruyter also warned that if Eskom does not get their act together, the power utility will continue to be on a downward spiral and will halt operations.
He said the state-owned entity (SOE) still faces a significant number of challenges despite some wins.
“We have a debt of some R450 billion. We don’t have enough revenue to cover our debt service costs. We’ve had our challenges with the National Energy Regulator of South Africa (NERSA) and this is part of our quest to find cost-effective tariffs that will enable us to be a sustainable and viable business,” De Ruyter added.
Eskom and NERSA have been in loggerheads over the tariff increases and De Ruyter said they are working on building the relationship with the regulator.
In addition, their operational expenditure has increased by 30% in the past five years, coal prices have augmented, while their procurement costs are higher than normal and load shedding is still not the thing of the past.
“Our business model is safe to say it’s outdated, the world of energy has changed around us, and we need to change along with it.”
However, De Ruyter said they have adopted the alternative of doing nothing and working around the clock to address the issues.
“If we don’t fix our operational stability, we will be on the red downward sloping curve which will result in poor governance as we’ve seen, poor staff morale, Eskom will be unable to operate, and we’ll require increased borrowings and support from the fiscus which we know it’s going to challenging particularly in a post-Covid-19 environment,” he said.
“And eventually, we’ll have severe restrictions and have curtailments imposed on us from the operational perspective which will translate into lower availability of electricity to the South African economy which of course is completely accepting.”
He said there are no additional bailouts they are expecting from the government except for the R56 billion.
De Ruyter said they are working around the clock to improve their income statement, balance sheet and continue to restructure Eskom while improving the culture of employees.
He said Eskom has managed to do short-term maintenance, they are repurposing old power stations and cutting day-to-day costs.
While the generation plant is still not reliable and predictable as they would like it to be, they are working on improving the current plant performance to reduce the risk of load shedding.
Other plans in the cards include expanding margin through efficiency return on assets, resolve NERSA tariff disputes, resolve municipal debt, coal cost renegotiations, fuel oil cost and consumption, and diesel consumption reduction.
Eskom’s Covid-19 response
De Ruyter said they have a comprehensive and focused effort in place to protect employees and contractors, in compliance with the government’s Covid-19 health and safety regulations.
“As of 7am, this morning, 21 Eskom employees and contractors have tested positive for Covid-19 and are receiving the best treatment available.”
He said the maintenance and construction projects were impacted by the lockdown.
The contractors are required to comply with Covid-19 health and safety regulations prior to working on-site, while operations at power stations and power networks have continued with minimal disruption.