Eskom’s diesel bill shoots up by 114%

South Africa’s indebted state-owned power utility’s costs to run its diesel-powered units more than doubled as its fleet of coal-fired plants experienced frequent breakdowns.

Eskom paid R21.4 billion in the 12 months through March 2023, compared with R10 billion a year before, to operate the open-cycle gas turbines intended to run during peak-demand periods, National Treasury said in a presentation to lawmakers.

This is a 114% increase, and the difference in the amount was partly due to higher-than-budgeted volumes and higher prices, the Treasury added.

The performance of Eskom’s fleet of mostly coal-fired stations has deteriorated, resulting in record blackouts that the central bank estimates will shave 2 percentage points off economic growth this year.

The government had declared it a national crisis and implemented unprecedented measures with few results. The rand has slumped almost 14% against the dollar this year, in part because of the crisis.

The presentation showed that Eskom’s energy availability factor, a measure of usable capacity, dropped to 56% during the financial year, mainly due to unplanned outages. This is a 6% decline from 62% the previous year.

The utility’s finances are also in a worse state, with the loss before tax almost doubling to R21.2 billion from R11.9 billion a year earlier. Gross debt securities and borrowings rose 11% to R439 billion in the year through March.

The yield on Eskom’s 2028 Eurobonds, which don’t carry a government guarantee, fell 10 basis points to 10.62% by 4:31 p.m. on Tuesday (30 May) in Johannesburg. The yield on South Africa’s generic 10-year notes was up 15 basis points to 12.5%.

Read: South Africans want Eskom to be privatised – or at least lose its monopoly