The plunge in international oil prices has a potential upside for South Africa\u2019s debt-stricken state power utility.<\/p>\n
Eskom can\u2019t generate enough power from its coal-fired power stations to meet demand, and burnt through diesel worth R6.5 billion ($407 million) at its open-cycle gas turbines in its last financial year to try and avert or limit power cuts.<\/p>\n
With the utility expecting supply constraints to persist for at least 18 months, a prolonged fuel price slump will go some way to helping contain its primary energy costs.<\/p>\n
The price of oil plummeted as much as 32% in rand terms on Monday, and was 19% lower at 11h15 a.m. in Johannesburg, after talks between the Organization of Petroleum Exporting Countries and Russia collapsed and Saudi Arabia initiated a price war.<\/p>\n
The price of crude in rand terms – which determines South Africa\u2019s gasoline prices, which are regulated by the state – has plunged 19% in the past two trading sessions.<\/p>\n
Eskom supplies about 95% of the electricity used in Africa\u2019s most industrialized economy, has amassed R454 billion worth of debt and isn\u2019t generating enough income to cover its operating and debt-servicing costs.<\/p>\n