'We have a crisis on our hands' - TechCentral

‘We have a crisis on our hands’

Image: Kyle May

Image: Kyle May

Eskom and South Africa must brace themselves for tough measures in order to make the power supply sustainable, public enterprises minister Lynne Brown said on Tuesday.

“We have to organise the country to attack these problems. Failure is not an option,” she said at Eskom’s Megawatt Park in Johannesburg.

Eskom released its interim financial results for the period ended 30 September, painting a bleak picture for the state-owned company’s liquidity.

Eskom’s six month year-on-year profit was reduced to R9,3bn, with a projected year-end profit of half a billion rand.

Meanwhile, municipal debt to the power producer rose to R4bn.

The National Energy Regulator of South Africa (Nersa) approved tariff hikes that would provide an additional R7,8bn for the financial year 2015/2016. In addition, government pledged a support package, which included an equity cash injection of no less than R20bn.

Eskom CEO Tsholofelo Matona warned that the company’s bleak financial situation, coupled with the operational problems resulting in recent power cuts, meant the power producer faced “a very untenable situation”.

“We have a crisis on our hands. We know where the problems are … we know what some of the solutions are, but for the period ahead we are living on the edge.”

Matona said there were a number of factors that contributed to Eskom’s reduced profits, including increased coal costs, the use of more diesel in open gas turbines to support the national power grid, and declining sales volumes.

Nersa had also granted only an 8% tariff hike, while the power producer had asked for 16%.

Matona welcomed government’s support package. “We think it will help relieve our immediate financial challenges for the next three years.”

Eskom had put in place an “aggressive” savings target of R60bn to demonstrate “we are helping ourselves”, he said.

It was also working with government to find ways to recover billions of rands of debt from municipalities, including some “extraordinary” measures being discussed, which neither he nor Brown would elaborate on.

Matona said: “Eskom has kept lights on for the longest period ever, even when conditions of the plant cannot do it. But this has become a problem now that we cannot avoid.

“We are facing the costs of having operated the plant in the way we have. We need this to be the problem of all of us; we need consumers to appreciate this and work with us.”

Eskom would take the opportunity to do maintenance whenever this was viable, but maintenance often led to reduced capacity.

Matona said it “pains” Eskom to implement load-shedding, but this was sometimes necessary as it had been over the last two weekends.

“When we have to reduce load [through power cuts], we protect the economy and rather focus on residential sectors. When we do loadshed, it is out of responsibility to prevent a total blackout that could be catastrophic for the country and the region.”

A total blackout would take “weeks and weeks” to rectify, he said.  — Sapa

18 Comments

  1. Excuse me? Why must WE brace ourselves for a problem that is 100% of the making of Government and its 100% owned SOE?

    Government, you created this problem. You appointed the wrong people. You ignored them when they said investment was needed. You dithered over IPP for a decade. You set the wrong targets, and got the expected – but wrong – results. You decided to build the biggest, most advanced coal-fired power stations in the world, instead of smaller, cheaper and quicker to implement plants. You cancelled the PBMR project. You encouraged the unions to go wild and strike. You insisted that “the lights will stay on” before the elections, thereby destroying 15% of Eskom’s capacity. You had your grubby hands in the till with the Hitachi and Chancellor House deal.

    This is your problem. You fix it.

    Call us when you’re done.

  2. I still get the cold shivers when I think that MALUSI GIGABA was let loose on the construction of power stations!
    Heads were going to roll after his one and only visit to Medupi and the whole cock up is STILL years behind schedule and waaaay over budget. This country deserves better, yet the ‘members of the community’ keep voting in the ANC which means a sea of Gigaba’s and Dames ‘disciplined cadres’ to DESTROY the national power grid while the BEE and AA policies are even now suicidally applied by Mantashe, Duarte, Craven and all the politically correct, fascist coven at Luthuli House.
    How does your pension look now folks? Now that it must be funded by a failed economy with a failed state power system.

  3. We are now, it would seem, on a slippery road to becoming a failed state. The minster thinks that most of us are numerically ignorant. We would like to know how far away are we from a total energy blackout (in numbers). What is the margin of safety, and what is the probability of a total blackout.

    The ANC is now catastrophic for the country and the region. What happened in Burkina Faso, Tunisia and Egypt could come here. You treat us as total idiots

    Dames probably resigned because he saw the writing on the wall

  4. And to add to the nightmare, the country is building hundreds of thousands of new low cost houses that will be added to the burden! cANCer it is!

  5. Please get rid of incompetent and unskilled people in senior posts. These people do not have the experience to do the job.

  6. The public must assist, so does this mean we will be bled a bit more? the illegal connections are all over the place no wonder the municipality’s are not paying Eskom they do not get the revenue back they spend on electricity, never mind make a profit.

  7. Arno Van Der Walt on

    How does Medupi with a R100 billion project overrun not feature as part of the problem. Are our journalists not focusing on this any more?

  8. ConcernedSA999 on

    Not to mention performance bonuses, although only they will know what for . . . .. . . .. . . . ??????We also supply a country outside our borders and they are paying LESS for their elctricity supply from us. After 20 years in governance, who would have thought it was all about “democracy”????? definitely not JZ and his cadres are only in it for themselves, gonna be a joke when the hole runs dry!!!! But hey, isn’t it time we people of SA stood up against all this, the education is down the tubes, the hospitals are non-functional, the municipalities are non-existant, our once reputable SAA has fallen apart, as for the current governing body, everytime they open their mouths it is loads of ridiculous reasoning and commissions of enquiries like you have never heard of before, totally useless, Arthur doesn’t know what Marthur is doing, what is left???????????????? We said it some time ago, here comes another ZIM!!!!!!!!!!!!!!!!!
    Why do we have to put up with this . .. . . . . . . . .

  9. Look at this scenario a manufacturing company are advertising to the public not to buy its product, and when we are buying there product irrespective, they stopped supplying their product and then they say that they are losing profits because of the high demand of their product, in a nut shell this company needs for us to spend more money for much less product, so give them a big increase and convert all our electric appliance to battery/solar operated, maybe then their profits will increase. It makes so much sense, or does it.

  10. I have seen the high ranking paper shufflers at work. They are safely ensconced in their offices collecting their fat pay cheques and bonuses
    How many of the staff at HQ are skilled industrial engineers?

  11. Our country’s situation is very sad to me. The problem here is the ANC. That is just the facts. Our country is being governed by people who are incapable governing a country. And governing it in a way that THIS country with OUR history and OUR needs, needs to be governed. It is absolutely nothing personal. Nothing. It is just the cold hard truth that they people in government are not suitable or qualified for the job of running the country of South Africa. I appreciate and respect the roles the people in government’s father’s .etc had in freeing our country, I really really do, but just because a soldier won a war for a country does not mean you make him president. A soldier may not have the qualifications to lead. (Analogy). Running this country can’t be easy and I sure as hell can’t do it but I KNOW there are people running for parliament that is able to do it. It saddens me that the Government knows that it can win over its previously disadvantaged voters with propaganda, false promises, big parties and loud voices and it actually does that year after year instead of educating them. Because God forbid, educating them might just open their eyes to how absolutely USELESS the ANC is. I wish every person that does not want the ANC to be in power could just set aside their differences nad vote for one party just to not let the ANC win again. I don’t even know why I am ranting but the state of the government and the majority of this beautiful country’s people really bothers me.

    How are we going to change this? We cannot just wait for every election and hope something in going to change, we have to do something. Like Bulldog007 else said in a comment below “We are now, it would seem, on a slippery road to becoming a failed state.”

    Guys, I read there comments and I see smart and reasonable people seeing the facts and wanting change… And we must be able to do it.
    How are we going to bring the change this country needs?

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