TechCentralTechCentral
    Facebook Twitter YouTube LinkedIn
    Facebook Twitter LinkedIn YouTube
    TechCentralTechCentral
    NEWSLETTER
    • News

      Standard Bank IT spending tops R10-billion in six months

      19 August 2022

      Hungry Prosus to splurge up to R30.7-billion on iFood stake

      19 August 2022

      Koeberg unit shut down due to mechanical fault

      19 August 2022

      Blue Label expects robust full-year earnings growth

      19 August 2022

      Sarb tells banks they should work with crypto exchanges

      18 August 2022
    • World

      15 September pegged as target date for ethereum’s big ‘Merge’

      19 August 2022

      Qualcomm gets serious about servers

      19 August 2022

      China blasts US over ‘discriminatory’ Chips Act

      18 August 2022

      Tencent reports first-ever sales decline

      17 August 2022

      Chip makers are flashing a big warning for the global economy

      17 August 2022
    • In-depth

      Are you a chronic procrastinator? Read this!

      18 August 2022

      Semiconductor boom turns to bust

      16 August 2022

      African unicorn Flutterwave battles fires on multiple fronts

      11 August 2022

      The length of Earth’s days has been increasing – and no one knows why

      7 August 2022

      As Facebook fades, the Mad Men of advertising stage a comeback

      2 August 2022
    • Podcasts

      Qush on infosec: why prevention is always better than cure

      11 August 2022

      e4’s Adri Führi on encouraging more women into tech careers

      10 August 2022

      How South Africa can woo more women into tech

      4 August 2022

      Book and check-in via WhatsApp? FlySafair is on it

      28 July 2022

      Interview: Why Dell’s next-gen PowerEdge servers change the game

      28 July 2022
    • Opinion

      How AI could transform financial services in emerging markets

      19 August 2022

      No reason South Africa should have a shortage of electricity: Ramaphosa

      11 July 2022

      Ntshavheni’s bias against the private sector

      8 July 2022

      South Africa can no longer rely on Eskom alone

      4 July 2022

      Has South Africa’s advertising industry lost its way?

      21 June 2022
    • Company Hubs
      • 1-grid
      • Africa Data Centres
      • Altron Document Solutions
      • Amplitude
      • Atvance Intellect
      • Axiz
      • BOATech
      • CallMiner
      • Digital Generation
      • E4
      • ESET
      • Euphoria Telecom
      • IBM
      • Kyocera Document Solutions
      • Microsoft
      • Nutanix
      • One Trust
      • Pinnacle
      • Skybox Security
      • SkyWire
      • Tarsus on Demand
      • Videri Digital
      • Zendesk
    • Sections
      • Banking
      • Broadcasting and Media
      • Cloud computing
      • Consumer electronics
      • Cryptocurrencies
      • Education and skills
      • Energy
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Motoring and transport
      • Public sector
      • Science
      • Social media
      • Talent and leadership
      • Telecoms
    • Advertise
    TechCentralTechCentral
    Home»Sections»Energy»Real risk of load shedding as Eskom faces coal crisis

    Real risk of load shedding as Eskom faces coal crisis

    Energy By Antoinette Slabbert12 November 2018
    Facebook Twitter LinkedIn WhatsApp Telegram Email

    Eskom’s coal stockpile situation has deteriorated further, with five power stations having less than 10 days’ stock. Interventions to stabilise the coal supply may only have a positive impact by March next year.

    This means Eskom is entering the rainy season in Mpumalanga extremely exposed and that load shedding is a real risk, Eskom spokesman Khulu Phasiwe said on Sunday.

    In the meantime, the power utility is using costly diesel plants to supplement the power generated by its coal-fired fleet. It is unlikely to recover this additional cost from tariffs and could see further deterioration of its finances due to this unplanned cost.

    Eskom is entering the rainy season in Mpumalanga extremely exposed and load shedding is a real risk

    In addition, Eskom got a bloody nose in the high court in Johannesburg when it tried to force one of its former coal suppliers, which had cancelled its contract with Eskom, to continue supplying coal to its Majuba Power Station near Volksrust in Mpumalanga.

    Kuyasa Mining on Friday confirmed that it stopped supplying about 140 000t of coal per month to Majuba — through its subsidiary Delmas Coal — in late October. In court papers Kuyasa, an emerging miner, accused Eskom of negotiating in bad faith about a sustainable tariff escalation model, and said the current rate of R12.34 per gigajoule (GJ) at which Eskom buys coal from the group is less than its cost of production.

    Kuyasa claims it has been subsidising its coal supply to Eskom by R12-million/month for the past year and that this is ruining the group financially. The payment terms were 30 days after receipt of Kuyasa’s invoice.

    Arbitration

    Kuyasa has offered to continue supplying Eskom until the matter has been settled in arbitration, but then Eskom must pay it R27/GJ on a cash-on-delivery basis. No date has been set for the arbitration.

    Eskom has rejected this offer and questions the economic hardship Kuyasa claims. An affidavit prepared for court by Petrus Mazibuko, an Eskom manager for primary energy, points out that Kuyasa paid its staff bonuses of R18 000 each in 2017/2018. Kuyasa claims the payments were in fact for overtime.

    Moneyweb earlier reported that Eskom paid its staff bonuses of R88 000 on average in July last year and accepted a wage agreement in August this year that included a R10 000 after-tax “settlement bonus” for every one of the more than 33 000 members of the bargaining unit, in addition to a wage increase way above the inflation rate.

    Mazibuko says in his affidavit that Eskom cannot afford to pay Kuyasa so much more for its coal and accuses Kuyasa of planning to export the coal at a higher price. Kuyasa rejects Eskom’s poverty claim and refers it to the R600-million coal prepayment it made earlier to a Gupta-owned mine.

    In his affidavit Mazibuko discloses that Majuba’s reserve stock levels were at 9.3 days on 26 October, and that Eskom was diverting coal from other power stations to Majuba. The stock levels at these power stations were, however, also critically low.

    This is in contravention of the South African Grid Code, which requires Eskom to maintain stock levels at 20 days.

    Mazibuko also warned that should Kuyasa be allowed to cancel its coal supply contract because it wants a higher price, other suppliers will follow suit and export their coal, leaving Eskom without coal.

    Eleven power stations now left with stockpiles of less than 10 days

    In August, Eskom CEO Phakamani Hadebe disclosed to parliament that Eskom’s coal-fired power stations, excluding Medupi and Kusile, had coal stockpiles of on average 28 days, but that 10 of the 15 stations had less than 10 days’ stock.

    Phasiwe said on Sunday that this has since deteriorated to 25 days on average, with 11 power stations now left with stockpiles of less than 10 days. Of these, five have less than five days’ stock, he said.

    Of the 12 coal supply contracts that Hadebe told parliament were being negotiated, six have been signed and two of the six are already delivering coal, according to Phasiwe. Of the other four signed contracts, one will start delivering in December and the others early next year.

    Phasiwe says Eskom hopes to have to coal stock stabilised and back to the required levels by March next year.

    Transporting coal

    He adds that Eskom has engaged Transnet to transport coal from Medupi in Limpopo, where there is excess coal due to the late completion of the power station, to Kendall near Ogies in Mpumalanga.

    He points out that Majuba also has a rail link and says some of the newly concluded contracts are for coal supply to Majuba.

    In Mpumalanga, where most of the coal mines feeding Eskom’s coal-fired power stations are situated, December, January and February are the rainy months. Phasiwe says Eskom is concerned that the low coal stock levels could leave it exposed if the mines are forced to stop production for a few days due to heavy rain.

    He says the power stations have, however, implemented additional coal treatment plans, such as compacting four to five days’ of coal stock to keep it dry for use in the event of continuous rains.

    “All the mines have put in place treatment plans to ensure quick mine start-up after heavy rains,” he adds. “These measures include adequate pumping capacity in the pits, adequate drainage at mines’ final product stockpiles, and continuous total moisture content analysis.”

    He says Eskom has requested all mines to operate throughout December and that they are finalising volunteer staffing plans to that end.

    In the meantime, Eskom has embarked on another urgent coal purchasing process. It is waiting for alternative coal offers from its current suppliers and has identified suppliers it doesn’t currently deal with that have capacity to supply the Eskom power stations.

    • This article was originally published on Moneyweb and is used here with permission
    Eskom Khulu Phasiwe top
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email
    Previous ArticleVodacom shares tumble on slower revenue growth
    Next Article Interview: Huawei Enterprise Group’s Alex Du Min and Pinnacle’s Fred Saayman

    Related Posts

    Standard Bank IT spending tops R10-billion in six months

    19 August 2022

    Hungry Prosus to splurge up to R30.7-billion on iFood stake

    19 August 2022

    Koeberg unit shut down due to mechanical fault

    19 August 2022
    Add A Comment

    Comments are closed.

    Promoted

    Does your contact centre have the CX factor?

    19 August 2022

    Entelek, A2pay to roll out 2 500 free Wi-Fi sites in South Africa

    18 August 2022

    Companies are drowning in data – but solutions are at hand

    18 August 2022
    Opinion

    How AI could transform financial services in emerging markets

    19 August 2022

    No reason South Africa should have a shortage of electricity: Ramaphosa

    11 July 2022

    Ntshavheni’s bias against the private sector

    8 July 2022

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2022 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.