Eskom has run out of money for diesel

Eskom has said it cannot buy diesel for its open cycle gas turbines (OCGT) at Gourikwa and Ankerlig power stations until 1 April 2023.

Speaking to energy analyst Chris Yelland, an Eskom spokesperson said the power utility has spent R11 billion on diesel this financial year — twice the amount it had budgeted.

The power utility first revealed on Friday that it ran out of diesel for its OCGTs.

“Changes in the stages of load-shedding will be more erratic due to the absence of the buffer that is normally provided by the diesel generation capacity between generating unit breakdowns,” Eskom stated.

It echoed this statement on Sunday, 20 November, when it announced South Africa’s load-shedding timetable until Wednesday.

The schedule includes stage 5 load-shedding during the evening peaks from Monday to Wednesday.

Following the statement, Yelland contacted the spokesperson, who confirmed that the diesel tanks at Eskom’s OCGTs had physically run dry.

Chris Yelland
Chris Yelland, EE Business Intelligence managing director

No additional diesel had been ordered due to the budget overrun.

Yelland said that unless someone comes up with the money, Eskom has decided to make do without its diesel-powered emergency power plants until next year.

Eskom said it does not know who would pay for the diesel.

It also does not know how much diesel South Africans burned in standby generators to cope with load-shedding this year.

News24 reports that Eskom previously overran its diesel budget, justifying the cost by saying that the cost to South Africa’s economy if it didn’t would be far greater — R500 million per day per stage of load-shedding.

However, the National Energy Regulator of South Africa (Nersa) refused to allow Eskom to fully recover its budget overruns from consumers.

Nersa said that if Eskom ran more efficiently, it would not have to resort to overspending on diesel.

Eskom executives then had to explain to National Treasury why they weren’t running a tighter ship.

Enoch Godongwana, South African Minister of Finance

In October, Finance minister Enoch Godongwana announced a bailout for Eskom in his 2022 Medium Term Budget Policy Statement.

The South African government will take over one-third to two-thirds of Eskom’s debt, allowing the state-owned utility to prioritise improving its plant performance and reduce load-shedding.

Godongwana emphasised that the bailout would include strict conditions that Eskom and other stakeholders would have to meet before and during the debt transfer.

“These conditions will address Eskom’s structural challenges by managing its costs, addressing municipal and household arrears due to the utility, and providing greater clarity and transparency in tariff pricing,” Godongwana stated.

He said the conditions would be informed by a Treasury-led independent review of Eskom’s operations, focusing on the performance of its generation fleet.

Eskom’s budget was put under further pressure this year by a settlement with unions to end a debilitating strike.

The strike plunged South Africa into stage 6 load-shedding in June when wage negotiations with unions deadlocked.

The National Union of Mineworkers and the National Union of Metalworkers of South Africa ultimately accepted Eskom’s 7% wage increase.

However, Eskom warned then that it could not afford the salary increases.

Now read: R9-billion Eskom loan “misguided” — Economist

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Eskom has run out of money for diesel