Eskom’s big diesel problem
Electricity minister Kgosientsho Ramokgopa says Eskom will raise R30 billion to fund diesel sourced directly from wholesalers.
However, this would mean a loss of revenue for PetroSA — a state-owned company reporting to energy minister Gwede Mantashe — and the deal could create a conflict of interest within the African National Congress’ ranks.
This is according to the managing director at EE Business Intelligence, Chris Yelland, who, during an interview with 702, explained that PetroSA makes a lot of money through the diesel it sells to Eskom.
“It would cause a loss of revenue for the middleman. And the middleman, in this case, is PetroSA — a company reporting to the minister of mineral resources and energy,” said Yelland, referring to the deal.
Yelland said PetroSA makes a lot of money and is only viable because of the volumes Eskom procures.
“So there’s a lot of conflict of interest going on here,” he added.
However, Yelland noted that the electricity minister’s diesel-funding deal is only a proposal to the National Executive Committee (NEC) and Cabinet. It hasn’t been accepted yet, and there has reportedly been a lot of opposition to his plan.
“We have to remember that what the electricity minister indicated was simply a proposal. It hasn’t been accepted,” Yelland said.
“It was presented to the NEC. It was then shuffled off to Cabinet and presented to the Cabinet, where there was a lot of opposition to his plans.”
“The plans were then shooed out of the way, and he [Ramokgopa] was told to go speak to Necom [National Energy Crisis Committee] to ensure his plans had the buy-in from Necom,” he added.
Asked whether this isn’t the exact plan former Eskom CEO André de Ruyter proposed, Yelland said it was.
“Yes, it was proposed by André de Ruyter. It was shot down by the energy minister [Gwede Mantashe],” he said.
Chris Yelland, managing director of EE Business Intelligence
What happens when Eskom runs out of diesel
Eskom burns diesel in its open-cycle gas turbines (OCGT) to produce power and help negate higher stages of load-shedding. The R30 billion proposed by Ramokgopa is significantly higher than Eskom has needed to raise before.
In November 2022, the power utility ran out of money to buy diesel for its Gourikwa and Ankerlig OCGT power stations.
An Eskom spokesperson said it had already spent R11 billion on diesel during the year and that the figure was twice as high as it had budgeted.
“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 warned the public last year.
The crisis was averted when government stepped in and ordered Eskom to buy diesel from PetroSA, reportedly at exorbitant prices.
For reference, the Gourikwa and Ankerlig power stations generate approximately 2,000MW of power — equivalent to two stages of load-shedding.
The contribution of diesel-powered electricity generation is crucial for Eskom to prevent the need for higher stages of load-shedding during winter’s evening peaks.
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