Eskom spending billions on diesel every month

The Department of Public Enterprises revealed that Eskom has spent almost R65 billion on diesel in the past five years — and R23 billion in the past year.

In a recent Parliamentary Question, DA MP Farhat Essack asked the Department of Public Enterprises about Eskom’s diesel expenditure.

He said Eskom has increasingly relied on diesel to power its Open Cycle Gas Turbines (OCGTs) to plug the electricity generation gap.

The utility heavily relies on its OCGTs, some of its most reliable power stations, to reduce the stages of load-shedding implemented.

However, the diesel used to power them is costly, making them more expensive to run than a traditional coal power station.

This means the utility has spent billions every year to meet the demand for electricity in South Africa.

Public Enterprises Minister Pravin Gordhan revealed in his answer that the total amount of money the power utility has spent on diesel for each of the past five years since May 2019 has amounted to R64.78 billion.

R23 billion was spent in the 2024 financial year — the most Eskom has spent in one year over the 5-year period.

Eskom’s 2024 financial year ran from April 2023 to March 2024, and 2023 marked the worst year for load-shedding that South Africa has ever experienced.

South Africans endured 6,947 hours of load-shedding in 2023 and almost double the amount of days with load-shedding in 2022.

Gordhan also revealed that R6.5 billion of the total diesel spend was recovered from Nersa decisions and the Regulatory Clearing Accounts (RCAs).

“This gap contributes to the need for government support,” he said.

Gordhan identified Eskom’s current diesel suppliers as PetroSA, Astron, Shell, BP and Engen.

Last year, there were concerns that the utility would run out of money to purchase diesel to run its OCGTs to soften the blow of load-shedding when Eskom had spent R20 billion of its budgeted R29 billion by November 2023.

Aside from costing the country billions, Eskom’s OCGTs were also never designed to be run for consistently long periods, as they are peaking stations — used to provide bursts of power to meet demand on short notice.

However, Eskom’s demand for diesel was so great in 2023 that PetroSA enlisted tankers to store diesel as the country did not have enough onshore storage facilities.

“As there is limited storage, PetroSA has used floating tankers to ensure that product is readily available as and when required according to forecasts as agreed with Eskom,” the state-owned oil company said in a letter to stakeholders dated 18 October 2023.

There were four tankers designated to deliver diesel to PetroSA “to supply key customers” and one carrying gasoline, it said.

According to ship-tracking data compiled by Bloomberg, as many as six ships were being used.

In the 2023 financial year, diesel production sources accounted for 19% of Eskom’s total cost but only 2% of total production.

“Use of diesel is necessary but unsustainable,” said acting CEO Calib Cassim at the time.

“Although diesel spending is still unacceptably high, it is in line with expectations and still driven by the shortfall in supply by renewable and short-term IPPs, as much as by Eskom’s own poor generating plant performance.”

This article was first published by Daily Investor and is reproduced with permission.