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Coal|Energy|Eskom|Exploration|Financial|Power|Service|Maintenance
Coal|Energy|Eskom|Exploration|Financial|Power|Service|Maintenance
coal|energy|eskom|exploration|financial|power|service|maintenance

Eskom warns its debt could reach R550bn

Eskom CEO Phakamani Hadebe

Eskom CEO Phakamani Hadebe

Photo by Dylan Slater

21st November 2018

By: African News Agency

  

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Eskom's financial situation will remain dire for the next few years with a risk its debt burden would grow from R400-billion to some R550-billion in the foreseable future, the power utility's CEO Phakamani Hadebe conceded on Wednesday.

"The institution is really under severe financial strain," Hadebe told Parliament's portfolio committee on public enterprises in a briefing on its financials and logistical woes.

Acting chief financial officer Calib Cassim said the problem was partly the company's inability to service its debt from its earnings, forcing it to borrow more. He said Eskom hoped that its expenditure levels would stabilise within the next three years once its new build power plants were completed but the picture was further clouded by the need for backlog maintenance.

Chief operating officer Jan Oberholzer told the committee that Eskom was implementing a nine-point strategy to deal with backlogs and declining energy availability, and that urgent maintenance work would see 59 planned outages. However, Oberholzer said, he did not foresee a need for load-shedding in the immediate future.

He confirmed that the company's energy availability would dip to around 72 to 73 percent before the financial year was out and that it would continue to rely on diesel as an additional fuel source as coal level remains at crisis point.

"We will burn diesel until March," Oberholzer said, adding that the cost of diesel from April came to R538-million and could reach R1-billion by the end of the year.

Oberholzer listed seven large power plants, including the Arnot power station on the Mpumalanga Highveld and the new builds of Medupi and Kusile, as "a handful of problem children" in terms of operational ability.

A further 10 power plants had coal stock levels of less than 20 days, and of those half had less than ten days worth of coal.

The Eskom officials told the committee that National Treasury on Tuesday gave the utility the go-ahead to ask existing suppliers to increase their contractual quantities for the short term in a bid to bring coal stock levels to an average 30 days by the end of the current financial year.

But Hadebe said Eskom would likely return to desirable levels of an average 46 days by mid 2020 only.

He explained how the current coal crisis was triggered by the company's notorious coal supply deal with Tegeta Exploration, saying by the time it became apparent that Tegeta was unable to deliver even half the amount of coal stipulated by its contract, Eskom's relationships with its old suppliers, who had been alienated in the rush to sign the Gupta-linked company, had broken down.

However, since changing boards, the company has managed to sign 29 contracts for the supply of a total of 15.8-million tonnes of coal. That was still not adequate and it secured permission from National Treasury to put a request for proposals for a further 4-million tonnes.

So far that has resulted in contracts for the supply of 1.1-million tonnes of coal, Hadebe said.

Edited by African News Agency

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