Crisis-ridden power utility Eskom is approaching the Auditor-General and the National Treasury to seek approval for a special procurement dispensation that will allow it to accelerate the purchase of critical goods and services required to address ongoing breakdowns of its coal fleet.
The underperformance of Eskom’s aging and under maintained fleet of 15 coal-fired power stations – along with the fact that the units in commercial operation at the new Medupi and Kusile coal stations were prone to tripping and were delivering only 40% of their rated capacity – is the main contributor to South Africa’s current bout of confidence-sapping load-shedding.
An exercise has even been launched to assess the potential costs and/or benefits for Eskom of not completing the much-delayed and over-budget Medupi and Kusile power station projects.
The most recent supply shortages have been exacerbated, however, by the loss of 1 160 MW of capacity from the Cahora Bassa hydro scheme in Mozambique following damage to the lines as a result of the deadly Idai tropical cyclone. It has been worsened further by depletion of diesel stocks after Eskom resorted to using the diesel-fuelled open cycle gas turbines (OCGT) at far higher rates than planned to address the supply/demand gap arising as a result of trips at the coal stations. The allowable revenue granted to Eskom for the 2018/19 financial year assumed a diesel cost of R600-million, but the utility is likely to spend about R5-billion on the primary-energy source.
Notwithstanding modest demand of about 30 000 MW, South Africa’s theoretical installed base of 48 000 MW has been unable to meet that demand, owing to 17 000 MW being unavailable as a result of planned (8 000 MW) and unplanned outages, as well as the need to sustain a system reserve of 2 000 MW and the unavailability of the 3 000 MW OCGT fleet, owing to a lack of diesel. As a consequence, the system operator has been resorting to Stage 4 load-shedding, involving rotational power cuts of up to 4 900 MW, to sustain system balance and prevent a national black-out.
Briefing the media for the first time since the March 14 resumption of load-shedding, Public Enterprises Minister Pravin Gordhan said the new procurement model would be more responsive, than is the case currently, to Eskom’s need to accelerate the pace of procuring spare parts, equipment, services, coal and diesel. Nevertheless, the model would still include the necessary safeguards to prevented “malfeasance”.
He also indicated that the terms of the prevailing moratorium on the appointment of new staff could be where skills gaps were identified.
Eskom chairperson Jabu Mabuza said “speed was of the essence” and argued that current procurement processes were not “geared up for the speed that is now required”.
He said the operational component of Eskom was at a crisis level, which required a “crisis reaction methodology”.
“Here we need time and speed. Here, we need time to work with the equipment [and] we need speed to address the problems. We need speed to get the equipment and the spares . . . and to get the people that you need to do that work. And you need money to pay for the things that you need to get.”
Eskom refused to provide a firm timeframe for when load-shedding could be eased, indicating that greater insight would be provided once the Eskom technical review team, appointed by Gordhan and the Eskom board on March 4, had completed its assessment. However, Gordhan made a commitment to provide feedback on the prognosis in the coming ten to 14 days.
Both Gordhan and Mabuza insisted that the current crisis at the coal fleet was the consequence of inadequate maintenance of an aging fleet. They also insisted that maintenance budgets had been consistently cut during the terms of previous boards and executive teams in favour of expenditure on new projects.
The lack of maintenance was especially apparent currently in the surge in boiler tube leaks, which had become so serious at some stations that a total of eight units have be stopped entirely to allow for repairs.
The problem had worsened in recent months as a result of the cancellation, 18 months ago, of a contract with a service provider that had provided preventative analysis on potential boiler tube failures. Eskom indicated hat a new contract should be awarded within days to ensure that the activity was resumed.
CEO Phakamani Hadebe said a decision had also been made to raise the maintenance budget by R5.5-billion from an initial level of about R20-billion for the year.
The utility would also be assessing prospects for resuming power purchases from private generators, as was the case under its previous short and medium term power purchase programmes. It would also be seeking to reignite some of the demand-side management initiatives that were rolled-out during previous periods of serious supply/demand imbalance.
Gordhan said that government and Eskom understood the frustration being expressed by citizens and business over load-shedding, but said there was no “magic formula” to addressing the crisis.
“”It’s going to be a huge struggle ahead of us to actually overcome this crisis.”