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Ramokgopa: Running diesel plants may be costly, but loadshedding is far worse

10th May 2023

By: News24Wire

  

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Eskom will likely exceed its diesel budget this financial year, but the cost of loadshedding to the economy would be far worse, said Electricity Minister Kgosientsho Ramokgopa.

The minister was responding to questions in Parliament's National Council of Provinces on Tuesday.

Ramokgopa said that at the rate Eskom is relying on diesel to run its open-cycle gas turbines to stave off higher stages of load shedding, it would likely run out of the allocated funding for diesel. In terms of the 18.65% tariff hike the National Energy Regulator of South Africa approved for Eskom, about R8-billion of the revenue raised will cover diesel costs. As for government's R254-billion debt relief to Eskom, about R22-billion of this will go toward covering diesel costs too, Ramokgopa explained.

"At the rate of burning diesel, we will exceed the money," he said.

But there were broader issues at stake, he argued.

"The question is not whether the fiscus can afford it, but rather where the South Africa economy can afford it," he put forward.

The Reserve Bank has estimated loadshedding shaves off two percentage points of GDP growth. According to the bank's monetary policy statement from January, loadshedding stages between 3 to 6 are estimated to cost the economy between R204-million and R899-million per day.

Ramokgopa said that loadshedding saw the loss of more than 650 000 jobs in 2022, and this will worsen as the power crisis continues. It's impacted production processes for farmers, and this has also filtered through to food inflation, which the poor are disproportionately impacted by.

Taking this into account, Ramakgopa said the choice between running open-cycle gas turbines or saving the South African economy is simple. "The principal occupation is saving the South Africa economy and the poor disproportionately affected by loadshedding," said Ramokgopa.

Risk of grid collapse

Ramokgopa also addressed concerns about whether the country would face a blackout. He explained that there is a reserve margin of 2 200MW of energy generation capacity that must always be maintained for grid stability.

If there is Stage 6 loadshedding, then Eskom's system operator will not draw on the 2 200MW to reduce loadshedding to Stage 4. This is in order to protect the grid.

Ramokgopa said it is "highly unlikely" to have a grid collapse if the reserve margin is protected. He said there are plans in place for a worst-case scenario, but this was unlikely to materialise because "safeguards" are in place.

Ornamental presence

During the questioning session, Ramokgopa dismissed suggestions by Democratic Alliance member of Parliament Dennis Ryder that he has limited authority because Mineral Resources and Energy Minister Gwede Mantashe has a "hold" on the president.

"I am not a junior minister … There is nothing in the Constitution that attaches hierarchy to ministers," he said. "My presence is not ornamental. I bring a significant amount of technical skills in addition to my political prowess," Ramokgopa added.

Responding to questions about whether he would advocate having Eskom under his oversight, Ramokgopa said this is for President Cyril Ramaphosa to determine. Currently, Eskom's management and board account to Gordhan.

He explained, "I am not the one to prescribe to the president as to whether or not an entity should report to me. The president will make the determination as he sees fit."

However, Ramokgopa had been given "scope" to engage and work with Eskom, particularly to improve the performance of coal-fired units, he said.

Ramokgopa explained that Ramaphosa had invited him, Gordhan and Mantashe to coordinate their efforts to resolve loadshedding.

"… It is an emergency situation. It is an existential problem of economic proportions. This is something that requires our collective attention," he said.

Edited by News24Wire

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