Eskom ‘could run out of funds by month-end’

15 January 2015

Eskom, the generator of approximately 95% of South Africa’s electricity has signed a number of deals — 26 at last count — with various private power suppliers or independent power producers (IPP), as well as purchasing power from Namibia and Mozambique, in an effort to keep the country’s lights on.

Due to high electricity demand and the unavailability of some generating units, Eskom began deploying a nationwide load shedding program late last week.

The current issues are nothing new for the cash-strapped company. In 2014, the country’s Treasury provided Eskom an R20 billion bailout to help the utility meet the day-to-day electricity needs of households and businesses, funding the use of diesel-generated power, which costs R3 per kilowatt hour, compared to coal-generated power, which costs far less.

The use of diesel power generation is supposed to be a temporary measure, as the generators are designed to run for 3 hours, but due to the large shortfall, they have been running for up 12 hours at a time.

Without another bailout, some speculate that the country will face a perpetual series of blackouts and, ultimately, a total system outage. In fact, Public Enterprises Minister Lynne Brown has predicted that “Eskom will run out of money by the end of January.”

With reserve margins at an all-time low, Eskom is in a precarious position. However, some analysts say they are taking the right steps.

Related articles

Read the latest issue

Latest Issue