Plan to end blackouts

Brian Molefe

Brian Molefe

Published Jun 13, 2015

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Johannesburg- Eskomis close to being able to run its maintenance programme to deal with a backlog accumulated over the years without load shedding, acting chief executive officer Brian Molefe told Parliament on Friday.

“Maintenance without load shedding,” was the parastatal’s new strategy, Molefe told members of the standing and select committees on appropriations when Eskom and the Department of Public Enterprises appeared before them to motivate for a R23 billion government cash injection and the conversion of a R60bn subordinated loan into equity held by the state.

The cash injection and conversion of the loan have already been approved by the cabinet but must be approved by Parliament before they can come into force – a process expected to be completed before the end of the month.

Molefe said after the meeting if Parliament approved the measures, he was confident Eskom would be able to regain investment grade status from rating agencies by 2018, enabling it to borrow at more reasonable interest rates.

Eskom acting chief financial officer Nonkululeko Veleti said the measures would improve the entity’s debt to equity gearing to 67 percent, from 75 percent without them.

Eskom had total debt of R298bn and assets of R457bn, compared to debt of R20bn and assets of R55bn in 2005, illustrating the impact of its build programme on its balance sheet, Veleti said.

Molefe said it was important to note the utility was able to cover its operating costs from earnings and it was only capital expenditure that resulted in the need for borrowing.

Explaining the plan to eliminate regular load shedding, Molefe said with 43 500MW of installed capacity and average demand in winter of 33 000MW, Eskom hoped to implement a “maintenance budget” of 9 500MW, which would ultimately eliminate the requirement for backlog or “risk” maintenance of 6 000MW.

But, he warned MPs, that the proof would be in the implementation and there remained a risk from unforeseen events which could result in load shedding at any stage.

This explained the unwelcome return of load shedding this week – including stage 2 on Friday – for example, after the sudden loss of about 1 400MW from Mozambique’s Cahora Bassa hydroelectric plant and cloud cover over the Northern Cape, which had affected generation from solar plants there.

The extreme cold weather had also pushed demand up to a peak of 34 500MW, Molefe said.

“So it’s not that we don’t have a strategy, we have a strategy that was disrupted. We are in a recovery phase – going back to that strategy and we’re going to see how long we can stay within that,” Molefe said. Before the past weekend, the country had enjoyed a period of 11 days with no load shedding.

However, energy expert Chris Yelland said the public was being misled. “I really find it hard to understand why they keep on over-promising and under-delivering.

“We want a realistic assessment of the facts so we can plan and make proper arrangements,” he said.

Political Bureau

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