Cape Town - Bypassing municipalities to directly supply electricity to residents through prepaid meters would help Eskom balance its books and address its R25 billion municipal debt, Eskom’s interim chief executive Brian Molefe reckons.
Speaking to journalists after a marathon meeting with Parliament’s public enterprises committee members, Molefe said it was an initial idea of his, and not yet canvassed with the government or the Eskom board.
“Perhaps we can start with the municipalities that are in arrears… We (Eskom) can’t be a source of funding for municipalities at the expense of the national grid,” he pointed out.
Overall municipal debt stood at R25bn, the power utility noted. Some of that debt was current – or money owning on the latest bills – but longer-term municipal debt was about R4.5bn.
Eskom documentation showed the worst-performing municipalities were just more than R3.3bn in arrears for more than 90 days.
Some R404 million was due for between 30 days. Soweto owes R8bn, it emerged on Wednesday.
It was unclear whether the debt arose because municipalities failed to pay over electricity fees – electricity tariffs are a key source of income for local government – or whether residents were not paying their bills.
Molefe said if about R20bn could be received upfront through prepaid meters, it would assist Eskom’s cash flow and balance sheet.
The power utility has been rated by international rating agencies down to non-investment grade, a rating that severely hampers efforts to raise money on the markets.
Earlier, Molefe told MPs: “In the long term, I think the whole of South Africa must move to prepaid electricity. Perhaps if we can all move to prepaid electricity, we might be able to ask for lower tariff increases, because the cash requirement of Eskom will then be taken care of upfront.”
Historically, during the apartheid era, Eskom had directly supplied townships, as well as municipalities in the white areas.
In recent years, the power utility started rolling out prepaid electricity meters, but this has often triggered community protests.
Prepaid meters are regarded as too expensive for consumers and discriminatory, as they are seen as aimed at poor South Africans. Similar protests broke out repeatedly over prepaid water meters.
On Wednesday, Soweto emerged as a case in point during discussions in Parliament.
It also emerged that Eskom’s prepaid strategy was said to be “very slow”.
The strategy was to install prepaid meters section by section for those households that agreed to them, while disconnecting households in areas that refused them.
With the idea of universal prepaid electricity meters now in the public domain as an option, Eskom’s main message on Wednesday was that maintenance was crucial as the alternative was “too ghastly to contemplate”, according to Molefe.
He dismissed claims that Eskom had been delinquent over maintenance, saying it had not received the necessary funds despite repeated requests.
Radio 702 reported Molefe saying on Wednesday that the coming long weekends would see an “Eskom maintenance festival” as engineers and technicians go all out to fix ageing plant.
This meant they would spend the weekends – when it is expected there would be less demand for electricity – working, he added.
As the power utility is tackling its maintenance backlog, Eskom is also on the hunt for an additional 3 000MW on its grid every day.
Molefe said he was confident it could be achieved by the end of the year, marking an end to load shedding. This comes as Public Enterprises Minister Lynne Brown has warned South Africans that load shedding was here to stay for about two years.
Eskom executives indicated they had finished a list of various options to find this 3 000MW on Tuesday night, but had yet to submit this to Molefe. No details were announced at Wednesday’s media conference.
It is estimated load shedding was costing the economy between R20bn to R40bn a month. It has slashed economic growth.
Facts and stats
* 121 generating units, 32 more than in 2001.
* 43 594 megawatts total generating capacity, of which 82 percent comes from coal-fired power stations.
* 32 000MW is a typical day’s electricity demand.
* On any given day, 5 400MW are lost due to planned maintenance and 6 800MW for unplanned shut-downs.
* 46 days of coal stockpiled.
* Eskom’s maintenance backlog is estimated at three to five years.
* R25 billion is owed to Eskom. Municipalities owe R3.319bn on the over 90 days book and R404m over 15-30 days. Soweto owes Eskom R8bn.
* By 2021, South Africa’s two new coal-fired power stations, Medupi and Kusile, will add a total of 9 600MW to the grid – each will have six 800MW generating units – and the Ingula pumped storage scheme will add a total of 1 332MW via four pump turbines.
* Current estimates of the final costs for Medupi are R105bn and Kusile R118bn. (Note: Running three years behind schedule, initially Medupi was expected to cost R69bn and Kusile R80bn.)
* Eskom plans to complete a second unit at Medupi in 2017 – the first is complete but must still be connected to the grid; the first Kusile unit by 2017 and the first Ingula unit in 2016, with the other turbines online in 2017.
* Eskom is spending R280bn over the next five years on almost 8 000 projects: R159bn for new builds, R29bn for major overhauls, R63bn for refurbishment and replacement, R10bn for new connections and R19bn for legal, regulatory, safety and environmental compliance.
* The new capacity also includes replacing six steam generators for the two Koeberg nuclear power station units, as well as nuclear fuel, 46 wind turbines for a total of 100MW and concentrated solar power of 100MW.
* 160 000 households were connected to electricity in the 2013/14 financial year.
* Eskom has 46 000 employees; another 15 575 workers are contracted by private companies at Medupi and Kusile.
** Sources: Eskom presentation to parliamentary public enterprise committee and replies to MPs’ questions; Eskom media briefing.
Political Bureau