Eskom paints a bleak picture of future power supply

The parastatal has delivered it interim results for 2014 in Johannesburg.

FILE: Eskom says the utility is now in its most challenging position in living memory. Picture: EWN.

JOHANNESBURG - Eskom says with warnings of more rolling blackouts, the utility is now in its most challenging position in living memory.

The parastatal has delivered it interim results for 2014 in Johannesburg, which shows a bleak picture for the future of electricity supply.

Eskom instituted rolling blackouts for the third time this year at the weekend as fuel reserves ran out, forcing it to call on industrial customers to cut their consumption by 10 percent.

The utility says the power grid will remain constrained until more units from its build programme can come online.

It says its plants are old and maintenance has become critical.

Eskom says the grid will remain tight for the rest of summer and South Africans may have to deal with rolling blackouts until at least next year March.

The utility's chief executive Tshediso Matona said the parastatal's financial position is systematically deteriorating due to rising primary energy costs including diesel and coal.

"Our financial health has been deteriorating in recent years. The support package recently announced by government will go a long way towards easing our liquidity. For the period ahead, we will be living on edge. Eskom has kept the lights on for the longest time ever, even when the company could not bear it."

However, Minister of Public Enterprises Lynne Brown says she is optimistic that the parastatal will recover from the current situation.

"It gives me comfort that this is the beginning of a turnaround."

The first unit of Eskom's Medupi power plant is still on track to come online in Decemberbut the project is almost two years delayed.

The government said last month it would inject R20 billions of cash into the struggling utility and said it could also convert its existing R60 billion subordinated loan to equity.

Even with the cash injection and permission to raise electricity tariffs granted by the energy regulator, Eskom said its "financial health is under strain".

Eskom's net profit fell 24 percent to 9.3 billion rand in the six months to end-September, and it forecast a 93 percent decline in full-year net profit to R500 million.

Ratings agencies Standard & Poor, Fitch and Moody's recently downgraded Eskom and chief financial director Tsholofelo Molefe said that "any further downgrade would seriously impede Eskom's ability to raise external funding".

Eskom has urged South Africans to continue to conserve power.


Extreme weather conditions, rain and even a severe storm which resulted in a mini tornado in Soweto south of Johannesburg, all played a part in some of the outages experienced this week.

Eskom says it has tried to implement load shedding over the weekends instead of during the week when electricity cuts will affect business.

Johannesburg has also experienced sporadic outages in several suburbs due to weather, technical faults and cable theft which are an ongoing issue.

City Power's Louis Pieterse says these issues must be reported.

South Africans meanwhile have been urged to use electricity sparingly during peak hours.

At the moment, diesel is being used to run open gas turbines to make up for the shortage in generating capacity, but the reserves are running out despite more fuel arriving in the country on Monday.