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Eskom 2012

- Article by SABC (March 5, 2012)

Bongani Bingwa

the ever-increasing fuel price has motorists and industry concerned - it'll soon be r11.68 a litre.

bongani bingwa (carte blanche presenter): "and in april we'll see a further price hike because of higher oil prices and a rise in fuel levies. but that's not all april has in store -electricity tariffs are also set to increase."

bongani: "if you think it's going to cost a lot to fill your vehicle, wait till you see what eskom is currently paying. to keep the lights on, they're using massive amounts on diesel at some power plants while trying to catch up with years of neglected maintenance at others. i can tell you, at 60 million litters a month, this [refuelling a car] cost a pretty penny."

actually billions and billions of pennies worth of diesel is being spent to keep the lights on, to avoid power cuts and to make the system easier to manage during the intense maintenance programme on which they've embarked.

we've all been asked to assist by saving 10% on electricity usage and so far south africans seem to have heeded the call.

but it's not easy to save if you rely on electricity to do business.

shanees (hairdresser): "it is vital! basically we cannot do anything: we won't have hot water, we won't be able to use out tools. we would have to do wet-cuts and send them home."

bongani: "and, without electricity, can you survive?"

shanees: "no, not at all."

some people have made a plan since the 2008 electricity crisis.

shabir: "we bought the generator - it's automatically connected."

bongani: "what would happen [without electric]?"

shabir: "crisis for the business - damaging of the stock... something like that."

it's a tight situation, at times a quarter of eskom's capacity of around 40 00mw has been offline.

that's enough to power three cities the size of johannesburg, says journalist and energy expert, chris yelland

chris yelland (energy expert): "the situation in the early part of this year has been very critical indeed and i don't think the public perhaps realise how critical."

in addition to the planned maintenance, there have been many unplanned breakdowns that saw reserve capacity drop below the accepted margin.

the reserve is the difference between what's cooked and what's eaten. if we keep eating there'll be little left for lean times and we'll have to tighten our belts.

tight for eskom means having only mw left for distribution and that's when we'll be asked to switch off to avoid blackouts.

chris: "on the 9th of january this year they had 450mw. now that is one quarter of what they would like to have when they say the situation is tight... and you could imagine if one generator had tripped out, unexpectedly, we would have had load-shedding."

so the warning is to treat electricity as a rare commodity this year and beyond because there'll be a deficit.

[eskom] brian dames (ceo: eskom): "we have consistently communicated that the peak of our deficit will occur in 2012. and we're now in 2012 and hence what we're now seeing playing out is exactly as we predicted."

bongani: "that clip is from a media conference held by eskom's ceo, brian dames in january this year. eskom uploaded it on youtube and we took it from there. brian dames wouldn't grant us an interview."

instead, eskom's spokesperson hilary joffe agreed to answer our questions.

bongani: "how is eskom coping?"

hilary joffe (spokesperson: eskom ): "we're in a very challenging period in terms of the power system and we need the partnership of all south africans working with us if we are to get through the next couple of years until our new power stations come on line."

60% of eskom's capacity is generated from base load plants that operate on coal, or in the case of koeberg, on nuclear fuel.

hydro plants, pumped storage and gas turbines generate another 25%; this gas turbine outside cape town is known as ankerlig.

another one known as gourikwa is situated near mossel bay.

these open cycle gas turbines are peak plants that only generate power in emergencies and when the demand is high, on average, less than an hour a day.

but they've been working overtime lately to keep the lights on...

hilary: "we are using them more than we were this time last year. they are our reserves and thank goodness we do have them."

but it comes at a huge price. while they're called gas turbines, they actually run on very expensive diesel.

the reason? eskom is still waiting for a gas pipeline to be built, says economist tony twine.

tony twine (economist): "we have to run on diesel until those pipelines are in place to bring the natural gas, which is far more efficient to the open cycle generators."

[eskom] brian: "it is very expensive. to give you a sense, as i said, it costs us 38 cents to produce electricity, on these things it costs us close to r1.40 to produce electricity."

bongani: "that would be the cost per kilowatt hour, which is how we're charged for electricity. but that was in november - apparently not anymore."

eskom says the cost of electricity generated by the open cycle gas turbines rose to r2.50 per kwh in february; 10 to 15 times more than when generated at coal power stations.

bongani: "that's five times more than what eskom is selling it for! but they say it's not that simple."

hilary: "we look at a blended price for generation across all our 27 power stations. plus, we're buying in some power from outside eskom - from independent power producers - and that too costs us more than it would cost to generate using our own coal fired power station. so, it's that blended costs which matters to us."

the fact remains: ankerlig and gourikwa will need lots of diesel in the coming months.

chris: "they use enormous amounts of diesel. i've read figures that are truly astounding. these open cycle gas turbines consume tonnes of diesel per hour."

to be exact 160 tonnes per hour when they're running on full load. and it's for that reason that eskom moved away from diesel in the 1970s, says tony.

tony: "electricity generation in south africa has basically headed away from petroleum fuels as their primary energy carrier input for the better part of 40 years now."

eskom's figures show the average combined diesel consumption at the two gas plants was over two million litres per day from mid-january to mid-february.

that's more than the rocket fuel and liquid oxygen used by apollo 11 to get to the moon and back!

or, if you prefer, a thousand vehicles would be able to travel for a year on the amount of diesel that these plants consume in just one day.

bongani: "how much does eskom pay for diesel?"

hilary: "we don't disclose that figure because it is contractually between us and our suppliers. we do pay less than the market price."

bongani: "so that's not a regulated amount?"

hilary: "no, it is negotiated with suppliers."

bongani: "i mean, is it a considerable difference than what i would pay for diesel?"

hilary: "it is less than you would pay for diesel."

bongani: "considerably?"

hilary: "somewhat."

bongani: "okay so they won't tell us: let's say eskom is getting a discount of r4. so instead of r11 they're paying about r7 per litre for diesel. that would be about r14-million per day; a staggering r5.1-billion a year. and the price of oil is still on the up."

these oil tanks in cape town harbour store massive amounts of imports. it's transported by road to ankerlig and it's said the tankers make up to 14 round trips a day to supply the plant.

gourika is supplied from mossel bay.

there's apparently a mad rush at the moment to find enough diesel to feed the turbines, according to insiders, in the diesel transport industry.

chris: "they're doing it because they have a crisis. they're not doing it because they want to do it. if they were not doing it the lights would go out."

and nobody wants a repeat of those dark days of 2008.

apart from asking south africans to save, eskom has also made deals with large clients, like bhp billiton.

chris: "the smelter gets a special secret electricity price and in return eskom is allowed to interrupt their supply for a certain amount of hours per month. the details of this arrangement are still secret."

bhp billiton was recently warned of possible load reductions at their mozal, bayside and hillside smelters.

bongani: "here's is a report by reuters saying ferrochrome producer, merafe resources and london based xstrata announced this week they would shut five of their furnaces until the end of may. one can only speculate what it's costing them and the economy."

chris: "if we had foreseen the demand growth in the country; if we had built power stations timeously; if we had encouraged independent power producers; if we had encouraged industrial co-generation and planned these things carefully and properly this wouldn't have happened."

another cycle of load shedding would be a blow to business confidence.

chris: "it affects the gross domestic product; it affects jobs... it affects our ability to be competitive on world markets. to meet demand - if we are constrained in our energy supply it has a huge knock on affect and a huge cost to the economy."

- Article by SABC (March 5, 2012)