Found: Fifty million litres of diesel for fifteen days of relief – but source of funding future supplies remains uncertain

23 Nov 2022

A consignment of 50 million litres of diesel found at state-owned PetroSA is headed to Eskom, but it’s a short-term intervention as the supplies will last for only 15 days. The diesel will allow Eskom to run its open-cycle gas turbines as a buffer against higher stages of rotational power cuts.

“For the whole of yesterday [Tuesday], the DPE [Department of Public Enterprises] itself has been liaising between Eskom and PetroSA to find a way within the limited resources Eskom currently has to have immediate availability of diesel,” Public Enterprises Minister Pravin Gordhan told MPs during Wednesday’s question-time with economic cluster ministers.

“By the evening and this morning, 50 million litres of diesel have been found, have been provided by PetroSA. Some of those litres travel by pipeline, some by truck.”

But securing funding for future diesel supplies remains an ongoing discussion.

The latest discussions about Eskom’s crises began with Sunday evening’s “urgent talks” between Gordhan and Finance Minister Enoch Godongwana, who had skipped Eskom in his October Medium-Term Budget Policy Statement.

“A number of options were identified. Those options are currently being evaluated by the Treasury team and we expect a response soon,” said Gordhan, who also referenced discussions with Mineral Resources and Energy Minister Gwede Mantashe on keeping the diesel flowing.

“We are going to do our best to ensure the supply line stays in place to ensure an adequate supply for Eskom,” said Gordhan.

The National Energy Regulator of South Africa (Nersa) has dismissed Eskom’s attempts to recover all diesel costs through annual tariff increases, which the power utility says are still not cost-reflective. From April 2023, Eskom has asked for a 32% increase in the cost of electricity.

The amount that municipalities owed Eskom had increased to R49.1-billion by August, up by R5-billion over just four months, according to Deputy President David “DD” Mabuza’s replies in the House.

Eleventh-hour interventions

Wednesday’s ministerial replies to an urgent question from DA MP Ghaleb Cachalia did not explain why the latest interventions came at the eleventh hour during yet another lurch in the electricity supply crisis.

Perhaps it was Sunday’s Eskom announcement of Stage 5 rotational power cuts that, like Friday’s announcement of Stage 4, linked the lack of diesel with higher stages of scheduled electricity outages.

“Changes in the stages of load shedding will be more erratic due to the absence of the buffer that is normally provided by the diesel generation capacity between generating unit breakdowns,” according to the official Eskom statement.

Also on Sunday, the Department of Public Enterprises issued a statement expressing “serious concerns about the risk of higher levels of load shedding in the coming months”, and announcing: “The DPE is urgently working with National Treasury and Eskom for it to find the money to buy supplies of diesel.”

It seems Stage 5 is the government’s alarm trigger for action.

On Wednesday, no MP asked about the apparent discrepancy in the rands and cents between the power utility and the minister.

While in Eskom’s state of the system briefing last week it emerged the power utility had spent R11.1-billion against a planned R6.1-billion diesel budget, Gordhan on Wednesday talked of a R10-billion diesel budget and actual spending of R14.7-billion.

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These multibillion-rand differences come at a time when South Africa can ill-afford them. Because, diesel or no diesel, for the next 12 to 18 months rolling blackouts will remain South Africa’s reality, as Daily Maverick reported already in September.

https://www.dailymaverick.co.za/article/2022-09-21-the-cold-hard-facts-theres-no-quick-fix-and-the-power-crisis-is-likely-to-get-worse/

On Wednesday, that reality remained unchanged, regardless of the 50 million litres of diesel, funding options and pledged supply stability.

“We discussed a particular target in terms of load shedding until there’s enough megawatts in our system by next year and the years to follow,” said Gordhan of his Sunday meeting with the Eskom board where, again, energy availability seems to have been a key talking point.

The Eskom board appointed at the end of September has been meeting executives and power station managers, but has refrained from public statements.

That’s set to change by the end of the week if Gordhan’s replies to the House are anything to go by.

He repeatedly invoked the five-point response plan President Cyril Ramaphosa announced on 25 July, which focused on increasing plant energy availability, private investment, accelerated renewables, rooftop solar for businesses and homes, and the fundamental energy sector transformation.

“This problem has been accumulating for many years before my time. We take the onus of doing the best to put Eskom on a better footing than before. I do hope the private sector and the investment of the private sector … will begin to have an impact in 2023 and we will see a more stable environment.”

What Wednesday’s parliamentary question session also showed is how steeped in politics rolling blackouts and Eskom are as the governing and opposition parties each claim to have the answers.

No love was lost in the exchanges between Gordhan and Cachalia, with talk of people with “half a brain” and “a quarter of a brain”, and mutual finger-pointing of politicking and electioneering.

The seeming increasingly tighter coordination between the executive and Parliament, an independent, separate sphere of state, also emerged on Wednesday over DA leader John Steenhuisen’s attempted visit to Kusile Power Station.

In a statement, Gordhan described this as breaching National Key Point security protocols and “DA grandstanding that has nothing to do with the energy crisis”. He reiterated this during the question slot, followed by a statement from the parliamentary public enterprises committee chairperson, Khaya Magaxa, on an “illegal oversight”.

“It is regrettable that Mr Steenhuisen, as the leader of the official opposition party in the National Assembly and the second-biggest party in the country, showed gross opportunism [and] failed to recognise and respect a National Key Point. [A]nyone wanting to access them should follow proper protocols,” said Gordhan.

In an online broadcast, Steenhuisen had called for Eskom to be declared a “ringfenced State of Disaster”.

“A State of Disaster will allow government to bypass its own self-imposed obstacles, bottlenecks and cost inflations in the form of unworkable labour legislation, localisation requirements, cadre deployment and preferential procurement,” said Steenhuisen, according to the broadcast transcript.

“These ANC policies lie at the heart of Eskom’s collapse and need to be set aside if the utility is to recover.”

In the House, Gordhan had a different view.

“The less grandstanding the better. Let us not use the electricity crisis as a political football. Let us put our thoughts and ideas together. Nor should we create a fighting environment,” he said.

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Eleventh-hour interventions