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FACT CHECKED: Load shedding - not enough coal or all part of a loan deal?

Dec 13 2018 13:02
Lameez Omarjee

Eskom has attributed load shedding in recent weeks to planned and unplanned plant maintenance.

Most recently, the power utility announced that there was a low probability for load shedding over the festive period, when economic activity would slow down. 

Eskom, however, warned that the system still remained vulnerable and there was still a risk of power outages, which could be attributed to technical faults on the distribution network.

Public perceptions vary regarding what's really behind the power outages. Fin24 conducted a fact check to separate fact from fiction.

Here's what we found. 

Rumour 1: Eskom has implemented load shedding because of a coal shortage

True/False: False

In multiple press statements released by the power utility since load shedding was implemented, Eskom has maintained that the power outages are linked to a capacity issue.

Spokesperson Khulu Phasiwe told Fin24 that the load shedding was linked to generating capacity, which is affected by the status of plants that have deteriorated. He emphasised that the load shedding was not due to a coal shortage.

However, coal stockpiles are low at some power stations, which could compound the problem, especially if it rains.

If there are less than 20 days of supply then all the coal is likely to get wet, Phasiwe said.

"We are now building up coal reserves," he told Fin24, and cited a briefing by CEO Phakamani Hadebe to Parliament's Portfolio Committee of Public Enterprises in November. Hadebe told the committee that Eskom secured additional contracts to supplement coal supply.

Eskom's coal supply has been affected by its contracted supplier Tegeta going into business rescue as well as under-investment in cost-plus mines.

Rumour 2: There's a coal boycott

True/False: False

Phasiwe said that claims by the Middleburg Chamber of Commerce and Industry - that there are piles of coal Eskom is not buying - are false.

Previously, Phasiwe told Fin24 that there were several factors to consider before buying coal, such as its quality, competitive pricing, supplier reliability and procurement guidelines.

"We only buy coal from suppliers that are in our database as a guideline. We can’t buy coal just because we need it. If we do that, we will wind up before a commission one day," Phasiwe said at the time.

In a statement issued on Thursday, the power utility affirmed that it had concluded 35 new coal contracts between January and December 9, 2018 to supplement coal supply. To address the coal shortage at power stations, Eskom said that three days of compacted strategic stockpiles had been created.

Rumour 3: Eskom coal is being shipped from Richard's Bay to China

True/False: False

A blog - South African Market Insights - which considers SA's coal exports between 2010 and 2017, found that 46% of coal exports go to India and 11 % of coal is exported to China. The Richards Bay Coal Terminal (RBCT) processes the majority of coal exports, the blog highlighted.

According to the RBCT's website, it is a logistics company which facilitates coal exports for various SA coal exporting parties.

The RBCT exports across the world - Asia (81.6%) of which the majority goes to India, Europe (10.1%), Africa (7.8%), and South America (0.5%). According to a presentation available on RBCT's website on its operations, coal exporters using its facilities include Anglo Operations, Sasol Mining, Glencore Operations SA, Exxaro Coal, and South 32 Coal. Gupta-linked Koornfontein Mines and Optimum Coal Terminal are also among the exporters named.

"There is no new coal leaving South Africa," Phasiwe told Fin24. He explained that even if coal were being exported to China, it is by companies that have nothing to do with Eskom.

The companies who are assigned to deliver coal to Eskom, are doing so, he assured.

Rumour 4: Load shedding is linked to the China Development Bank loan to Eskom for R33bn

True/False: False

Rumours imply that load shedding is a ploy to loot investments by foreign governments to benefit a few elite.

The loan to Eskom from the China Development Bank is meant for the construction of Kusile power station, Fin24 previously reported.

President Cyril Ramaphosa has also told Parliament that the R33.4bn loan does not have any conditions.

The facility has a grace period of five years, and thereafter the principal amount is repayable by Eskom in 20 instalments over a period of 10 years. There are no specific conditions for this loan, the president revealed in a written reply to a parliamentary question.

Answering questions in an oral reply to Parliament in November, he reiterated that none of the country's assets would be seized in the event of a default.

As for allegations of money being diverted, Public Enterprises Minister Pravin Gordhan has been vocal about the fight against corruption at state-owned enterprises, including Eskom.

In November, Hadebe told Parliament's portfolio committee on public enterprises that 822 out of 1 049 disciplinary cases had been concluded, and 97 of the 822 employees had left the organisation.

Of the 239 instances of whistle-blowing 122 were concluded, and 67 disciplinary hearings are underway following these cases.

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