Fear of unforeseen Eskom system collapse
Fin24

Fear of unforeseen Eskom system collapse

2015-01-13 10:59

Johannesburg - The admission by Eskom's CEO that it faces serious financial trouble and that load shedding will commence as from next week onwards do not bode well for South Africans and business in particular, according to Christo van der Rheede, CEO of the AHi.

"Nevertheless business commend the CEO for admitting that Eskom faces a national emergency," he said in a statement.

"A bigger worry, though, is the fear of unforeseen incidents that might cause the entire system to collapse. Eskom's diesel budget is also very limited and it pins it hopes on government to assist."

READ: Nene: Eskom must get its house in order

The AHi wants Eskom to provide a detailed finance plan to government, outlining how it will manage its cash flow.

However, many municipalities are not paying their bills and according to Van der Rheede municipal debt bedevils Eskom's financial sustainability as some municipalities are "completely dysfunctional".

Eskom's liquidity position is also heading for a significant decline in profit due to rising costs and it's reserves, valued at R20bn, are under severe pressure, according to the AHi.

"Megaprojects are delayed, but Eskom is very close to synchronising Medupi unit 6, with Kusile to follow by the end of year. Erratic power will flow to the grid before full power is achieved during the first half of 2015," said Van der Rheede.

"System constraints will heightened from January 2015, with load shedding as from next week onwards."

The AHi encourages businesses to prepare themselves for a rough ride and to rather invest in their own power supply.

READ: No quick fix for Eskom - analyst

Deals with private suppliers

The current energy challenges have put Eskom's Renewable Energy Independent Power Producer (IPP) Procurement Programme in the spotlight again.

Eskom told Fin24 on Tuesday that it is important to note that its IPP programme is being driven by the department of energy and that the current IPPs that have signed – about 22 of them – have been connected over two years ago already.

Plans are underway to connect even more.

"Eskom remains committed to developing the electricity supply industry by facilitating the integration of IPPs into the national grid and buying electricity from IPPs for national distribution," Eskom told Fin24.

"IPPs play an important role in ensuring the security of supply at a time when Eskom’s generating capacity is closely matched by electricity demand."

Eskom interfaces with IPPs through two organisational units. Firstly, Eskom’s grid access unit manages the end-to-end network service relationship with generators and IPPs connecting to Eskom’s grid.

"Its other key role is to facilitate grid access by ensuring the process is efficient and all commercial options for IPPs are available in a transparent and non-discriminatory manner," according to Eskom.

Secondly, the buyer is housed in the energy planning and market development unit, which enters into power purchase agreements with IPPs. This unit also assists the department of energy with the country’s integrated resource plan.

The first project under the RE-IPP was connected to the grid on September 27 2013 and the first IPP was commissioned on November 15 2013.

Eskom has successfully facilitated the connection of 22 renewable energy independent power producer (RE-IPP) projects with a capacity of 1 076MW to the grid. Of these a total of 467.3MW is currently available to the system.

The department of energy has approved an additional 1 457MW pursuant to the third bid submission. No contracts have yet been signed for this capacity.

A further 1 005MW of capacity was signed under the department of energy's Peaker programme.

ALSO READ: Promote private generation to address electricity crisis

Comments
  • Karen - 2015-01-13 11:05

    aggg man, stop talking and START doing IDS!

      Ugogo Showerhead - 2015-01-13 11:12

      EISH EKSDOM!!!!!1...I AM IN.serious financial trouble and...SINCE MY municipality IS not paying their bill,I WILL NOT BE PAYING THEM EITHER....GOGO....

      Revelgen - 2015-01-13 11:13

      The Eskom debacle is a clear indication that the ANC is absolutely incapable of running a modern country. They were warned of impending disaster in 1997 - and did NOTHING. Now our silly little corrupt president actually blames 'apartheid' when Soweto was already electrified in the late 1980's??? The result of the Eskom debacle? Even more unemployment. Less business tax money coming in. Less help for the poor. SA voters need to wake up to the fact that the ANC and its unholy 'Tripartite Alliance' are a total mess. Voting them out is the ONLY thing that will save SA. I don't care what the colour of the people in government is, but I DO care that they are capable of strategic planning and implementation.

      Yob Vas - 2015-01-13 11:15

      there used to be 2 absolutes in life - death and taxes, now there are 4, you can add, ANC stealing and Eskom load shedding. oh sorry, I forgot, load shedding is apartheid's fault....

      Cautious But Wise - 2015-01-13 11:22

      From what I heard Eskom can buy diesel for quite a few months by only recovering Soweto's debt.

      Heywood Ublowme - 2015-01-13 11:24

      The same CEO said the other day that there was "no crisis" but now admits that Eksf*kkendom faces a "national emergency" - now what's the f-f-f'ing difference?

      trev2 - 2015-01-13 11:26

      If they could only cut off all people that are in arrears and all illegal connections, there would be no need for load-shedding.

      goyougoodthing - 2015-01-13 11:41

      Tell the truth, the government has been stalling IPPS for years because the system is too transparent, there are no margins to skim and the entire process is self funded.

      Bruce Gatland - 2015-01-13 11:42

      It seems rather simple to me. If a municipality is not paying their Eskom bill, stop supplying them. That's what would happen in my business. Continuing to supply a non-paying customer on credit terms, is reckless lending and contravenes the NCA.

      WollieVerstege - 2015-01-13 12:31

      Last set of batteries being installed this week. Soon I will be Eskom Free. Has anyone thought about what is going to happen with Eskom's future cash flow? I mean most of the current paying customers I know are getting off the grid - partially or fully.

      Antony John - 2015-01-13 13:07

      Wollie, they'll just up our taxes....can't totally escape the rot....unless you leave to a country that is governed by well qualified individuals...

      Cautious But Wise - 2015-01-13 13:49

      @ Antony: Eskom pays for imported parts and diesel in US$. Increasing the income tax rate will give the SA government more ZAR which is useless to improve Eskom's generating capacity with. If they however increase the VAT rate, more people will save instead of buying imported goods, improving the current account, thus providing government with more foreign currency to run Eskom. A strike in any sector generating foreign currency directly reduces SA's ability to finance Eskom's capital expenditure and foreign sourced inventory.

      Made Inthe South - 2015-01-13 14:22

      Here are the real facts for Eksdom failure: No new power stations built in 20 years Cadre deployment[Also called BEE] Lack of planning and maintenance Excessive bonuses and R43 Million Gupta sponsorships Eksdom negligence like the silo collapse and turbine blowup Millions of illegal connections Free power to ZimBOBwe and Nkandla Medupi and Kusile 4 years late because of strikes and faulty welding to the R38 Billion boilers by Hitachi Power Africa[ZANC owned] Letting coal get wet in the rain. IT IS NOT APARTHEIDS FAULT

      Renny Meere - 2015-01-14 16:49

      What I would like to know is where are all the ANC supporters on these forums, they seem very quiet all of a sudden, go figure?

  • Made Nza - 2015-01-13 11:07

    If all government departments and employees were productive for an hour? Surely Eskom would be down for a month!

      Dexter Tangocci - 2015-01-13 11:09

      Yeah total grid collapse

      Andrew Terr - 2015-01-13 11:58

      Funny thing is,back in the day the cadres targeted sub-stations.Today they are IN CHARGE and doing an even better job at forking things up.

      Genet Joobs - 2015-01-13 13:04

      Actually, there is talk of total grid collapse. Very possible.

  • Werner Nel - 2015-01-13 11:11

    Rebates for personal solar installations? Selling back excess to the municipalities? Zero tax rates on Solar installations? That includes import duties.

      Made Inthe South - 2015-01-13 14:27

      ZANC losing out on tax?I don't think so.It is just their t-shirts that they import from China that must be tax free

  • Scouter Four-One - 2015-01-13 11:13

    The knock on effect is almost incalculable - planners and investors will be factoring in this possibility(dare I suggest probability?). The principle of 'cause and effect' is precisely what led to the ultimate demise of a once encouraging 'early' Zimbabwean economy. The agricultural sector being a good example of just how bad the 'effect' can turn out to be. The truly worrying aspect is that there is no immediate 'quick fix' for Eskom's maladministration - no matter how much money is thrown at the problem, improving power resources & output has a lengthy lead time attached to it. And that is a lead time the SA economy cannot now afford.

      Made Inthe South - 2015-01-13 14:25

      Why are Medupi and Kusile 5 years late[Operationally]?Because of violent labour strikes and faulty welding to the boilers,the boilers that Hitachi Power Africa[ZANC owned through Chancellor House] had a R38 Billion contract for.That resulted in them flying in overseas welders to do it over.And adding to cost.?Google it Proudly brought to you by the ZANC Alliance[Of which Numsa was a part]

  • Philip Mare - 2015-01-13 11:13

    Did the CEO of Eskom not get a nice vonus in December? I thought i tead it right here?

      Made Inthe South - 2015-01-13 14:29

      And they are giving R43 Million to the Guptas for breakfast meetings this year

      Pietro Mariani - 2015-01-14 18:34

      and they cry help from the GOV for money. I do not understand that logic CAN SOMEONE PLEASE EXPLAIIN IT TO ME. If company is in financial trouble but declares profits and pays hefty bonuses to the CEO's and says to the GOV we need money in the same sentence. EISH maybe I Am dom, or they making miracles better than GOd

  • Marc Anthony Webb - 2015-01-13 11:18

    Can you ever believe we are in this situation???Sure I understand Jan Van Riebeek wasn't to good on the maintenance side of things but gradually we built this country (Black-White) and it was handed on a platter to the ANC and all that was required was planning and the basics.But NO!!! They have been to greedy and only interested in themselves at the expense of the Nation and then blaming the past for their shortcomings.Let me miss a payment to the Council I get cut off quicker than you can buy drugs from someone in Hillbrow and now combined that the State believes we are all imbeciles enough should be enough.

  • Hennie Cloete - 2015-01-13 11:20

    This admittance of the CEO must have come as a great relief for Mac (or is it Gwede?) Etzinger.

  • Bruce Gatland - 2015-01-13 11:24

    It seems rather simple to me. If a municipality is not paying their Eskom bill, stop supplying them. That's what would happen in my business. Continuing to supply a non-paying customer on credit terms, is reckless lending and contravenes the NCA.

      Bruce Gatland - 2015-01-14 14:24

      Shelley, the same residents choose the councilors that are stealing their money.

  • Lynn Hugo - 2015-01-13 11:30

    eskom do you want SA to feel sorry for you? We don't!! your bonuses you took for no planning, just give it back.

  • Marius Schoeman - 2015-01-13 11:30

    Yet Eksdom still exports electricity to neighboring countries at reduced rates... All of this is thanks to the cANCer that is running our country... Reminds me: The leader of a Kingdom is known as a King. The leader of an Empire is known as an emperor. For the same reason South Africa is known as a country....

  • Brad Smith - 2015-01-13 11:31

    Admission...N24. Not admittance. Ai!

  • Leigh-Rose Jenkins - 2015-01-13 11:34

    How can it be "unforeseen" when practically the entire population has been saying that it's about to collapse for long enough now...?

      Arie-Willem Meijer - 2015-01-13 11:42

      Isn't it time for a proper audit of eishkom. Not just the financials but staff in key positions. Can you actually do your job or how did you get the job? Sounds to me like an incompetent lot is running the show

  • Sean Bagley - 2015-01-13 11:35

    Eskom's request for a budget to have new stations built that got denied by that moron Thabo Mbeki was never part of this "unforeseen system collapse right?

  • Graeme de Villiers - 2015-01-13 11:35

    So then surely if the fear exists, by definition, WHEN the system collapse happens, it can no longer be classified as unforeseen? Or will it also be blamed on apartheid, because nobody saw that coming either?

  • Leigh-Rose Jenkins - 2015-01-13 11:35

    Maybe it's time for the working class of this country to hit the streets in the same manner as the unemployed do on a regular basis!

  • Anakin Stealthwalker - 2015-01-13 11:40

    Electricity WASTAGE: The message is still not coming through to some businesses: IE why must ONE hardware shop run 70x 400W lights inside? That is 28 000W [28kW] drawing 121,73A @230vAC. Saw it just now buying duct-tape?! Is this ABSOLUTELY necessary in BROAD DAYLIGHT? HELLO? HELLO? Nobody's home!! How about saving just half of that (1/2) = 14 000W by switching off every 2nd light? This is so infuriating, Eskom must URGENTLY install a TOLL-FREE number where people can report this and APPOINT a team of motivated mobile advisers to see where they can save electricity. Do this NOW while you still can. I understand fully that some factories and industries are not able to reduce their usage, but those who can are just plain lazy, uninterested and would rather just wait for the next rolling blackout when their shops get plunged into darkness. How will they do business then? Rather have 1/2 [half] the lights and keep the shop open for business?

      Magus - 2015-01-13 12:15

      You should go to the dark side, if they can afford to burn the lights they should burn them. If we all just saved power we will just be delaying the inevitable as nothing gets done until a crisis is upon us anyway

      Burret Groenewald - 2015-01-13 14:10

      I got a special LED light for that and petrol stations. Its a 75% savings on the 400w and taken me a year with no success. On avg 12 lights p/station is 4.8kw(4800w) saving 3.6kw(3600w) p/hour x 12 hours 43kw(43000w) p/day. There are 5000 petrol stations. If im right thats a saving of 215MW p/day.

      Hennie De Ruyter - 2015-01-13 15:18

      I also tried special LED lights. They cost 5 times the price of a compact fluorescent light and do not last half as long.

  • Daren Steenhuis - 2015-01-13 11:40

    My predictions for this country if Eskom's grid collapses: The whole country goes dark, possibly for a very long time. Some areas will then lose water supply as well. If there's no power for a very long time, people can't cook food, can't wash or clean their clothes, people who lose their water might not even be able to clean themselves, eventually people might start getting sick and dying. In order to stop that from happening, there could be riots in the street, protests left, right and centre. South Africa might risk civil war. And people thought apartheid was bad. All this could become possible because of the most incompetent, corrupt, and brainless people running Eskom, while being influenced by the poisoned, ANC that are run by low life thugs who support a man that stole billions of OUR money. I wonder how the ANC, and especially Zuma, will react once they find out hw many people truly want them to rot in Hell. Something tells me they still won't care. They never do anyway. There are a lot of times where I wish people would storm the Union Buildings or Nkandla and make Zuma and the ANC answer for their crimes the same way the French brought their own justice upon King Louis XVI in the French Revolution. People deserve freedom from this oppression and if something isn't done to right the injustice of all injustices, people might begin fighting for it. But hey, at least Zuma will finally pay then.

      cobienk - 2015-01-13 13:04

      D'accord

      Genet Joobs - 2015-01-13 13:07

      I think you are very close to the truth about total grid collapse Darren.

      Stefan Van Der Spuy - 2015-01-13 14:32

      So much more reason to leave no stone unturned to get expertise flown in from abroad if necessary to ensure that the grid is redesigned/redundancy and contingencies added, to ensure that a total collapse cannot occur. Surely that must be the first priority.

  • Daren Steenhuis - 2015-01-13 11:44

    All this nonsense, all of it. Proudly brought to you by the ANC. And 62% still apparently enjoy having them in power. Honestly, I wish they never existed

  • Kevin Lowings - 2015-01-13 11:46

    Why do anything as long as they can blame something else. No point in doing work when you can sit back, blame apartheid, collect your salary AND bonus! The "powers" that be are probably sitting in the sun drinking beer or holidaying overseas where there is electricity. Hope you dingbats are proud of yourselves?

  • Hennie De Ruyter - 2015-01-13 11:48

    Exactly how many of the coal power generating units are down? It is high summer with lower usage and yet the diesel gen-sets are running flat-out. It is not what they say, it is what they keep quiet about what scares me. I wonder if Rand Water has started installing back-up power for their pumps? Probably not, Joburg is about to turn into a very ugly place.

  • Jaun Meyer038 - 2015-01-13 11:49

    It is beyond me that the president still blames apartheid. The clear indicator is that the National development plan was not followed. Billions in outstanding revenue. Millions of illegal connections. Why am I paying for other to steal? Withholding tax due to no confidence should be my right!!!!! Bunch of retards.

  • Mark Crozier - 2015-01-13 11:50

    The damn plane is about to crash into the mountain and our President is doing what...? Visiting Guinea. Useless!!!

      Jaun Meyer038 - 2015-01-13 12:04

      He's apparently building international relations. Sounds like a dirty weekend away - and knowing that cross eyed woodworm, that’s exactly what it is.

  • Frank Persson - 2015-01-13 11:59

    Incompetence at a massive scale

  • coenraad.vaneeden.5 - 2015-01-13 12:31

    My father told me it will happen , he said give them 25 years and it will come to a stand still,we need some magic

      Bradley Duncan - 2015-01-13 14:45

      He wasn't far off his prediction!

  • Ian Murray - 2015-01-13 12:36

    Effort must be made to enable as many households as possible be energy independent. With solar PV this is possible. SA has many suitable properties and excellent radiation levels.

      Selborne Collins - 2015-01-13 12:42

      Ian, I hear you, but the point is the country should never have BEEN IN THIS SITUATION IN THE FIRST PLACE, THE REGIME WAS WARNED AS FAR BACK AS 98 ABOUT THE NEED TO INCREASE CAPACITY.........

      Anakin Stealthwalker - 2015-01-13 13:08

      Here in Randburg we have too many trees (shade) and those panels need to go to a central UPS to charge batteries. It's not only the cost of the panels to be considered - it's part of system. Maintenance (shouldn't use that word...) is also an issue - bird crap and dust can signicantly reduce the efficiency of the panels. It may however be practical in certain areas.

  • Barry Pointeer - 2015-01-13 12:41

    As I said a few weeks ago.. when ever these idiots say there is no crises just give it a few weeks and they will change their tune.

  • Mark Bateman-Evans - 2015-01-13 13:22

    Load shed on weekends... That's what they're saying. Our municipality load sheds the area where i live on Sunday afternoon from 17:30 to 20:00 and a Saturday from 15:30 to 18:00. Stage 3 load shedding is from 15:30 to 20:00 on both days. No super rugby or LIVE formula 1 for me... Switch off Soweto because they dont pay! There's a few hundred MW added back to the grid!

  • Allan Brits - 2015-01-13 13:22

    But didn't he get a R20ml bonus just before Christmas

  • Peter Webb - 2015-01-13 14:59

    This bloody idiot CEO last month said there was no crisis with Eskom. WE ARE ALL IN BIG TROUBLE THANKS TO ANC.

  • Jabu Mtshali - 2015-01-13 16:08

    Just relax boys, we are working on it and we need incentives to do so.

  • Philip Dawson - 2015-01-14 12:04

    Members of Government and the ESKOM EXCO involved in the past 15 to 20 years should be had up for Treason. Oh hang on a moment - its all to do with the now distant past which looks like it will be the excuse for anything that is wrong as long as I live.

  • CyberDog Breath - 2015-01-15 11:47

    The rest of the world has terrorism. South Africa has Eskom and the ANC. #StillkeepingupwithJoneses

  • Jeremy Michael Peacock - 2015-01-20 14:38

    Simple solution. Go to Stage 2 load shedding immediately in those areas where there is a debt to Eskom, stop throwing good money after bad.That will put the pressure on those municipalities to settle their debt.

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