Page 3 - Energize March 2021

FROM THE EDITOR:

Could the private sector

stop the load shedding?

by Roger Lilley, Now Media

Everyone knows that South Africa’s state-owned power utility Eskom faces serious challenges
in keeping its power generation output sufficiently high to meet demand. But what’s behind
these challenges and how could the electricity supply system be improved?

he country’s economy suffered greatly since According to its latest interim results report
regular load shedding began in 2008. Now, (published in December 2020), Eskom’s debt is now over
Twith the added harm inflicted by 2020’s R460-billion, with debt servicing costs of R94-billion this
lockdown regulations associated with the Covid-19 year. The report makes a chilling announcement: “Without
pandemic, further load shedding will make economic government support, cash from operations remains
recovery this year nigh on impossible. As the country insufficient to meet debt servicing”.
anticipates winter, it’s bracing itself for still deeper Invoiced municipal arrear debt is now R32,9-billion,
and longer episodes of load shedding. Such load and so-called “small power user” debt is R13,9-billion.
shedding leads, not only to cold and dark days and Although the government, as the only shareholder
nights, but to still greater economic hardship. in the business, provided a bailout of almost R88-billion
Since economic recovery and growth prospects (R56-billion in 2020/21 and R31,7-billion for 2021/22), the
depend on sustainable electricity, it was good to power utility continues to haemorrhage cash, with the
see the government act swiftly to source additional, South African economy being the loser.
“emergency” (risk-mitigating) power in the short- The economy loses in two ways: firstly, the R88-
term. It was also encouraging to see the Department billion could have been – and should have been – spent
of Mineral Affairs and Energy’s quick response to the on infrastructure upgrades, such as rural schools,
Requests for Proposals and the subsequent selection roads, railways, or any such projects, and secondly,
of a handful of “preferred” independent power because although the money has been given to Eskom,
producers’ bids. the country still faces load shedding which undermines
The organisation’s Group Chief Executive Officer, business and reduces the tax revenues and job-creation
Andre de Ruyter, has warned that although load which the country desperately needs.
shedding has been temporarily lifted, the power The best decision the government made, in my
utility will have no choice but to continue curtailing opinion, is the inclusion of the private sector in the
load to match available supply for many months yet. generation of electricity. Both the Renewable Energy and
Some experts have suggested that load Risk Mitigation IPP programmes have given the private
shedding may be part of our lifestyle for the next sector the opportunity to provide the additional power
five years. needed, create jobs, and stimulate the economy.
But the utility faces more than just ageing, The IPP projects which have already come on
unreliable generators. The organisation faces a stream, demonstrate that the private sector can build
double financial challenge: It has so much debt that power stations on time, within budget and according
the amount needed to service that debt is crippling; to specification.
and it is owed so much by some businesses, It seems best for Eskom’s ageing and unreliable power
individuals and municipalities, that it struggles to stations to be closed and replaced by new power stations,
make ends meet. built, owned, and operated by the private sector.

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