Extreme load shedding ahead as Eskom diesel budget runs low

Anchorlig station by Eskom.

  • Eskom has run out of money to buy diesel.
  • The embattled energy company says it won’t overspend like it has in the past.
  • The implication is deep, with lengthy load shedding on the cards.
  • For more financial news go to News24 Business front page.

Eskom said Sunday it ran out of money to buy diesel and plans to stop ordering more until April 1, 2023.

The consequence of this will be extreme load shedding, which has not yet been experienced in SA.

At a state-of-the-systems briefing last week, Eskom’s Chief Operating Officer Jan Oberholzer said Eskom has sold since 1. This was later revised to R11.1 billion.

“If we continued to burn diesel like we have for the past seven months, the cost would be astronomical. But we don’t have the money to spend it. We could pay if the municipalities would pay us,” said Oberholzer the hour.

The implications of Oberholzer’s statement begin to diminish as SA begins the week with Stage 4 load shedding.

READ | Tier 3 load shedding and worse: Prepare for Eskom’s new normal

In the past, Eskom has overspent its diesel budget, arguing that the R500 million per day per tier cost to the economy is greater than the cost of buying diesel. Eskom has therefore spent lavishly on diesel to keep the lights on, with the only cap being the amount of diesel that can be physically delivered and burned each month. This equated to around R2.4 billion diesel per month.

But SA’s national energy regulator (Nersa) has refused to allow Eskom to fully reimburse its costs for diesel spending from consumers, arguing that more efficient and prudent operations would not have to resort to such excesses. This has left Eskom out of pocket and its executives under pressure from the National Treasury for overspending and failing to streamline the sinking ship.

On Sunday, in an exchange published on Twitter with analyst Chris Yelland, Eskom spokesman Sikonathi Mantshatsha confirmed that Eskom does not plan to procure more diesel by April 1 next year and that its tanks are empty.

At the briefing last week, Eskom provided a statistical forecast of load shedding over the next 10 months. The forecast indicated that by August 2023, SA would experience Stage 3 load shedding most days of the month, assuming diesel was burned to make up the deficit. The diesel needed to keep the system at Tier 3 varied from R3 billion to more than R7 billion per month. Since burning this amount of diesel is physically and logistically impossible, it was implied that load shedding would actually be several levels above level 4.

Eskom also warned at the time that the system was so unpredictable that there was a 4,000 MW variation at any time. The system can therefore jump from level 2 to level 4 or from level 2 to zero in a short time.

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