Is Eskom facing another power crisis?

Eskom may have to declare a power emergency and start load shedding. Yes, even though power demand is well below theoretical production. It seems the parastatal company is running out of coal for most of its coal-fired power plants. The coal Eskom purchased was under long-term agreements tied directly with specific mines. However, the mines have been producing less coal, due in part to agreements with require Eskom to bear ALL capital costs. And, the coal is then sold on a cost plus basis.

As a result, over the past few years, according to insiders, shipments are down about 20% from planned levels and Eskom is using more coal that it can source. Eskom is asking Nersa for ZAR67-billion for unbudgeted costs and wants to pass along huge increase to users.

To meet the shortfall so far this year, Eskom reportedly has been using diesel turbines to meet demand. “This could be worse than the power crisis in 2008,” one insider said.

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