NATIONAL NEWS - Eskom acting CEO Phakamani Hadebe yesterday gave assurances that Eskom is addressing coal shortages at seven of its 15 coal-fired power station and there would not be load shedding this winter.
He also confirmed Eskom was resuming its investment in cost-plus mines, scrapping a decision by former CEO Brian Molefe to phase out its agreements with these dedicated mines.
Cost-plus mines are each tied to a specific Eskom power station, which is designed to use the type of coal produced at the mine.
Eskom and mine owners enter into a long-term agreement in terms of which Eskom supplies capital for mine development and expansion in exchange for security of supply at a small margin. Eskom has oversight over the operations to ensure prudency of cost.
For a number of years, Eskom failed to invest the required capital in such mines and in 2015, Molefe announced a policy change away from the cost-plus model. But that left Eskom vulnerable, as its power supply is dependent on investment decisions by private mine owners who do not necessarily base such decisions on its needs.
Without long-term coal supply agreements, the utility is over-reliant on short-term contracts, which cost much more.
The under-investment and the failure of the Gupta-owned Tegeta mines to comply with their contractual obligations for delivery, have resulted in a coal shortage at seven of Eskom’s 15 coal-fired power stations.
Hadebe said the coal supply at Komati power station was back to the required 20 stock days and the supply at one of the other six should be normal in a few weeks.
Eskom hoped to restore supply to the other five power stations to acceptable levels later this year.
Tegeta stopped supplying Hendrina power station in March and Eskom is negotiating with the Tegeta business rescue practitioners to resume at least some of its contracted 8.5 million ton annual supply obligation. Hadebe said the problem came at short notice.
Eskom had completed a probe after coal stock levels at Hendrina last year were found to be much lower than records showed. Staff at the power station and in Eskom had been suspended.
