Eskom’s ability to save R16.3 billion in diesel costs over eight months of uninterrupted electricity supply has provided much-needed financial relief. However, the utility remains under scrutiny, as experts warn that South Africa still faces significant load shedding risks. During a briefing to Parliament’s Energy and Electricity Portfolio Committee, Eskom’s leadership outlined its recent performance while acknowledging lingering concerns about municipal debt and energy availability.
Eskom’s Financial Improvements
Eskom CEO Dan Marokane highlighted that the utility’s operational performance has improved substantially. He attributed the savings to optimized diesel usage, with R16.3 billion saved by avoiding load shedding. Additionally, Eskom’s year-on-year revenue saw a boost due to tariff increases and slightly higher electricity sales.
“These achievements translate to improved financial performance,” Marokane noted, adding that the final results for the 2023/2024 fiscal year will be released on December 20. However, despite these positive strides, the utility’s financial health remains precarious due to growing municipal debt and ongoing maintenance challenges.
Municipal Debt Crisis
One of the most pressing concerns is Eskom’s ballooning municipal debt, which surged from R78 billion in July to R90 billion within three months. Electricity and Energy Minister Kgosientsho Ramokgopa emphasized the significant threat this poses to Eskom’s financial sustainability. The utility has identified the top 10 municipalities with the highest debt levels, but without a viable solution, the financial strain continues to mount.
Former Eskom CEO Brian Molefe suggested the implementation of prepaid electricity across South Africa to address non-payment issues. “Prepaid electricity would force municipalities to pay in advance, reducing the risk of long-term arrears,” Molefe explained.
Load Shedding Risks Persist
Despite eight months without load shedding, concerns about Eskom’s energy availability factor (EAF) remain. African Christian Democratic Party (ACDP) MP Wayne Thring dismissed the milestone, comparing it to congratulating a fish for swimming.
Meanwhile, MP Brian Molefe warned that Eskom’s EAF of 63% still puts South Africa at risk. He pointed to the Planned Capability Loss Factor (PCLF) at 6.7% and the Unplanned Capability Loss Factor (UCLF) at 28.3% as key indicators. “If UCLF rises to 35%, the system could lose control entirely,” Molefe cautioned. He suggested that PCLF should ideally reach 10% to meet international standards of 80% EAF, 10% PCLF, and 10% UCLF.
Just Energy Transition and Community Impact
Eskom’s decision to restart operations at the Komati coal-fired power station has raised questions about its commitment to the Just Energy Transition (JET) plan. Marokane explained that the utility revised its approach to prioritize energy security while minimizing the socioeconomic impacts on local communities.
“It became evident that shutting down coal power stations without considering community impacts was detrimental,” Marokane said. He emphasized the need to protect the value chain, jobs, and economic activities while ensuring a smooth transition to renewable energy.
The Road Ahead
Eskom’s improved financial performance and diesel cost savings are commendable, but the utility faces critical challenges that cannot be overlooked. Municipal debt, ongoing load shedding risks, and the need for more robust maintenance plans require immediate attention.
Experts have urged Eskom to focus on bolstering its energy availability factor, increasing planned maintenance, and implementing strategies to ensure financial stability. As South Africa continues to grapple with energy security, Eskom’s next steps will be crucial in determining whether the country can achieve long-term stability in its power supply.
While Eskom’s cost-saving measures are a step in the right direction, the utility must address underlying issues such as municipal debt, energy inefficiencies, and maintenance gaps. Only then can it secure a more sustainable and reliable energy future for South Africa.
