De Ruyter’s half-baked accusations of Eskom diesel spend are ironic
Just when we thought Eskom had turned the corner, its former CEO, André de Ruyter, came out with his guns blazing, accusing Eskom of burning massive amounts of diesel to keep the lights on at all costs.
Eskom and the National Energy Regulator of SA (Nersa) put out statements that disputed the allegation.
Life’s lessons are about storytelling. When people desire justice, accountability and proper governance they look for heroes and saviours within their society. The story of Eskom is ridden with such valiant folk versus skittish and fiddle-footed characters who led Eskom over its 102 years of history.
The founding fathers of Eskom and industrial pioneers, such as Dr Hendrik Johannes van der Bijl, would be greatly disappointed to learn that Eskom, created with a clear vision to drive industrialisation by providing guaranteed cheap electricity, is a shadow of its former self.
Several weeks ago, the Department of Public Enterprise revealed in Parliament that Eskom had spent R65 billion in diesel to power Open Cycle Gas Turbines (OCGT) to generate power. Last year alone, Eskom spent R23bn on diesel to reduce the severity of load shedding.
However, most of the diesel spend over the five years was during De Ruyter’s tenure at Eskom. Under his leadership, Eskom’s power plants performance also took a major downturn in performance.
Despite exposing huge levels of corruption, very little blame has been attributed to De Ruyter for his lack of leadership and management skills in turning around Eskom and fixing the ailing power stations. His performance as Eskom CEO plunged South Africa into worse levels of load shedding than before.
That is why Eskom got hot under the collar at the attack by De Ruyter.
This as De Ruyter’s recent claims are not supported by the facts. The current Eskom budget for diesel in the current financial year (April to June 2024) is R5.8bn, and R1.16bn has been spent as of May 9, 2024 (19.7% of the total budget).
Contrary to media reports and speculation, Eskom’s use of OCGTs is closely monitored, and their role is strategic rather than extensive.
De Ruyter helped fanned the flames of public suspicion around the recent suspension of load shedding for the past 50 days as speculation abounds that the government has been burning diesel to keep the lights on ahead of the elections.
However, this is not the case. Eskom has ramped up the energy availability factor (EAF) and turned the corner.
On his X handle on Monday, Electricity Minister Kgosientsho Ramokgopa wrote: “Today @Eskom_SA achieves an EAF of 70.78%. This milestone was last attained in August of 2021. Congratulations to the competent, committed and patriotic men and women at @Eskom_SA. The end of loadshedding is within reach; Eskom absolutely deserves applause for achieving this long awaited milestone. Well done Eskomites for the sterling work. Where there is a will there's a way.“
You would think that the end of load shedding temporarily or permanently would spark a mood of hope and exhilaration among many, especially former Eskom executives. Well, it hasn’t and that is odd.
De Ruyter, with his astronomical, reckless diesel spend and abysmal Eskom performance outcome under his leadership, should be the last person to moan and groan about Eskom’s use of the diesel spend. It’s absurd.
Even former CEO of Eskom, Matshela Koko, came out swinging in Eskom’s defence on X: “2018 was very brutal. I am glad that @Eskom_SA is steadily coming out of the self-inflicted pain. It warms my heart to see such a turnaround. Well done Bheki Nxumalo and the team.”
On May 10, 2024, Eskom issued a media briefing to clarify the issues surrounding the use of diesel and how far it has been using the allocated funds for diesel over the current period. Chairperson Nyati Mteto went to lengths in his media briefing to explain and clarify Eskom’s position on the diesel spend.
It said: “Here are the facts:
– The continuous suspension of load shedding is due to sufficient generation capacity, resulting from a more reliable generation fleet.
– Unplanned outages have reduced by 4 400MW since April 26, 2024 due to extensive maintenance and the success of the Generation Operational Recovery Plan initiated in March 2023.
– The EAF has improved significantly, performing above 60% since April 29, 2024 and reaching 65% on May 1, 2024, with a month-to-date figure of 63.34%.
– Eskom’s outlook for the winter period of 2024 states that it will continue to strategically utilise its peaking stations, including OCGTs. OCGTs are dispatched during morning and evening peaks to meet high electricity demand when it is necessary.
– In April 2024, Eskom spent R1.1bn on OCGTs, producing 167.8GWh. This is about 60% less than April 2023 when R3.1bn was spent to produce 470.22GWh.
– The OCGT load factor for April 2024 decreased significantly to 6.8% compared to last year’s figure of 19.13%.
– Diesel spending on OCGTs shows a declining trend, with R53.9 million spent in the first nine days of May 2024.
– Eskom’s budget for diesel in the current financial year (April to June 2024) is R5.8bn, and R1.16bn has been spent as of 9 May 2024 (19.7% of the total budget).“
Determining Eskom’s diesel budget
Nersa makes a revenue decision related to OCGT volumes for Eskom and independent power producers based on assumptions for the years ahead. It is to be noted that the Eskom Board determines the budget, which resulted in a reduction from the 18% load factor of 2024 to a 12% load factor for 2025, while Nersa’s allowance is at a 6% load factor. Eskom’s performance in April 2024 aligns closely with Nersa’s 6% load factor.
The Multi Year Price Determination methodology requires Eskom to use OCGTs to minimise load shedding.
The usage of Eskom’s OCGTs is no cause for alarm.
For the time being, the coal fleet is the most important asset. All other issues and energy programmes and policies are secondary. The focus should be on prioritising capital resources towards maintenance and plant refurbishment.
Eskom simply needs to see through its generation recovery strategy and fix its current coal fleet power plants. Maintain them and return them to their historical performance levels. Certainly load shedding will be a thing of the past. Eskom should be driving an aggressive programme of plant recovery and putting a plan in place to build more mega power stations.
While the demand is low, industry is exploring alternative energy sources to avert further disruptions in their production circles.
To me the matter is simple. South Africans just want electricity, they don’t care much about corridor politics within Eskom and its ministries and the ruling and opposition.
People just want guaranteed electricity to rebuild their lives, create opportunities for trade and industry, work and secure incomes and live happily. The government must give special attention to the electricity generation sector.
Electricity is vital for all economic activities and the welfare of the nation. The elections are here and most people will be voting. The electricity crisis and issues will feature dominantly as an elections outcomes decider.
Crown Prince Adil Nchabeleng is president of Transform RSA and an independent energy expert.
* The views in this column are independent of “Business Report” and Independent Media.
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