The Electricity Minister in the Presidency Dr Kgosientsho Ramokgopa has conceded that Eskom does not have the necessary generation capacity to avert Stage 8 load shedding this winter!
This comes as Eskom last week warned that there was a higher likelihood that the rising demand for electricity because of the cold winter weather could see it implementing an unprecedented Stage 8 load shedding, if unplanned breakdowns should increase up to 18 000MW and if 4 000MW is taken off service due to maintenance.
Ramokgopa yesterday went back to visit Kusile power station in Mpumalanga to receive a report, and inspect the repairs and construction project taking place there.
At least three of the power station’s units are offline due to a flue gas duct (chimney) failure which occurred as far back as October, costing Eskom at least 2 400MW in generation capacity, while another unit has also been taken offline.
Ramokgopa said the four units offline at Kusile would each have provided 800MW to the national grid, collectively supplying 3 200MW and easing load shedding by at least three stages.
“Kusile is a critical part to the easing the load shedding crisis. If we were to get these units back, I think we would have made significant advances,” Ramokgopa said.
“Last time I was here, management indicated that they will be bringing those three units back (online). The last one will be brought back on December 24; the last one of the three will be back on-stream by November 28, 2023 and the second one by December 11.
“The confirmation we got is that we will start doing tests on Unit 5 by October. We are confident that we will have it fully running by April next year,” the minister said.
Kusile is one of Eskom’s two new power stations consisting of six 800MW coal-fired generating units for a total generating capacity of 4 800MW.
The station has been plagued by design flaws that will cost a further R14 billion to finalise construction, taking the overall cost to build to a staggering more than R175bn since construction began in 2007.
The government has taken steps to improve the performance and extend the life of Eskom’s existing coal fleet as part of a resolution to ease load shedding in spite of objections from environmental lobby groups.
Though Ramokgopa said three units were expected back online later this year, he could not rule out the possibility of higher stages of load shedding in winter.
“I am saying this reluctantly, because load shedding is load shedding… It is devastating to the economy,” he conceded.
“It will be very irresponsible of me to declare by decree there will be no Stage 8. We are doing everything possible to ensure that we don’t go to higher stages of load shedding.”
Breakdowns at power stations are currently at 16 486MW of generating capacity, with some 3 817MW generating capacity out of service due to planned maintenance.
Bank of America Merrill Lynch’s South Africa strategist John Morris said it had helped that Eskom dealt with fears of a national blackout, though it confirmed load shedding to peak at Stage 8 this winter.
“Grid collapse fears have eased. If it did (collapse), consensus says it would take one or two weeks to restart,” Morris said.
The risks outlined by Eskom have raised the possibility of real gross domestic product (GDP) contractions in the second and third quarters, and possibly for the whole of 2023.
However, a number of economists are holding off from further downscaling the GDP forecast for now, until the release of the first quarter GDP figures early next month.
On Friday, S&P Global Ratings also did not issue a rating review for South Africa, thereby leaving the country’s BB- long-term foreign currency debt rating unchanged, while maintaining a stable outlook.
Oxford Economics Africa’s head of macro Jacques Nel said S&P’s inaction was not surprising given the uncertainty around South Africa’s energy situation.
“The decision by S&P to not issue a ratings review despite having one scheduled, could mean that it is reluctant to affirm the rating given the uncertainty permeating through the economy at present,” Nel said.
“Another downgrade is much more likely than any improvement, which suggests we could see another, more damning review down the line…
“The inaction could also just mean that S&P felt another review was unnecessary given the change in outlook it communicated in March. However, it is difficult to believe the latter without at least some semblance of truth also being behind the former,” he said.
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