The government is planning to spend R30 billion to buy diesel during load shedding as this would protect the country from severe power cuts in winter and keep the economy going.
Electricity Minister Kgosientsho Ramokgopa said on Saturday they have identified a number of areas where Eskom can save money and buy diesel, as load shedding continues.
Ramokgopa, who was briefing the media after presenting his energy plan to the National Executive Committee in Gauteng, said there were intervention measures in place for the next 18 months.
But part of the plan was that they will cut out the middleman when they buy diesel to run Open Cycle Gas Turbines.
However, there are also immediate interventions, and the NEC had agreed to these interventions.
Ramokgopa for the next six months part of what would happen is that Eskom would have to use Open Gas Cycle Turbines (OCTGs) and burn diesel.
This was done in the period between 2014 to 2017 where Eskom ran OCTGs, which contributed 21% of energy to the grid.
This time OCTGs were contributing 11% and they will ramp this up to protect the economy and the country from the winter period, which has a huge demand.
Ramokgopa said the demand will outstrip supply in winter.
He said Eskom has set aside R8bn for diesel and after Finance Minister Enoch Godongwana gave it a fiscal relief, that gave Eskom another R22bn.
Part of the plan was that when they also buy diesel they will cut out the middleman and buy it directly from suppliers.
Ramokgopa said this would save Eskom more money.
He said the NEC agreed that Eskom would have to run OCTGs.
“We know the total capacity is 5 300MW. The key is the availability of diesel to be able to address this matter. What we know about the diesel situation, with the 18% increase that Nersa has granted to Eskom, it will pay R8bn for diesel. In terms of the fiscal relief the Minister of Finance has provided to Eskom, there is an additional R22bn that Eskom has made available for procurement of diesel. We have confirmed R30bn that is available for diesel procurement,” said Ramokgopa.
“The second part in relation to OCTGs and the issue around diesel is that government should consider to buy directly from suppliers because what that does, they give us an opportunity to stretch R30bn so that whatever savings we are making from cutting out the middleman, that saving can make us procure additional diesel,” he said.
He said the other intervention was for a period between six to 18 months.
Ramokgopa said load shedding would not be ended by the end of this year.
This was a lengthy process that required all stakeholders to work together.
ANC chairperson of the sub-committee on economic transformation Mmamoloko Kubayi denied that the government planned to sell some of the power stations to the private sector.
She said the state has a responsibility to ensure that Eskom continues to do what it is required to do.
For now there are steps that are being taken to provide energy and ensure electricity supply stability, she said.
Current Affairs