By Lehlohonolo Lehana.
The Minister of Energy and Electricity, Dr. Kgosientsho Ramokgopa says his ministry was doing everything possible to ensure it is able to address the “new phenomenon” of load reduction, saying this required urgent attention especially since it related to municipalities and Eskom.
“We have engaged with Salga [South African Local Government Association] and we are pulling together with Salga on the best way of ensuring that we protect the interests of municipalities and we safeguard the interests of Eskom,” Ramokgopa said.
Collectively municipalities owe Eskom about R78 billion and municipalities are owed about R349 billion by various categories of customers, including households, businesses and the government.
Ramokgopa reports that a new pilot project is being prepared to further “stress test” an initiative aimed at ensuring that municipalities settle their accounts with Eskom
The initiative is being supported by the Salga, and has already been piloted in three municipalities, namely the Beyers Naudé local municipality, in the Eastern Cape, as well as at the Kamiesberg and Nama-Khoi municipalities, in the Northern Cape.
Speaking during one of his regular briefings, Ramokgopa reported that the idea was to extend the mechanism to about two municipalities in each province, especially those with large unpaid debts to Eskom.
He reported that it drew on an innovation developed in the private sector and could be deployed both to those municipalities that were participating in the debt-relief programme launched by the National Treasury last year and those that did not apply or qualify for the scheme.
He confirmed that the majority of the municipalities that had signed up to the debt write-off scheme were failing to comply with the 14 conditions set by the National Treasury.
“The latest number we have is that 78% of the municipalities that have entered that programme have defaulted, which means it is not effective. So, you need a different instrument; financing is just one leg, we are resolving a bigger problem,” the Minister asserted.
For participants in the National Treasury scheme, it appears that the idea is to help them comply with the conditions for the write-off.
“[But] even if you have not applied for the write-off, it is possible for the municipalities to do two things as a result of this intervention: the first one is to pay your debts and the second one is to ensure that you pay your current account without diminishing the financial viability of the municipality,” he said.
While he did not provide any specifics about the nature of the intervention, he stated that the constraints for many municipalities was not only financial and that other “structural” problems also had to be dealt with to ensure payment to Eskom.
He said that, while households made up the majority of non-payers, businesses and government departments were contributing a significant portion of the value of revenue not being collected by municipalities.
“If we address [non-payment by business and government] you will see that there is going to be significant relief,” he said, arguing that municipalities should not be expected to “carry” national and provincial departments.
Ramokgopa again stressed the need to review the country’s electricity pricing policy, which provided the foundations for the way tariffs were set.
He argued that ongoing steep increases in tariffs were not only unaffordable for poor households, but were also placing strain on the middle class and business and that alternative solutions should be found to ensure affordability, including by reviewing the Free Basic Electricity allowance for indigent households, and cost-reflectivity.
South Africa’s electricity pricing policy is based on the user-pay principle and regulated electricity prices are currently set using an allowable-revenue formula that is divided by projected sales to arrive at a yearly tariff adjustment.
Ramokgopa stressed the importance of the National Energy Regulator of South Africa’s independence in determining tariffs, but he indicated that he had requested Eskom to provide his department with prior sight of the application to assess whether ways could be found to moderate the request.
It has been reported that Eskom is consulting on a submission that would lead to a 36% hike being implemented on April 1 if approved.
Ramokgopa also said in the next three weeks or so, Eskom will be sharing what the summer outlook is. We are still buoyant about the performance of these generation plants.
“Having said that, we need to caution against any early declaration to decree load-shedding as behind us. We do everything possible to resolve this question but the numbers do indicate that we are within touching distance.”
The majority of the country has experienced uninterrupted electricity supply for 137 days.
“We are expecting Medupi unit four to give us 800MW [megawatts] and to fire up Kusile unit six, which is another 800MW. We are hoping to get an extension of life of Koeberg unit two,” Ramokgopa said.
“We are not complacent. We are doing everything by the book, ensuring we cross all the t’s and dot all the i’s and are diligent in what we submit to the national nuclear regulator. We are still optimistic about getting that extension of life and it will give us an additional 980MW.”
By the end of August,it is expected that there will be an additional 2 500MW of electricity from the Eskom fleet alone, the minister said.
He singled out the Tutuka, Kendal and Kriel coal-fired power stations as “emerging stars”, noting that Tutuka has experienced a significant nuber of problems.
“But we are seeing results now. Just this period, from March to August, the unplanned capacity loss factor [UCLF] has reduced by 29%. That’s significant from where Tutuka started; they’ve moved from 2 411MW to 949MW,” Ramokgopa said.
“At Kendal, there were major issues with regard to exceeding the emissions standards, so there [were] a number of interventions that had to be made. Today… we were able to reduce the [UCLF] from 2 500MW out and now we’re sitting at about 919MW. And, of course, they continue to do exceptional work.”
“Exceptional results” had been seen at Kriel, with the reduction in the UCLF having gone down 53% from 1 400MW to about 508MW.”
Ramokgopa credited the leadership changes at the helm of these three power stations for changing its trajectory.
The improvement in the Energy Availability Factor (EAF), the minister added, means less reliance on opencyclegas turbines and burning less diesel. Since the start of the financial year, the use of diesel has been brought down by 73%, saving about R9.6 billion, compared with the same period last year.
“The more we improve the generation performance is going to find expression in the tariff increases because if your generation relies heavily on expensive forms of generation, it must be reflected in their tariff.”
Ramokgopa took on the role of electricity minister in the Presidency in March 2023, when Eskom’s energy availability factor (EAF) averaged around 53.19%.
The EAF is the ratio of available generation relative to the maximum amount of energy that could be produced over a specific period.
The National Transmission Company South Africa’s latest data revealed that Eskom’s EAF averaged 70.87% for the week from 22 to 29 July 2024.
The EAF is the ratio of available generation relative to the maximum amount of energy that could be produced over a specific period.
It provides a strong measure of the performance of Eskom’s generating fleet.
Through a cabinet reshuffle in June 2024, Ramokgopa was appointed as Minister of Electricity and Energy.
This involved merging the electricity ministry in The Presidency and the Department of Energy and establishing a separate mineral and petroleum resources ministry.
In its latest power alert, Eskom said EAF for July averaged 67.41%, which was last achieved in July 2021.
The improved performance and lessened demand due to more businesses and households using solar power have resulted in no load-shedding since 26 March 2024.