Eskom’s R10 billion boost a blow to Andre de Ruyter
Eskom’s improved performance over recent months has allowed the utility to reduce its diesel expenditure by R10.21 billion – a 75% decrease.
This disproves claims made earlier this year by former Eskom CEO Andre de Ruyter that the only reason load-shedding had been suspended was that the utility was burning diesel “at the rate of knots”.
RMB economists Keabetswe Mojapelo and Manqoba Madinane said Eskom has successfully maintained an uninterrupted power supply for over 142 consecutive days since 26 March 2024, including 108 days throughout the winter period.
“This marks a significant improvement, with no load-shedding since the start of Eskom’s financial year on 1 April 2024,” the economists said.
They explained that the utility’s Generation Operational Recovery Plan has led to a R10.21 billion reduction in Open-Cycle Gas Turbines (OCGTs) diesel expenditure, a 74% decrease compared to the same period last year.
This is because – without relying heavily on OCGTs – Eskom has consistently maintained a higher Energy Availability Factor (EAF) this year compared to last year.
Eskom’s average EAF was 67% over the past week, with several power stations achieving an EAF above 70% or 60%.
In addition, current unplanned outages are significantly lower than forecasted, averaging between 9,800 MW and 12,400 MW, which is lower than the winter forecast of 15,500 MW.
Energy analyst Chris Yelland previously said the utility’s turnaround is nothing short of exceptional.
“I never really expected to see this day and take my hat off to Eskom head of generation Bheki Nxumalo and team in appreciation and respect,” he said in a social media post.
He said the utility had improved markedly across all metrics, with its EAF improving while its unplanned breakdowns declined and planned maintenance levels were maintained.
Eskom CEO Dan Marokane has attributed Eskom’s improved performance to its strategic implementation of a generation recovery plan, which has been instrumental in this transformation.
By prioritising maintenance, upskilling staff, and optimising operational efficiency, Eskom has managed to decrease unplanned outages and enhance the overall reliability of its coal-fired power plants.
This comes despite claims from former Eskom CEO Andre de Ruyter that the only reason load-shedding had been suspended was because the utility was burning diesel “at the rate of knots”.
De Ruyter made these claims earlier this year during a question-and-answer session at the PSG Financial Services’ Annual Conference on 8 May 2024.
At the event, De Ruyter was asked about his tenure at Eskom, during which the utility suffered massive losses and load-shedding reached its highest level yet.
During his tenure, former Eskom COO Jan Oberholzer was De Ruyter’s right-hand man.
De Ruyter said many people do not understand the utility’s size and complexity, and maintaining an Eskom generation unit requires around 18 months of planning, including budgeting and contractor identification.
“When you do an outage of one unit at a power station, there is a lead time of 18 months of planning,” he said.
“Jan and I put in place most of the outages that are currently being delivered and contributing to somewhat improved results from the coal fleet.”
De Ruyter added that during their tenure, the utility only had a diesel budget of R6 billion to run open-cycle gas turbines (OCGTs) – “peaking” power stations intended for emergencies.
“We were very aware of how we had to scrimp and save to use diesel very frugally and carefully,” he explained.
However, he said the current administration has a diesel budget of around R24 billion – four times what De Ruyter’s team had.
“So, if the lights are on, well done, but they are on because we are pouring money into diesel at the rate of knots,” the former CEO said.
However, Eskom has managed to achieve over 140 consecutive days without load-shedding while shaving R10.2 billion off its diesel expenditure, according to RMB’s economists.
The graphs below, courtesy of Yelland and EE Business Intelligence, show the improvement in Eskom’s EAF and Unplanned Capacity Loss Factor since the start of this year.
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