Eskom Battles Coal Shortages

South Africa’s power utility Eskom is experiencing severe coal shortages at seven of its power stations in the Mpumalanga province, it has emerged.

Eskom supplies 95 percent of South Africa’s population with coal-generated electricity. While the utility is adamant that power will not be cut, it has confirmed the reports.

“The prevailing situation at the seven stations Arnot, Tutuka, Majuba, Hendrina, Camden, Kriel and Komati power stations, is that coal stock levels are below the required target of 20 days as stipulated by the Grid Code,” said Eskom in a statement on April 25. The shortage is due to a combination of factors, “including the historical underinvestment at cost-plus mines due to capital constraints and the undersupply on both coal quality and quantity by the Tegeta mines which are under business rescue.”

The Tegeta mines, owned by Gupta family businesses, have failed to deliver coal as expected, with the Optimum colliery having requested to deliver half of its monthly contracted 400,000-tonne supply to Eskom. The business relations between Eskom and Tegeta have been under scrutiny after it was widely reported that Eskom made a prepayment of R569 million ($45 million) to Tegeta, which owns Optimum, for the supply of coal in 2016. Following these revelations, then-CEO of Eskom Brian Molefe resigned.

Despite reports and statements from energy analysts claiming that power cuts are inevitable, Eskom said the overall stockpile levels are at 35 days and would enable the company to keep the lights on. According to the company, the situation could not be compared to the ‘load shedding’ issues of 2008.

“The recent media reports on impending load shedding due to a shortage of coal are unfounded. Eskom has contracted 84 percent of the coal it requires over the next five years.  A recovery plan is in place to address the short-term imbalance of coal and to improve the stock days at the seven stations below minimum. Eskom is working on ways to expedite the coal procurement process at these mines,” said Eskom’s Interim Group Chief Executive Phakamani Hadebe in the statement.

Reports of the coal supply shortages come just weeks after the signing of 27 renewable energy deals, which form part of the Renewable Energy Independent Private Producers Procurement Programme. The REIPPPP received investment commitments to the value of nearly R200 billion ($158 million) after the 2008 loadshedding period. Through this programme, South Africa has been working to increase its energy mix. Currently 5 percent of the nation’s needs are met through the Koeberg nuclear power station, while coal powers most of the remaining 95 percent.

The 27 new renewable energy projects will contribute 2,305 MW of capacity and are valued at valued at R56 billion ($4.2 billion).

Read the full statement by Eskom here.