Bloomberg News

Eskom Cuts Coal Orders as It Overhauls South Africa Power Plants

November 05, 2013

Eskom Holdings SOC Ltd., supplier of 95 percent of South Africa’s power, said it has begun scaling back coal purchases as it takes plants offline for maintenance during the summer months when electricity demand wanes.

“Because we are getting into maintenance season we take a lot of coal onto stock,” Eskom Chief Executive Officer Brian Dames said in an interview in Cape Town today. “Currently stocks sit at about 46 days. You cut back your higher-cost lines and supplies.”

Eskom, which uses coal to generate 85 percent of its power, is cutting costs as it implements a 500 billion-rand ($50 billion) spending program to replace equipment and add capacity through 2017. The utility strained to meet power demand during the winter after deferring maintenance on some aging stations because of higher unplanned shutdowns in the summer.

Eskom has avoided blackouts since 2008 and hasn’t refused to connect any new customers to the power grid, with reserve margins only running to single digits at night, Dames told lawmakers. The utility’s should bring its coal-fired Medupi plant in Limpopo province online as planned next year, and activate its Kusile plant in Mpumalanga province in 2015, he said.

Eskom halted all its construction projects on Nov. 1, the day after an accident at the Ingula hydropower project near the eastern town of Ladysmith killed six contract workers. While the company has resumed work on the Medupi and Kusile facilities, which will have generation capacity of about 4,800 megawatts each once completed, Ingula remains closed until investigations have ended, the company said on its Twitter feed.

The bodies of three Filipinos who died when three construction platforms, each weighing about eight tons, fell down a vertical-incline tunnel will be repatriated this week, Dames said. Three people injured in the accident remain in intensive care, he said.

One megawatt of capacity is enough to supply 2,000 average European homes.

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net


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