Eskom warns coal stock levels below 20-day target at seven plants

Cape Town – Eskom warned on Wednesday that it runs the risk of low coal stock levels at at least seven of its power stations, ahead of the consumption-heavy winter season.

Naming the Gupta-linked Tegeta as one of the reasons for the low stock levels, the power utility said coal stock levels at Arnot, Tutuka, Majuba, Hendrina, Camden, Kriel and Komati power stations were below the required target of 20 days, as stipulated in the entity's grid code.

“Although the total current coal stock day levels of 35 days, excluding Medupi and Kusile power stations, are within an acceptable range it is necessary to have all stations at the required stock day levels,” Eskom said in a statement.

Eskom admitted in the statement that it was facing imbalances, with coal supply likely to fall short of ideal targets at as many as seven of its coal-fired power stations.

• READ: Eskom coal supply woes may be worse than before 2008 load shedding, reports show

Eskom blamed Tegeta before for the supply woes, with spokesperson Khulu Phasiwe telling SAfm last week that the supply problems stem from mines run by Tegeta Exploration and Resources. He told the radio station that Eskom was working with the National Treasury to source more coal for the plants that don’t have adequate supply.

“There are some difficulties - that’s the situation they’re managing now,” Phasiwe said of Tegeta.

“From our side, we’re looking for a replacement supplier as soon as possible to make sure we don’t go back to the days of load shedding, especially as we’re going into winter,” Bloomberg quoted him as saying.

South Africa was forced to implement load shedding in 2015 after seven years of power shortages hindered economic growth.

• READ: Eskom says coal supply problems linked to Tegeta

Under the management of the Gupta family and Duduzane Zuma, Tegeta secured coal supply contracts under suspicious circumstances, with questions raised about payments made to the company before supplying coal as well as the quality and quantity of the coal once it was supplied.

Eskom said on Wednesday while the level of coal stock days in more than half of the 15 coal-fired power stations in its generation fleet are above the grid code target of 20, systemic challenges affect those mines in under-supply.

“A number of factors, including the historical under-investment at cost-plus mines due to capital constraints and the under-supply on both coal quality and quantity by the Tegeta mines which are under business rescue, have negatively impacted stock levels and production,” the utility said.

Eskom said it informed regulator Nersa about the coal supply challenges with a view of seeking a remedy. The recovery plan includes securing additional coal supplies for the affected stations, and a further redirection of coal stock was under way to address the imbalance, said Eskom.

Interim group CEO Phakamani Hadebe said Eskom had already contracted 84% of the coal it required 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.".