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Spending millions on diesel could have a big impact on Eskom’s liquidity

Energy expert Chris Yelland said the amount of money Eskom spends on diesel to keep the lights on could have a strong impact on liquidity.

The energy company said it is spending millions transporting and burning millions of gallons of diesel to keep its open-cycle gas turbine stations (OCGT) operational.

The announcement was made during a virtual media briefing where Eskom management provided an update on current system challenges.

Eskom ramped up the power outage from 9am on Wednesday morning to power outages in phase four, which will last until Friday, before phase two starts until Monday.

Speaking at the briefing, Eskom Chief Operating Officer Jan Oberholzer said the power company must rely on open-cycle gas turbine plants powered by diesel.

“Between Ankerlig and Gourikwa, we use nine million liters of diesel per day to support the system. We all agree that it is not sustainable and we need to get out of this situation, but this is where we are. For us, burning diesel and having a financial nosebleed is much better than taking the country to a higher stage of tax relief.”

Yelland told 702 that while Eskom has had to spend the money on diesel to keep the lights on, it will have a major impact on his finances.

“The way the regulatory process works is that when it comes to diesel, they have to spend the money because it’s part of emergency diesel, then reclaim it from the National Energy Regulator of South Africa (NERSA) through the regulatory account mechanism. a year or more, sometimes even several years later. It would have a very negative effect on Eskom’s cash flow.”

Yelland said that with the current war in Ukraine, diesel prices are going up.

“Even if they use the same amount of diesel, the price goes up, so the cost goes up dramatically. In the end, Eskom gets the money, even if the government has to save it. That’s how it has been, Eskom gets a huge bail from the government that has been doing that for years.”

Eskom said it is considering switching to gas in the future, which is cheaper.

ALSO READ: Missing in action: what is Eskom boss André de Ruyter doing in Washington?

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