• Previous load forecasts had anticipated the current growth rate. The implementation of measures to provide for the growth has been inadequate and slow.

In particular, there have been delays in returning the mothballed generation plant to service and the implementation of energy efficiency and demand management initiatives remain behind targets.

• The implementation of the co-generation programme (with the private sector) has also experienced delays.

• Eskom’s maintenance strategy has resulted in the reduction of generation plant availability to below the 90% target as agreed upon with the Energy Regulator.

• Eskom’s new build programme is experiencing slippage of at least a year caused by delays in, amongst others, the completion of environmental impact assessments (EIA); shortage of civil contracting capacity, delays with land acquisition, delays in finalising coal contracts and obtaining water licences for the new coal-fired power stations.

• High unplanned maintenance and load losses combined with the usual high planned maintenance of generating units during the period resulted in reduced generating capacity being available in the period covered by the enquiry.

• Coal stockpiles were allowed to decline to unacceptably low levels after August 2007 and there was a reluctance to obtain supplementary coal due to its high cost and its impact on Eskom’s financial position.

Poor coal quality, wet coal and low stockpile levels contributed to the unplanned generation plant outages and load losses in the period.

• Poor coal planning and procurement by Eskom led to low coal stockpile levels.

Eskom failed to notify the Energy Regulator of the deteriorating coal situation.

• The System Operator used all available emergency resources such as operating the coal-fired generation at emergency levels, obtaining assistance from customers via the demand participation (DMP) mechanism, invoking the conditions of interruptible load contracts, and operating gas turbines before resorting to load shedding.

• Eskom exports of power (excluding Mozal) to neighbouring countries during the load shedding exceeded its firm contractual obligations.

Eskom must provide information regarding circumstances under which it (Eskom) can overlook the firm supply contracts.

• Licensees and customers were caught unawares by the electricity shortage and subsequent load shedding that would be experienced, hence the communication and co-ordination between licensees and customers was not as desired.

• The current regulations, procedures, licence conditions and industry codes do not make provision for long periods (months) of supply-demand imbalance.

• The Government National Electricity Emergency Programme (GNEEP) is addressing the electricity supply shortage with the support of the industry. Eskom’s role in the emergency programme must be clarified.

• The impact of the events has been that there is a major increase in Eskom’s primary energy cost, because the gas turbines were required to operate at very high load factors and Eskom embarked on the purchase of 45 millions ton of high cost coal to rebuild stockpiles.

These actions place further strain on an already constrained liquid fuel industry.

• High level institutional capacity with authority to act must be consolidated in government to address GNEEP while procurement of new private generation capacity (IPPs) must be managed and coordinated centrally by a professional entity independent from Eskom.

Further investigation is required in the following areas:

• The legal status of the multi-year price determination (MYPD) insofar as the obligations on Eskom to maintain coal stockpiles and reporting to NERSA.

• Whether some findings constitute a breach of legislation or licence conditions.

• Legal implications of load curtailment without the agreement from customers.

• Whether there is a causal link between national load shedding and the recent failures of distribution plant in the Nelson Mandela Metro and the Ekurhuleni Metro.

• The continued export of power to SAPP countries under system emergencies.

• Changes required to Eskom’s shareholder compact to prioritise security of electricity supply above Eskom’s commercial decisions in order to avoid national crises.

Further investigation is also recommended in the following areas:

• Primary energy procurement and management and in particular coal management in Eskom.

• The availability, adequacy and optimum utilisation of Eskom’s generation plant in emergency and in view of the mid-life of these plants. 


Numsa News Bulletin No 20 2008