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Eskom R19.5bn diesel ask likely to be denied: Godongwana

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South Africa’s cash-strapped power utility Eskom has asked the National Treasury for R19.5 billion to buy diesel to fuel auxiliary power plants, a request that’s unlikely to be heeded, said Finance Minister Enoch Godongwana.

“We don’t have it,” Godongwana said in an interview at Bloomberg’s office in Johannesburg.

Africa’s most-industrialised economy has been subjected to record power outages this year, mainly due to breakdowns at Eskom’s poorly maintained coal-fired plants that account for over 80% of South Africa’s power supply. The utility has been forced to use turbines that run on diesel, intended for bolster generation during peak-demand periods, to mitigate blackouts that have curbed economic growth.

Eskom has spent R11 billion on the fuel in the 10 months through October and warned last month that electricity outages, known locally as load shedding, may intensify if it runs out of funds to buy the fuel. The state-owned company has imposed 176 days of rolling blackouts so far in 2022, according to Bloomberg calculations.

The utility has since negotiated a deal with state oil company PetroSA for diesel, which should be sufficient to cover its requirements for the fuel through the financial year ending March 2023, Godongwana said.

Still, the state utility says it’s using the fuel sparingly.

“Due to the depletion of the budget to acquire diesel for the open cycle gas turbines, Eskom has been forced to strictly conserve the fuel for the direst of emergencies,” it said in a statement Friday, as it announced the resumption of power cuts. It warned the power cuts may “significantly increase” in the next six to 12 months as planned maintenance and breakdowns reduce generation capacity.

© 2022 Bloomberg L.P.

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