Eskom warns of cuts throughout week after coal silo collapses

November 3, 2014, 10:58am

Eskom warns of cuts throughout week after coal silo collapses

ESKOM on Sunday warned of power outages for most of this week as the state-owned utility started load shedding for the second time this year.

Power interruptions and forced reduction of industrial use of electricity are likely to affect SA’s already tepid economic growth rate.

The collapse of a coal storage silo, which damaged a conveyor system at Eskom’s Majuba power station in Mpumalanga, forced Sunday’s blackouts in Johannesburg, Pretoria, Ekur-huleni and Cape Town, Eskom said.

The accident at Majuba followed a warning last week that the system was "severely constrained" because of technical problems at some power stations and the loss of generating units. Industrial customers were then asked to reduce use by 10%.

Eskom CEO Tshediso Matona said the costs of the collapse had yet to be determined and an investigation would look at the cause and "possible preventative measures". He said Eskom did not suspect foul play in the collapse of the silo.

Though rolling blackouts are expected throughout the week, consumers are likely to be worst hit on Wednesday evening and the whole of Thursday. Eskom resorted to load shedding in March, which it blamed largely on wet coal. Its ageing power stations are in need of maintenance, which is difficult to schedule as the power supply is so tight.

The new Medupi and Kusile power stations are behind schedule and, until they supply the grid, virtually any minor problem could cause disruptions.

Mr Matona said the 13-year-old Majuba power station, which supplies a tenth of SA’s electricity, is the youngest station in the Eskom fleet. Its output was reduced from 3,600MW to 600MW.

As an emergency measure coal is being trucked to the station but the lost generating capacity is unlikely to be recovered. The silo’s collapse cut off the flow of coal to two of the station’s six units. These units were then fed through adjacent units to function at a 50% load. Eskom sustainability executive Steve Lennon said the power utility chose to resort to load shedding on Sunday to build reserves for the week ahead.

Eskom acting executive for technology and commercial Matshela Koko said rubble samples would be taken to investigate possible causes, such as corrosion. The board was confident the silo’s collapse was not due to foul play or "maintenance failure", Mr Koko said

South African Chamber of Commerce and Industry CEO Neren Rau emphasised the need for proper maintenance of power stations. He said the rolling blackouts were a particular concern to businesses as there was no certainty of supply.

"Business must appreciate Eskom’s decision to load shed on Sunday in order to mitigate the effect on the economy.

"However, there are areas of the economy that will need to recover from the impact of strikes, like mining and manufacturing. These have been through major strikes and could still be affected by Sunday’s load shedding," he said.

Economist Mike Schüssler said load shedding boded ill for SA’s credit rating, growth prospects and chances of creating much needed jobs. "It’s taking them back to early 2008, where we have a 1.5% growth rate. This is going to hurt the economy a lot. We are probably going to see a growth rate below 1.4%; it will be closer to 1%."

Last month, Finance Minister Nhlanhla Nene said the government would sell off assets to help fund cash-strapped Eskom, although details on the choice of assets have not yet been made public.

Large industrial users including steel maker ArcelorMittal SA and BHP Billiton, the world’s biggest mining company, are required to reduce demand to avoid a collapse of the grid. "Eskom did not spring this upon us," Kesebone Maema, a spokeswoman for ArcelorMittal, said. "We have an agreement on how to help manage power when these things happen."

BHP Billiton had "a plan" on how to work with Eskom, Lulu Letlape, a spokeswoman for the company, said.

BY KHULEKANI MAGUBANE Business Day Live With Bloomberg