Eskom coal crisis is a result of poor management

The Organisation Undoing Tax Abuse (OUTA) is perplexed and concerned about the reported coal supply crisis at Eskom. Eskom’s spokesperson today confirmed that the power utility has less than 10 days of coal supply in some (at least 9) of its power stations in Mpumalanga which OUTA believes is a direct result of poor management and mischievous attempts to purchase “emergency coal” at excessive prices.

“This is a clear indication that bad management decisions at Eskom are at the heart of our high electricity prices. Depleted coal stock piles will result in coal being purchased at premium prices, which will likely result in Eskom requesting another electricity price increase,” said Ronald Chauke, OUTA’s Manager: Energy Portfolio.

In January 2008, South Africa faced chronic power outages due to alleged low stock piles and high rainfalls that culminated in unusable wet coal. “We are deeply concerned that the low stock pile levels will inflict a severe blow to our already-fragile economy. In addition, we suspect that Eskom will not be able to meet South Africa’s electricity demand and will be forced to begin load shedding,” added Chauke.

On 28 August this year, Eskom’s CEO Phakamani Hadebe reported to Parliament that nine of its power stations in Mpumalanga had “very low coal stockpile levels. Yet the utility has been silent on the mitigation strategies. It is imperative that Eskom execute a mitigation strategy urgently to prevent the impending crisis from taking place.

OUTA urges the new board to follow through with the mandate given by the Minister of Public Enterprises, Pravin Gordhan, to come up with a new short-term strategy by September 2018. OUTA strongly suggests that this strategy should include a new coal procurement strategy to prevent emergency coal purchases.

OUTA is urging the new board to act speedily to resolve this coal shortage crisis and  embark on forward planning measures that will prevent consumers from being held to ransom.