Following the recent power outages that were so devastating for South Africa’s mining industry and recent announcements by the Government of a National Recovery Plan to tackle the energy emergency, Eskom announced measures being taken to address the situation. Jacob Maroga, Eskom’s Chief Executive, said: “The unavoidable load shedding of January left South Africans with a sense of anger and frustration, which was completely justified. It is a time for leadership and accountability. Although the solution to this problem does not lie with Eskom alone, in fact, Eskom cannot build new power stations fast enough to meet South Africa’s demand, it is our duty to deliver to South Africans a plan that is workable and achievable. A plan that demonstrates Eskom’s commitment to providing security of supply, in partnership, with all our stakeholders. A plan that can form the basis of a national rallying cry or a movement in which each and every one of us plays a crucial role, for the sake of our nation’s future. But Resource Investor reports Eskom’s “plan to buy an additional 45 Mt of coal to replenish depleted stockpiles has been met with incredulity internationally, with analysts saying it overlooks severe global coal supply constraints, logistical challenges and price concerns.”

Maroga: “We have been overwhelmed by the response from all quarters of South Africa. President Mbeki and his Cabinet have acted decisively on the matter, pronouncing a national emergency and mobilising all relevant departments to assist. Our meeting with Ministers and top business leaders on January 29 was another success story with concrete actions following; our key industrial customers have come to the party with a 10% saving which has had a dramatic impact on the stability of supply in the last two weeks. I would like to applaud the key industrial customers for the positive approach they have taken on the issue, and I take cognisance of their comment that this is a problem that needs to be shared, it cannot be shouldered by some industries alone. The media, both print and broadcast have offered assistance in getting the message through and lastly, the people of South Africa have demonstrated the spirit of this nation – a spirit that says we shall overcome, a spirit of ingenuity which we applaud and encourage as we partner forward.”

“Our mandate is to re-establish Eskom’s ability to provide a secure supply of power, the plan has already started and will run until 2012, when our first base-load power station comes on line.”

The plan follows three phases:

Phase 1 – Stabilisation Programme (immediate to end February) which specifically looks at restoring 4,000 MW to the system

Phase 2 – Power Rationing (March – July)

Phase 3 – Power Conservation Program and Supply Side Options (August 2008 – 2012), which requires 3,000 MW continuously for a period of four years.

Phase 1: Stabilisation Programme: For the immediate restoration of the system security, 4,000 MW is required until the end of February: 1,000MW from the improvement in coal delivery and associated problems; 1,800MW in load reduction by municipality customers; and 1,200MW or 10% in load reduction by industrial customers.

Says Maroga: “Since February 4, we have not had to load shed, in large part due to the relief provided by the key industrial customers through their 10% reduction in load and the generation improvements. The impact has been immediate and demonstrates just how effective energy saving can be. In January, losses were unusually high (2,000-4,000 MW); plant performance deteriorated and unplanned outages were unusually higher than normal (2,000-3,000 MW), resulting in a continuous 4,000MW deficit in meeting supply and demand. If we could get the residential, commercial and agricultural customers to reduce consumption by 10% or 1,800 MW, we would be close to our 4,000 MW target, without having to load shed.”

Phase two: Power Rationing: during the power rationing phase, and having restored coal supply, the focus falls on the long-term recovery of the power system. During this period, 3,000 MW is required from load reduction (1,800 MW from municipal customers and 1,200 MW from industrial customers), so power rationing would be a continuation of the 10% voluntary curtailment.

Maroga: “It is important to note that power rationing is a positive step towards providing consumers and businesses with a measure of predictability. If we are able to maintain the load reduction , the reserve margin increases to the required 15% and our maintenance can be done to ensure reliability of supply.

Phase three: Power Conservation: During this phase and for a period of four years the 3,000 MW sustained reduction enables growth and ensures adequate operational reserves for the power system security. The next step was to structure to enable the implementation of the plan. Maroga restructured EXCO, slimming down to a workable six key members and announcing a Recovery Task Team, clustered broadly around the supply side and the demand side of the business. Two Exco members with successful and long serving careers at Eskom will head up key streams within the task team, namely Brian Dames on the supply side and Erica Johnson on overall planning and risk management.

The six key streams or focus areas are:

• Supply side recovery: including generation plant performance, primary energy resources and enterprise build projects
• Power buy-back
• Demand side management: energy efficiency and demand reduction programmes
• Confidence Building and Communication
• Employee Morale

• Planning, resilience management and risk management.”Although the team has only been operational for a week we have progress to report, specifically around the critical and pressing issue of coal. We will also be instituting a weekly press briefing to keep media and the public up-to-date on all aspects of the recovery team’s performance,” said Maroga.

As to what has been achieved already, Brian Dames, was clear on the coal issue: “We have deployed a team to specifically investigate the coal issue and a detailed recovery response plan has been developed to address the issue. There are two main areas of concern: quantity of coal (the stocks are down to an average of 10 days rather than the norm of 20 days). Quality of coal, in particular, the high ash and fine coal content in our current supply. High coal fine content, together with unusual rainfall, led to the wet coal problem. The heavy rainfall and flooding at mines, hampered transportation of coal and hence production, from loading, to deterioration of roads and subsequent transport problems. Low grade coal with a high ash and fine content becomes slurry when wet.”

The coal plan will deliver the following:

• Approval of a mandate for emergency coal purchases including: supply and delivery of 53.5 Mt over two years with 17.7 Mt already approved.

• Although logistics for the transportation of coal over the next two years are extremely challenging, Eskom is in collaboration the Department of Public Enterprises and Department of Transport to solve the transport and logistics challenges. Eskom has already held discussion with the Chamber of Mines and the outcome has been positive in terms of supply of additional coal and transport.