Soaring fuel prices could also trigger fuel shortages and rationing as Eskom struggles to cope with soaring costs to keep its gas turbines running.
The Ukraine crisis poses an even greater threat to South African peace of mind than soaring fuel prices – it could also trigger fuel shortages and rationing, as well as more load shedding as Eskom struggles to cope with soaring costs to keep its gas turbines running. Energy analyst Ted Blom yesterday cautioned of “a fuel shortage as from 1 July, due to the closing down of oil refineries in Cape Town and Durban by end-June”.
While Blom didn’t believe rationing was on the cards, other countries in Europe had been preparing for possible fuel shortages, in addition to crippling price hikes for petrol, diesel and gas. While Eskom had yet to factor in the increases in oil and gas brought about by the invasion, it could only afford a certain amount from a liquidity perspective.
Last weekend’s system breakdowns led to Eskom running 17 OCGT just to keep dam levels from deteriorating. Blom said coal scarcity was also “not an issue”.Amid concerns over South Africa’s best coal quality being exported instead of stockpiled to boost Eskom’s coal-fired power stations, Blom said export coal was not suited to Eskom’s needs.
“The cost of buying additional fuel at increasing prices, may put additional debt pressure on Eskom and the economy,” he said.“It is likely we may experience more load shedding, especially as we struggle to maintain existing energy infrastructure.The rising demand for energy in wealthier economies – especially given the Russia-Ukraine conflict – “may continue to worsen the commodities flow challenge”.
The impact on South Africa’s poorest sectors, food production, retail tourism and hospitality, would be more adverse.