Power utility Eskom has warned suppliers it may halt purchases of coal because the nationwide lockdown to deal with the Covid-19 coronavirus pandemic has curtailed demand for electricity
The force-majeure notice Eskom issued to miners follows a similar instruction to wind-power producers two weeks ago as the utility struggles to honour contractual agreements.
It’s another sign of the unprecedented impact the disease is having on energy markets, with crude oil trading at a negative price on Monday because of oversupply.Eskom has more than 50 days of supply of coal and may invoke force majeure because its storage space for stockpiles is limited, said spokesperson Sikonathi Mantshantsha on Tuesday.
Last year, government asked independent power producers and coal suppliers to cut their costs as a national duty to help the utility, which has a R454 billion debt.Days after the March 27 start of the lockdown to control the spread of Covid-19, Eskom first used the clause – commonly used when oil pipelines are blown up by militant groups or natural disasters make commodity deliveries impossible – with wind producers that supply it with power.
The wind industry initially questioned the legality of the notice and said last week it anticipates benefitting from any government stimulus package to help it get on track. Wind energy supply had been curtailed for a couple of hours since the notice was served, Mantshantsha said.– Bloomberg
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