The South African power utility Eskom, which supplies approximately 95% of the South African electricity, is currently facing coal shortages at seven of its power plants in South Africa’s Mpumalanga province. Stockpiles at the Arnot, Camden, Hendrina, Komati, Kriel, Majuba and Tutuka facilities are low while additional contracts are required for all of them. Besides, the 3.6 GW Matla power plant could also run out of coal shortly.
The main driver behind the current shortage are the coal supply arrangements linked with a certain number of tied coal mines, which supply coal directly to power plants. The contracts require commitments from Eskom to bear all capital expenditure costs for the establishment, development and expansion of the mine but the company has failed to meet them, resulting in massive production declines (in some cases as low as 20% of the planned production levels). In particular, Tegeta Exploration and Resources has suspended coal deliveries to Eskom and sought insolvency protection.
Therefore, a coal supply emergency situation has been declared and the company's coal supply problems are as serious as the ones existing in the country shortly before the 2008 load shedding. In 2015 again, Eskom had to proceed to massive load shedding, denting economic growth.