Eskom’s effective per-litre cost for diesel used in open-cycle gas turbines (OCGTs) in its 2026 financial year was around half the price regular motorists paid at service stations.

MyBroadband calculated the number based on figures provided in a recent response from electricity and energy minister Kgosientsho Ramokgopa to questions in Parliament.

The minister revealed the power utility spent about R4.82 billion on 270.02 million litres of diesel for both its own and independent power producer (IPP) OCGTs in its 2026 financial year.

For perspective, that amount of diesel would be able to fill up the 80-litre tanks of nearly 3.4 million Toyota Hilux or Ford Ranger bakkies.

However, the diesel for that purpose would likely have cost much more. The average monthly wholesale price of a litre of 50ppm diesel was R19.12 over Eskom’s financial year.

That amount excludes a retail margin, which will vary from one station to the next. Adding the same 15% margin applied to petrol prices would push the pump price to about R21.99.

That works out to 23% more than Eskom’s cost per litre. However, the costs cited by Ramokgopa do not yet account for tax rebates.

Industrial diesel users like Eskom are eligible for the Diesel Refund Scheme, which allows them to claim back up to 100% of the general fuel levy and road accident fund tax.

These made up R6.03 of every litre of fuel during the 2026 financial year. Taking the rebate into account, Eskom’s effective average cost per litre would be R11.82.

That was R10.17 cheaper than the average monthly wholesale price with a 15% margin. Eskom’s effective cost per litre for the year would therefore have been about 46% lower.

Even before the rebates, Eskom can negotiate lower-margin prices as it buys in bulk and would contribute significantly to its suppliers’ revenues.

Eskom’s extensive logistics and storage infrastructure also allows it to bypass middlemen in the fuel supply chain.

While not an insignificant amount of diesel by most measures, the amount of fuel Eskom bought for OCGTs in 2026 was 64% less than the 747.73 million litres it bought in the previous year.

The cost of 2026’s diesel was also R9.35 billion lower than the R14.17 billion Eskom spent in 2025. In its 2024 financial year, its worst in terms of load-shedding, it spent R33.9 billion.

Reduction could have been even better

Gourikwa open-cycle gas turbine power station
The reduction was achieved thanks to a combination of a substantial drop in electricity demand and improvements in the energy availability factor of Eskom’s coal fleet.

While the reduction has been commended, Eskom could have spent even less diesel were it not for take-or-pay mechanisms in its power purchase agreements (PPAs) with OCGT IPPs.

Ramokgopa said the PPAs require Eskom to run the IPP-owned Avon and Dedisa OCGTs at a minimum monthly load factor of 1% every six months.

Regardless of whether Eskom used the OCGTs, it would have to pay for the equivalent cost to generate that amount of electricity.

Democratic Alliance MP Kevin Mileham questioned why the legacy contracts were not being renegotiated in light of Eskom’s improved operating reserve margin.

Mileham said these contracts resulted in coal stations sitting idle while more than R93 million was spent on diesel for IPP OCGTs over a three-week period.

The cost to produce electricity with coal power is about a tenth of the price of OCGT generation per megawatt-hour.

In Eskom’s 2025 financial year, it spent R546 per MWh of electricity from coal stations, compared to R5,860 per MWh generated at OCGTs.

Ramokgopa explained that coal-fired power stations lacked the fast-acting flexibility needed to stabilise the grid, especially as the share of variable renewable energy increased.

“Demand peaks fluctuate daily, and renewable generation (particularly wind and solar) varies with weather conditions,” Ramokgopa said.

“To maintain system stability, the grid requires fast responding generation such as OCGTs that can fill gaps instantly when renewables drop, or demand unexpectedly rises.”

Ramokgopa said the plants should be seen as an insurance policy, unwelcome when not used, but essential when the system is under strain.

The minister also said the cost of terminating the contracts would be substantial, but said that options were being considered to convert the plants to run on gas.

Ramokgopa said this would reduce operating costs significantly while retaining the OCGT’s quick-startup flexibility.

Source: https://mybroadband.co.za/news/energy/647418-eskom-received-a-big-diesel-discount.html?utm_source=newsletter