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Eskom inks three-year deal with Botswana

Energy
Johannesburg - Eskom on Wednesday signed a three-year supply agreement with Botswana Power Corporation (BPC) as the power utility continues to bask in excess capacity of 4000 megawatts.

Eskom said the agreement was in line with its plan to increase its electricity exports to South Africa’s neighbouring states. It said it was looking for new markets because of relatively flat electricity demand and additional capacity from its power projects.

In the six months to end of September last year, Eskom’s international sales volumes increased 31.6 percent.

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Overall electricity sales volumes increased by 1.2 percent during the period.

According to Statistics South Africa figures, electricity production grew by 0.9 percent year on year last year. On the other hand, electricity consumption contracted by 1.2 percent year on year.

The stagnation coincided with the commissioning of some of Eskom’s major projects. Eskom earlier this year announced that all four of its units at the Ingula Pumped Storage Scheme were producing a total of 1332MW.

Eskom earlier this week said Unit 5 at its Medupi Power Station Project in Lephalale, Limpopo, had attained commercial operation status, contributing 800MW to the national electricity grid. Medupi’s Unit 6 has been operational since August 2015.

Commitment

“The conclusion of this agreement serves to demonstrate our commitment to the SADC region to provide energy security and certainty with regard to long-term supply of energy.

"Eskom reaffirms its position that we are ‘open for business’ and stand ready to undertake further long-term supply agreements, for up to 10 years, with our various trading partners,” said Eskom acting chief executive, Matshela Koko.

BPC chief executive Stefan Schwarzfischer said the power agreement with Eskom offered BPC improved security of supply and gave the company a window of opportunity to tackle some of the major problems facing its generation plant. “We look forward to further collaboration with Eskom to further improve our energy and various technical aspects of the electricity business,” he said.

This is the second firm power sales agreement that Eskom has signed in just over a week, having recently concluded a five-year power sales agreement with the Namibian national power utility, NamPower.

Eskom said the two entities had a long-standing energy trading relationship.

Read also: Moody's places Eskom on review for downgrade

The transmission corridor between South Africa and Botswana provided one of the key corridors for energy trading for the Southern African Power Pool (Sapp), it said.

This corridor, being integrated in the wider Sapp network, provided a facility for various Sapp utilities to exchange power, depending on their requirements.

Eskom said it was currently investigating a number of strategic transmission projects to further strengthen the interconnection with BPC and other interested Sapp members.

“These new interconnections are intended to further support regional integration, provide reliable transportation of power to grow the regional economy, as well as mitigate drought risk by improving the connection between the thermal and hydro systems,” said Eskom.

Meanwhile it is reported that ratings firm Moody’s on Tuesday said it was placing South Africa’s state power firm Eskom’s credit rating on review for a downgrade, citing the risk of the country’s institutional, economic and fiscal strength deteriorating after President Jacob Zuma dismissed respected finance minister Pravin Gordhan last week.

On Monday, S&P's cut South Africa’s credit level to junk status over growing concerns of political and policy instability, following Zuma’s midnight cabinet reshuffle last Thursday.

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