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Wednesday, August 17, 2022

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Eskom has not approached Treasury for funds yet, says Godongwana

Electricity power lines and cooling towers are seen at Eskom’s Kendal coal-fired power station in Delmas.The top six power stations to get maintenance are: Kendal, Majuba, Kusile, Tutuka, Duvha and Matla. File photo

Electricity power lines and cooling towers are seen at Eskom’s Kendal coal-fired power station in Delmas.The top six power stations to get maintenance are: Kendal, Majuba, Kusile, Tutuka, Duvha and Matla. File photo

Published Aug 2, 2022

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Eskom has not approached the government for additional money to fund its massive maintenance costs in a bid to end load shedding.

This was according to Finance Minister Enoch Godongwana yesterday. He said the struggling power utility had not officially approached the National Treasury for a capital injection for its infrastructure maintenance programme.

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Godongwana was speaking during a briefing by a cluster of ministers in the Energy Crisis Committee, unpacking actions to achieve long-term electricity supply.

“Eskom has not come to us, for now, for the cost of maintenance,” Godongwana said.

“What we do know is that the matter was raised (and) a figure of about R2 billion in the context was raised. On closer interaction with Eskom, Eskom said no, it’s too early to do that precisely because they have given the generation division R8 billion for maintenance.

“But if the need arises, we will respond to that.”

This comes as President Cyril Ramaphosa last week announced an Energy Action Plan to solve the country’s 14-year-long energy crisis characterised by erratic power outages.

The plan includes a renewed push to improve Eskom’s plant reliability through maintenance, the removal of the 100MW cap on private electricity generation, doubling of renewable energy Bid Window 6 to 5 200MW, and a temporary relaxation of local content requirements.

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Public Enterprises Minister Pravin Gordhan yesterday said that after long discussions with the Eskom team, they had identified the top six power stations, which were going to receive a lot of attention in terms of maintenance.

“By maintenance we mean getting parts, contracts ready, and having the money and original equipment manufacturers available,” Gordhan said.

“The top six power stations are: Kendal, Majuba, Kusile, Tutuka, Duvha and Matla.”

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Independent energy expert Lungile Mashele said the deviation from the Public Finance Management Act (PFMA), and money being made available to Eskom was a welcome relief.

“These are important steps in ensuring a well-run and reliable maintenance programme and therefore security of supply,” Mashele said.

Gordhan said South Africa could quickly add nearly 2GW of electricity generation capacity to the grid.

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This would be through buying 1.6GW of surplus supply from Independent Power Producers, importing up to 200MW from neighbouring countries, and getting about 150MW of gas energy from Mozambique.

“There have been negotiations over the past 10 days or so with our neighbouring countries and the Southern African Energy pool, and somewhere between 100 and 200 megawatts could be available in a period of a month, depending on the contracting mechanism and agreement on prices as well,” Gordhan said.

Trade, Industry and Competition Minister Ebrahim Patel said local content requirements for solar projects would be temporarily relaxed, until the country solves the electricity crisis.

Patel said that under Bid Window 5, bidders would now only need to get 35 percent of their solar photovoltaic (PV) cells from local suppliers, when previously it was 100 percent.

“We have developed a flexibility framework for Bid Window 5 which covers solar PV panels, specifically because that is the area in which the market has come back to us and said it would like to have some flexibility,” Patel said.

“Within this 35 percent that will be produced locally, if there are any delays or challenges with supply, there is also an exemption facility that will be put in place because it will be helpful to the economy.”

“For future Bid Windows, the localisation targets are intended to be incrementally increased to allow the scaling up of local production to create jobs, and strengthen supply chain security.”

Mashele said the drop in local content requirements for solar PV modules was disappointing. She said this would affect jobs not just at the manufacturing plants mentioned, but the module value chain as well.

“The minister also mentioned that the increase in local content will be incremental in future rounds; this does not bode well for local manufacturing in future bid rounds as the precedent has been set,” Mashele said.

“This is interesting to me because as we divest away from fossil fuels, as a country and decommission our coal plants, we are more than happy to buy baseload fossil-based power from our neighbours.”

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