Public Enterprises Minister Pravin Gordhan said coal prices had increased 17 percent in the financial year ended in March. File Photo: IOL

JOHANNESBURG – President Cyril Ramaphosa yesterday backed the transition of South Africa from fossil-based to clean energy as envisaged in the Integrated Resource Plan (IRP) 2019, charging that the government would develop a framework to take ageing coal-fired plants out of service and reposition Eskom as an efficient energy generator.

Ramaphosa said in his weekly newsletter that although the government was mindful of the consequences of closing the plants on communities that depended on their existence, it wanted to attract investment in cutting-edge coal technologies to reduce the impact of coal-fired power generation.

He said the government needed to implement a just transition to ensure that communities and workers were not left behind. “That is why we will be developing a clear framework for the process of decommissioning coal-fired power stations that have reached the end of their operational cycle,” he said.

Last week, Mineral Resources and Energy Minister Gwede Mantashe launched the IRP 2019, which advocated the decommissioning of coal-powered plants, paving the way for the phasing in of nuclear energy at a pace, scale and cost the country could afford.

Eskom has flagged the price of coal and diesel as key to its burgeoning input costs over the past few years.

In July, Eskom projected that it would pay 20 percent more for its coal this financial year, after being forced into more expensive short-term supply contracts as cost-plus mine production declined. 

Public Enterprises Minister Pravin Gordhan said coal prices had increased 17 percent in the financial year ended in March. Gordhan said Eskom paid 14 percent more per ton from its initial target of a 9 percent cost increase.

Ramaphosa said the latest round of load-shedding made it clear that the country must act to protect its energy supply. “While technicians are working around the clock to fix problems at several power stations and restore the grid to stability, the government last week released the updated IRP,” he said, adding that the IRP 2019 was the government's policy blueprint for the country’s industrial, commercial and household energy needs until 2030. “It provides clarity and certainty on a crucial part of our development path.” 

Eskom was expected to retire several plants that have reached the end of their design life. Most of the plants were designed and constructed to operate for 50 years.

At the same time, the Koeberg Nuclear Power Station will reach its 40-year end of design life in 2024. The IRP 2019 contains plans to extend its design life and nuclear safety licence for another 20-years.

Ramaphosa said Eskom needed to improve its credit rating so that it can raise funding for its operational and capital expenditure.

“The sheer scale of Eskom's debt is daunting. Further bailouts are putting pressure on an already constrained fiscus. As the government has made clear, the most recent support to Eskom comes with stringent conditions. The fruitless and wasteful expenditure must be stopped,” Ramaphosa said.