Numsa seeks to stop Eskom signing renewable energy contracts

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Published Mar 27, 2018


Pretoria - The National Union of Metalworkers of South Africa (Numsa) and transform RSA turned to the Gauteng High Court in Pretoria on Tuesday to obtain an urgent interdict to prevent Eskom from signing 27 renewable energy contracts.

The applicants said if Eskom and government were allowed to go-ahead with signing the contracts, it will not only result in massive job losses, but it will also result in economic suicide.

Judge Dawie Fourie was told by counsel acting for the applicant, Nazeer Cassim SC, that it is estimated that the total value of all Eskom approved contracts over the next 20 years (if these contracts are entered into)  would amount to R1.1 trillion. This, he said was a significant financial risk to both Eskom and government and money the country could ill afford.

The applicants wanted the court to prevent the signing of these contracts, pending the main application which the Coal Transporters Forum (CTF) is due to launch soon. In that application CTF will ask that Eskom be interdicted from signing any power purchase agreement with any of the Independent Power Producers (IPP).

The applicants earlier this month turned to court for a late night urgent interdict after Minister of Energy, Jeff Radebe, announced that he would sign the agreements on March 13.

Judge Cynthia Pretorius at the time refused to grant the interdict and the matter was postponed to Tuesday.

Counsel for the minister at the time agreed that the signing would not go ahead, pending the outcome of these proceedings.

Judge Fourie indicated that he would deliver his verdict on Thursday.

The minister, in announcing his decision to sign the agreements, said the initiative would enable R56-billion of new investment in the economy over the next two to three years. He also said the programme would contribute to job creation across the energy value chain and support the technical training of young people.

Numsa, however, said it would lead to massive job losses due to the closing of power stations and the massive costs associated with the alternative power supply, would ultimately have to be carried by the citizens of South Africa.

The project entailed an alternative form of energy loosely referred to a mixed use renewable energy, compraising solar, wind and biomass as a source to generate energy. It is put up as an alternative to electricity and power presently being generated by the use of coal and to a lesser extent hydro and nuclear.

Cassim argued that while this alternative source of energy at face value is efficient, it it extremely expensive. “It has the potential to plague this country into bankruptcy,” he said. 

He told the court that Eskom has accepted that this will result in the closures of power stations and job losses. 

Cassim said before this project could be implemented, the National Energy Regulator of South Africa (Nersa) in any event had to agree with the minister in this regard and it had to first set the tariff. Cassim said there are no documents to show that Nersa had made any decision and the only inference is that it did not take the decisions, as required in law.

“It must follow that the conclusion of contracts with the IPP’s by Eskom will be unlawful,” he argued. 

Cassim said it will be argued during the main application - which is expected to serve before court within a few months -  that electricity currently purchased from IPP’s is sourced at R2.14 /kWh whereas Eskom can produce the same energy at R0.32/kWh.

He said Eskom has accepted that there is currently excess capacity which is likely to continue for a considerable period of time and a a result of over-capacity Eskom could be forced to decommission some of its power stations . “It would not be able to recover the costs of the IPP agreements from its pricing tariff scheme approved by NERSA,” he said.

Eskom, Nersa and the IPP’s all opposed the application and asked that it be dismissed.

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Pretoria News

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