Tag Archive | IRP

Overall energy strategy still not there

Feature article………….

DOE energy strategy in need of lead 

From closing parliamentary meeting….sent clients dec 15….   South Africa’s energy strategy problem is as much about connection as it is about the integration of supply resources, said Dr WolseyDr Wolsey Barnard Barnard, acting DG of the Department of Energy (DOE), when briefing the parliamentary select committee on DOE’s annual performance before Parliament closed in 2015

Of all the problems facing South Africa on the energy front, probably the most critical is the lack of engineering resources facing South Africa at municipal and local level, negatively affecting economic development and consumer supply, he told parliamentarians.

He particularly referred in his address to the fact that the main problem being encountered in the energy supply domain was the quality of proposals submitted by municipalities for supply development in their areas.     In many cases, he said, the entities involved totally lacked the technical skills and capacity to execute and manage projects and there was also, in many cases, a lack of accountability with reports not being signed off correctly and in some cases technical issues not resolved before the project started.

Doing the simple things first

Despite all the queries from Opposition members on major issues such as fuel regulation matters; nuclear development and the tendering processes; the independent power producer situation with clean energy connection problems and issues surrounding strategic fuel stocks; again and again (DOE) emphasised that nothing was possible until South Africa developed its skills in the area of energy (electricity) connections.

electricity townshipsThe quality of delivery in this area was “extremely poor”, Dr Barnard said, inferring that without satisfactory delivery of energy the burning issues of supply became somewhat academic. Localised development at the “small end” of the energy chain had to be developed, he said. This lack of skills was exacerbated by the “slow delivery of projects by municipalities and by Eskom in particular”, he said.

Eskom  in areas not covered by local government.

Dr Barnard said that there was a lack of accountability on reports provided; poor expenditure by most municipalities evident from the amount of times roll overs were called for and high vacancy rates in municipalities. Consequently, he said, the overall Integrated National Electrification Programme (INEP) was producing slow delivery of electrification projects requested of both local government and Eskom against the targets shown to MPs.

In probably the last meeting of the present Parliament before its recess, DOE spoke more frankly than has been heard for some time on the subject of its short, medium and long term energy solutions, including a few answers on the problems faced.

Frank answers

DOE explained it had six programmes focus which were outlined as the various areas of nuclear energy; energy efficiency programmes; solar, wind and hydro energy supply; petroleum and fuel energy issues, regulations and development electrification with its supply and demand issues.

DOE specifically mentioned that the Inga Treaty on hydro-power had come into force in the light of theinga fact that conditions to ratify the long term agreement between SA and DRC were satisfied and commercial regulations could begin in order to procure power. This would change the future of energy of solutions. This was a long terms issue but targets for the year on negotiations had been met.

Opposition members were particularly angry that a debate could not take place of nuclear issues and whether South Africa was to procure reactors or not. It was suggested by the Chair that maybe the outcome of COP21 might have given more clarity but MPs maintained that to make a decision DOE, as well as the Cabinet, “must know the numbers involved”.

DOE maintained silence on the issue saying as before that enumerating bid details would destroy the process. It was assumed by the committee at that stage that the then Minister of Finance must be grappling with the issue but MPs wanted an explanation to back up President Zuma’s State of the Nation address on nuclear issues, complaining that nobody in Parliament had seen sight of Energy Minister Joemat-Pettersson nor heard a thing on the issue.

Full team minus nuclear

Present from DOE, in addition to Dr Wolsey Barnard, Deputy DG and Projects and Programmes were Ms Yvonne Chetty, Chief Financial Officer; DG Maqubela, DG of Petroleum Regulations and DG Lloyd Ganta, Governance and Compliance.

On solar energy, DOE said some 92 contracts had been signed in terms of the IPP programmes. Forty of them were now operating producing some 2.2 megawatts of energy at a “cheap rate” when on line and solar germanythe grid being supplied but it became more expensive when not being taken up. Dr Barnard explained that South Africa was not like Germany which was connected to a larger EU “mega” grid in Europe where it both received and supplied electricity.

SA’s system, he said was rather a “one-way supplier”, solar energy being made available only when needed by the grid. But as SA grew economically, things would change.

He commented that the new solar energy station in Upington had not yet been completed but shortly it would not only be supplying energy “when the sun was shining” but, importantly, be able to stored energy for later use. This made sense with the purpose of the IPP programme, he said.

The big failure

On the issue of the PetroSA impairment of R14.5bn, subject raising again the temperature in the meeting, DG Lloyd Ganta of DOE explained that the PetroSA impairment had happened mainly for two reasons.
The first was that PetroSA had made a loss in Ghana to the value of R2.7bn, primarily, he said, due to the fluctuations in the price of oil, the price falling from $110 per barrel to $50 at the time shortly after their entry and at the point of the end of the first quarter.

Project IkwheziThe second reason was due to losses at Project Ikwhezi (offsea to Mossgas) where volumes of gas extracted were far lower than expectation, the venture having started in 2011. At the end of the 2014/5 financial year, only 10% of the expected gas had been realised. When parliamentarians asked what the new direction was therefore to be, the answer received was that engineers were looking at the possibility of fracking at sea to increase the disappointing inputs.

The financial reports from Ms Chetty of DOE confirmed the numbers in financial terms making up the loss,

Dependent on oil price

Acting DG Tseliso Maqubela then stressed that nothing could not change the fact that South Africa was an oil importing country but the country was attempting to follow the direction of and promises made on cleaner fuels and it had been decided to continue with the East coast extraction.

In terms of the NDP, DOE said that South Africa clearly needed another refinery for liquid fuels but

refinery

engen durban refinery

whilst an estimated figure of R53bn had been attached to the issue some time ago for the financing of such, the issue of upgrading existing plant had not been resolved with stakeholders.

Oil companies, he commented, had said that if the government were not to pay for this in part, especially in the light of fuel specification requirements also required to meet cleaner fuel targets set by international agreements signed by SA, the motorist would have to foot the bill as the country could not import clean fuel as such to meet all demand.

More refining capacity

“A balance has to be found with industry and a deal struck”, he said, the problem being that the motorist was at the end of the fuel chain and such a call would affect the economy. He said that possibly the refinery issue could be approached in a phased manner and at perhaps a lower cost.

In the meanwhile, cleaner fuels were a reality and already some traders had applied to the DoE for licenses to construct import facilities, one in Durban and one in Cape Town.

If traders were to bring in large quantities of clean fuels, he said, this would represent a complete change in the petroleum sector and an energy task team, made up of government and main stakeholders was at present putting together a full report on cleaner fuels and a strategy for the future.

LPG a problem

lpgThe Liquid Petroleum Gas (LPG) situation was different, he said, since in this area there was not enough production and import storage facilities and it was a question of short supply therefore to the market – a problem especially in winter.

Both propane and butane, the main constituents of LPG are used in the refining process in the far more complicated process of straight petroleum fuel production and with the economies of scale that have to apply to South Africa, this resulted in a high market gate price and insufficient quantities, he said.

Unfortunately, LPG was becoming very much the energy source of preference with householders,especially poorer homes, hence the pressure on government to find some way of introducing LPG on an a far larger scale and at a lesser price. The impression was given that LPG “got the short straw” in terms of production output numbers.

Nuclear non-starter

Again when the subject came round to nuclear matters, no officials present from DOE were in a position to answer MPs questions on why eight nuclear power stations should be necessary, if nuclear was indeed a necessity at all, and whether the affordability had been looked at properly – the chairman again suggesting that the matter be put off until reappearance of the Minister of Energy in the New Year.

Gas on back-burner, as usual

Finally, on questions of gas and fracking, DG Tseliso Maqubela said that government “was takingmozambique pipeline a conservative approach” inasmuch that any pipeline from Northern Mozambique to South Africa was not under consideration but that plans were afoot to expand existing pipelines from that territory in the South.

On fracking, as most knew he said, a strategic environmental assessment had been commissioned, basic regulations published and also the question of waterless fracking was a possibility, now being investigated.
Previous articles on category subject
MPs attack DPE on energy communications – ParlyReportSA
Eskom goes to the brink with energy – ParlyReportSA
South Africa at energy crossroads: DOE speaks out – ParlyReport
Gas undoubtedly on energy back burner – ParlyReportSA
SA aware of over-dependence on Middle East, says DOE – ParlyReportSA

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Houses_of_Parliament_(Cape_Town)

Parliament : some clarity on policy emerging

Departments brief new Parliament..

Editorial….

Again and again the words ‘certainty’ and ‘uncertainty’ have arisen in parliamentary working committees,  not only in terms of the foreign investment climate but also in terms of borrowing, building and direction of strategies to achieve growth and the creation of jobs.

More than anything else, uncertainty seems to be South Africa’s greatest economic stumbling block. Even public utilities, let alone investors, bankers and private sector industrialists, have made submissions asking for clarity on government policy and decision making.

Cabinet indecision could be the problem. Leadership could be the problem. Let the political commentators decide but from a parliamentary viewpoint this week one sensed the first elements of certainty and clarity.

IRP being finalised

No doubt the news that the integrated resources plan is finally happening will bring more certainty to the energy sector and the recent nuclear and hydro decisions have let everybody know where that sector is going.

Whether recent decisions are considered right or wrong in the health sector, Minister Dr Motsoaledi seems to have a firmer hand on the tiller.  Similarly in the transport sector, and more than just hopefully but certainly, the first Brazilian train is due to arrive and new coaches will shortly be going through some new stations that are being built.

Minister Pravin Gordhan has brought his experience with SARS to bear on local government and his unsmiling manner will no doubt rattle many a cage down the line and produce the necessary repayment plans.   He appears, from reports coming to Parliament, to be getting around the constitutional problem of local affairs being out of bounds to national affairs and will bring a number of errant provincial and local employees to court.

Saving the day

Although Parliament still cannot amend a money Bill but only debate same,  national treasury seem to have come to the party to plug the gap in certain instances, thus getting rid of expressions like “currently in negotiation on possible funding” in departmental and state utility reporting. But a what cost and will this be enough?  Be that as it may, the gap has been plugged.

Whether recent events are good or bad news according to the governing or opposition parties, confirmation of direction in government policy takes the crystal ball out of planning and strategy.   Decisions can be made.

We sense at the moment some direction in parliamentary affairs and in the coming weeks, whilst there will be surprises for some such as the Areva nuclear build award, disappointments for some such as no reversal of the decision to proceed with carbon tax and the worry of the decision to increase electricity tariffs despite the multi-year fixing, at least we are beginning to know for certain where we are.

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IRP energy plan calls for less capacity

IRP plan now out and public comment called for…..

The Department of Energy (DoE) has called for public comment on the much talked about Integrated Resource Plan (IRP) clarified as being for the period 2010-2030

Commentators have noted, that the final IRP plan anticipates that 6 600 MW less capacity will be required by 2030 than originally thought. This has led many into thinking that DoE may delay, once again, impending decisions regarding the proposed nuclear build programme but ,in the State of Nation Address (SONA), President Zuma,was clear that provision was to be made for a nuclear development  but gave no dates.

The comment period on the final IRP closes in early February and DoE, in their statement and notice, says “the responses will be used to inform a final draft to be submitted to Cabinet by March 2014.”

The report finally updates the original IRP of 2011 and takes into account SA economic growth patterns; renewable energy contributions; possible changes to the electricity market and sourcing of energy.

Peak demand expectations less

A demand projection for 2030 is made which is considerably lower the 2011 peak demand but the new document notes that “from a peak demand perspective, this means a reduction from 67 800 MW to 61 200 MW (on the upper end of the range), with the consequence that at least 6 600 MW less capacity is required.”

In addition, the update still uses the National Development Plan’s economic growth target of 5.4%, meaning that as things stand at the moment, demand projections could be reduced even further amounts unless there is a considerable change in South Africa’s economic fortunes.

This has led to many projecting that any nuclear decision will possibly be delayed, further supported by the fact that the new IRP  suggests that no new nuclear baseload capacity is required until after 2025 in any case.

Nuclear development in conflict with SONA

The 1,100 page report suggests that the country should not “prematurely” commit to a technology that may become “redundant” if electricity demand expectations do not materialise. Under such low demand growth conditions, the update does not foresee a need for nuclear baseload until after 2035.

The document also favours a procurement programme launched for between 1 000 MW and 1 500 MW of “fluidised bed combustion coal plants, based on discard coal” which is completely unlike the current coal inputs from Medupi or Kusile. It supports “stepping up” exploration for shale gas in South Africa.

The possibility of enlarging the current Eskom power station configuration with the building of new, more efficient coal-fired plants are debated and the new IRP plan calls for “flexible decision-making in favour of decisions of least regret” which means, according to the DoE IRP compilers, of avoiding “commitments to long range, large-scale investment decisions”.

Play it as you go along, seems to be the theme of the new IRP. Maybe the plan is to sell energy to the North.

Previous articles on this subject
http://parlyreportsa.co.za//cabinetpresidential/energy-resources-doing-it-better-and-quickly/
http://parlyreportsa.co.za//energy/nuclear-gas-workshop-meeting/
http://parlyreportsa.co.za//energy/integrated-energy-plan-iep-around-corner/

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Integrated Energy Plan (IEP) not crystal ball gazing, says DOE

Department reports to Parliament on energy plan.

It must be understood that the integrated energy plan (IEP) for South Africa  was going to be a “simplistic representation of a number of possible future outcomes encapsulating the state of energy demand and supply that could materialize in light of current policies and macroeconomic trends.  The IEP will not be a representation of a most likely energy future.”

So said Ms Tshidmidzi Ramendozi, chief director, energy planning, department of energy (DOE) when addressing parliamentarians of the portfolio energy committee on the state of the IEP, where the DOE had arrived at in terms of producing such a plan and when it was likely to come about.

Under questioning Ramendozi estimated a final draft in the hands of the cabinet by  the middle of 2013.

The development of an IEP was envisaged in a White Paper on Energy in 1998 and the minister in terms of the National Energy Act of 2008 was then mandated to develop and publish such an IEP on an annual basis. The purpose of the IEP was described in the Act “to provide a road map of energy policy and technology development future energy landscape in South Africa to guide future energy infrastructure investments.”

Seven test cases would be studied in the current exercise, Ramendozi said, which would indicate what could happen if particular actions were taken. She was at pains to point out that such test cases were not really scenario planning exercises, which would have allowed for outside forces or factors over which DOE or those associated with energy generation had no control.

Major factors within the ambit of the planning exercise, she said, for projections in the IEP, were the original energy White Paper; the 2010 integrated resources plan; the national development plan; the new growth plan; the national climate change response paper; the national transport master plan; South Africa’s beneficiation strategy and the proposed carbon tax policy.

Parameters governing the base assumptions were, Ramendozi said, renewable energy targets; the fuel reserve margin; the limits governing annual carbon emissions and the penalties involved.   Naturally macroeconomic factors such as banking rates, economic growth and global oil prices were involved in the assessments.

From this base, for which DOE had to make certain assumptions on GDP factors forecast in the 2012 budget, was to take a middle, moderate growth scenario out of low to high growth patterns, and assume a certain amount of skills restraints into the future.    It also had to assume global oil price projections from the Energy Information Administration and, also to be accounted for, were international projections from the annual energy outlook documents of 2012 in order to establish some sort of formula to go forward.

Assumptions for various test cases could then be undertaken, Ramendozi said, with or without the new nuclear build programme; in one case with existing nuclear structures and one without and mothballing existing structures.  Such would form the basis in test cases one and two.

Then came test cases three and four, at which point Ramendozi referred to the national development plan which had presented a number of factors which had to be borne in mind although these directly affected the integrated resources plan (IRP) and were incidental to the IEP under consideration as far as test cases were concerned.

These factors were that as a net importer of crude oil, South Africa was very much a taker in the oil market and susceptible to fluctuating prices. Also to be considered were the new fuel specifications being considered and the fact that refineries were to be re-equipped to capacitate such and that South Africa would no doubts continue on its path of intensive use of fuel-powered vehicles but improving its national transport system generally.

She noted the options in the national energy development plan, as far as liquid fuels were concerned, and these were as DOE saw it – to build a new oil-to-liquid refinery; build a new coal-to-liquid refinery; upgrade existing refineries; import more refined product or build or buy a shareholding in a new refinery in Angola or Nigeria.  All this had to be considered at this point of the running of test models.

Turning to test case three in the process, Ramendozi said this included expanding existing refineries with greenfields operations. Test case four included upgrading or expanding refineries and possibly, in addition, increasing importation of refined product, allowing for consequent upgrades of port infrastructure and associated costs such as transportation.

Test cases five and six, DOE noted, included the issue of carbon emissions, which was based around South Africa’s international commitment to reduce emissions by 34% by 20120 and 42% by 2025. Factors to be considered were the findings of the long term mitigation exercise involved at the time which had established that South Africa’s energy use emissions constituted 80% of all emissions, 40% of which, a majority on a comparative generating basis, arose from the generation of electricity.

Test case five, Ramendozi said, therefore involved the issues of refurbishing the existing “fleet” of generating plants to meet targets set by the department of environmental affairs (DEA).  This would produce a result for this test case.

However, there was little doubt that such a “retrofit plan would still leave demand outstripping the supply of electricity” so that, as per test case six, the plan to be modelled would involve  “South Africa mothballing its (coal) power plants and investing solely in new technologies as a substitute.”

Ramendozi concluded that the issue of carbon tax finally arose in test case seven. Here, the impact of carbon tax on the choice of energy technologies throughout the entire value chain had to be considered, bearing in mind the DOE was aware of a current proposal to tax emissions of CO2 @ R75 per ton of with an increase of around R200 a ton.

For this modelling exercise and still to be completed, she said, was quality checking of the data collected; the actual configuring of the base for the test cases; subsequent analysis and evaluation and then the final report writing.

Stakeholders would be consulted before a draft report was issued, the draft report being considered first by cabinet before the draft became public.

MPs commented that quite obviously things were still therefore at a very early stage and were surprised that the DOE paper at this stage gave no evaluations of each energy source and no comments on job creation or job losses or skills so far reached.   Ramendozi replied to this, and a number of other similar questions on energy resources, that parliamentarians were confusing the IRP, which dealt with resources and the effects and consequences of their use, with the purpose of the IEP.

It was not the job of the IEP to evaluate and decide upon the quality of resources and their use or not.

The IRP was very much on the subject of electricity energy, she said, to repeated and similar parliamentary questions on coal issues and the future of coal as a primary industry.  Questions on gas reticulation and exploration off the Mozambique coast and what PetroSA were planning, for example, and similar issues in the hydrocarbons area, she noted, similarly involved specific resource evaluations and this was not what the IEP was about. She said the job in hand which looked at the whole sector in a broader sense.

“For example”, Ramendozi said, “when looking at the transport master plan it becomes quite evident that whilst improving rail transport systems, a knock-on result in a broader sense would be a swing perhaps from road to rail, meaning a different call upon the rail electricity need. This would be an IRP issue, however.”

This should answer many parliamentarian’s questions, she said, why there was so little to be said in the IEP on the specific issues surrounding liquid fuels in the planning process.

The IEP was to be a road map and the process leading to building such a plan would yet have to “unpack” many of the issues surrounding energy and the economy from a macro-economic viewpoint.  Such macro-economic issues as job losses and the use or over-use of water, for example, would indeed be in the considerations for individual test case models.

“This is going to be a particularly difficult aspect of preparing the IEP”, Ramendozi said, “because it involves cross-debate with many government departments, including treasury, environmental affairs, labour, health and transport, for example, and the final document needed to be both visionary and re-active to findings and take into account policy matters that had been adopted as courses of action”.

“What the IEP will not be”, she said, “is another IRP which evaluates resources but rather a document which will consider test case models, with or without certain weightings, based on inclusivity or excluding issues, and also to incorporate known supply options with given macro-economic factors.”

She commented, in reply to questions on the effect of carbon tax, that this would indeed be a “challenge” to assess, since whilst MPs saw this as an effect on the purse of the individual, DOE’s thinking on this at this very early stage might be to take the treasury viewpoint that the effect carbon tax could be countered by incentives in the system in the form of allowances, before costs reached the individual.

On augmenting the IEP with the liquid fuels strategy, Ramendozi said, that here again DOE was more concerned with producing transportation and demand factors at this stage. She said, in a similar vein, when asked about the Mathombo project, that her department could not even talk the need for a new refinery, “until we start running the various test case models”.

On questions regarding fracking and gas exploration activities in the Karoo, Ramendozi responded, “With all the geological and logistics issues facing fracking, we are hardly even considering this contribution in terms of the time frame of the IEP. We do not see Shellgas playing an effective role in the energy picture in the immediate future as far as short term test cases are concerned”.

She told parliamentarians that one of the test cases included natural gas related to electricity needs, compared with to gas to liquid technologies. However, she said the whole exercise was not to consider one resource against another but how to complement resources into a common system.

The IEP, she said, “must take on board government policy towards the environment, attitudes toward climate change and therefore such issues and water and water resources used in coal fired plants will have to be considered.   However, social issue answers are not something that will come out of the IEP”, she told parliamentarians.

In many cases we see the final IEP highlighting many issues but not addressing their manner of implementation”, she concluded.

Ramendozi said that in terms of producing the IEP, DOE would consider a reserve fuels margin of 19% and when asked as a final question by an MP what DOE were “going to do about the elephant in the room – the growth rate”, she responded that DOE had to follow exactly what treasury were stating for growth “otherwise all other related data would not make sense”.

Chair, Sisa Njikelana, concluded by saying the IEP presentation was the final document in an “important parliamentary year on energy matters,” stating that DOE had to get the concept behind the IEP right in their minds “before it moved into the nuts and bolts of the various test case issues”.

He said that the energy committee was to put on whole host of questions in writing to DOE based on a forthcoming parliamentary summation of the situation so far on the IEP, and this would be an exercise undertaken once parliament re-assembled in the New Year.

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Eskom sheds light on future intentions

annual report 2011/12

Eskom, whilst it may have some problems, is in a very healthy position and has electrified more than 155,000 homes this year.  It has, as promised, “kept the lights on” in South Africa but would fail in its New Build programme unless it had the backing of government financial support.

This was stated to the public enterprises portfolio committee in Parliament by CEO Brian Dames when presenting to Parliament the Eskom 2011/2 annual report figures in a presentation to back up the published annual report and financial statements.

He said that any funding issues had been resolved, particularly as far as funding for future projects was concerned, as had labour problems at Medupi power station building site.

Dames said that although sales had increased only by a marginal 0,2%, the increase in tariff allowed had resulted in revenue growing from R91.4bn in 2010-11 to R114.7bn in 2011-12.        Since March, there had actually been a decline in sales, reflecting the impact which the world recession was having on the South African economy.

Profit amounted to R13.248bn, giving a 3,7% return on average total assets, mainly as a result of NERSA having approved a 16% increase, providing therefore an economic benefit of R11bn this year to the country’s coffers.

Paul O’Flaherty, financial director, compared the final results to NERSA’s targets for 2011/12.   NERSA had estimated a higher operating profit than eventually emerged. The lesser figure came about because of a reduction in sales due to a depressed economy but with cost savings of over R4bn, a net profit figure of R13.25bn was finally reflected in the figures which exceeded NERSA’s expectations.

O’Flaherty, however, gave some warning signals for the coming year as far as the consumer was concerned, bearing in mind that the utility had originally applied to NERSA for a 29% hike in tariffs in order to fund its power generating programme over what was then a shorter period.

He told committee members that as coal were such a large proportion of Eskom’s costs and with coal prices being unpredictable, inputs at their coal fired power generating stations could easily rise above the rate of inflation and in such as case the consumer would have to bear the brunt.

As things stood, coal costs had gone up by 29% during the year. He also said that Eskom had finally negotiated an increase of 8,1% for the workforce and this would add to input costs throughout the group.

Brian Dames said that a major issue in the coming year was to convert coal deliveries from road to rail as far as this was possible and Eskom had set a target last year earlier to move 8,2m tons by rail. So far, Eskom was looking at a figure of 8,5m tons having been achieved. This was encouraging, he said.

Dames told parliamentarians that the special tariffs enjoyed by BHP Billiton for their aluminium-smelter, originally set when Eskom had excess capacity were currently under negotiation.      Eskom had also recently been able to renegotiate more favourable contracts with zinc plants in Namibia who had until now enjoyed tariffs below cost of production.

He warned that as tariffs inevitably increased, such would be translated into debt problems, particularly at municipal level. Already it was a challenge was to manage the Soweto debt, which stood about R4.5bn at the end of the last financial year.

Dames said that NERSA had agreed, as part of recent talks, that Eskom would be allowed price increases in the future and would also be allowed to revalue its assets to allow for a higher level of depreciation. The cost of replacing Eskom’s assets today would be R500bn, compared to the historical cost of R290bn but as its debt grew, so would its financing costs.

Eskom’s rating with government support was “BBB+” and without government backing its rating would be lower. This was not a possible scenario, he said, for the country or Eskom.

Eskom’s build programme would continue as planned, the committee was told, which would deliver an additional 11 256MW by the time the Kusile coal fired power station came on stream in 2019. What would happen after that, Dames said, depended entirely on the integrated resource plan (IRP) being drawn up by the department of energy (DOE) in discussion with stakeholders.

Both DOE and Eskom are locked into investigative debate on the financial prospects for Eskom should it be stripped of the national transmission grid in order that independent power producers may enter the energy supply chain, all regulated by the presently halted ISMO Bill. Such matters directly affect the IRP and all future consequences in energy planning.

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Eskom woes on unpaid debt and copper theft a problem

In written responses to two Parliamentary questions, minister of public enterprises, Malusi Gigaba, clarified what appeared to be an extraordinary debt load being carried by Eskom in the form of unpaid electricity accounts.

He, secondly, clarified newspapers reports on copper theft which seems to be adding to the woes of Eskom, whose credit rating appears under pressure as it considers its funding options for the IRP.

Eskom is a major factor in the Integrated Resource Plan (IRP) formulated by the department of energy in terms of energy needs of South Africa for the next decade. Minister Gigaba told parliamentarians that insofar as the question raised on outstanding unpaid accounts, municipalities and government departments were reported to him as being 30-day arrears with Eskom to the tune of R543.4m.

He further said that 161 government institutions owed Eskom money, with municipalities accounting for the bulk this but the total had been R533m as at January 30. Of this, local, provincial and national government departments then owed R10.3m.

As was to be expected, the minister pointed out that the divulging of Eskom customer information could not go much further than this but added that generally municipalities accounted for 40.8% of Eskom’s electricity sales.

On the second question posed by parliamentarians on copper theft problems, Minister Malusi Gigaba was careful to point out that the cost was not just the value of the copper stolen but the security measures to improve the situation as well and these costs had escalated from R9.8m in 2006 to R35.3m in 2010/2011 for Eskom.

This has all followed a previous media statement by Transnet of a jump in 2010/2011 to R96.5m for copper cable theft and a significant jump also in Transnet’s spend of over R80m on increased security measures to combat this. So far in the current year on a month by month basis, figures were still increasing.

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