Page 3 - Energize March 2021
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                                Could the private sector

                                stop the load shedding?

                                 by Roger Lilley, Now Media

                    Everyone knows that South Africa’s state-owned power utility Eskom faces serious challenges
                    in keeping its power generation output sufficiently high to meet demand. But what’s behind
                    these challenges and how could the electricity supply system be improved?

                         he country’s economy suffered greatly since      According to its latest interim results report
                         regular load shedding began in 2008. Now,     (published in December 2020), Eskom’s debt is now over
                    Twith the added harm inflicted by 2020’s           R460-billion, with debt servicing costs of R94-billion this
                    lockdown regulations associated with the Covid-19   year. The report makes a chilling announcement: “Without
                    pandemic, further load shedding will make economic   government support, cash from operations remains
                    recovery this year nigh on impossible. As the country   insufficient to meet debt servicing”.
                    anticipates winter, it’s bracing itself for still deeper   Invoiced municipal arrear debt is now R32,9-billion,
                    and longer episodes of load shedding. Such load    and so-called “small power user” debt is R13,9-billion.
                    shedding leads, not only to cold and dark days and    Although the government, as the only shareholder
                    nights, but to still greater economic hardship.    in the business, provided a bailout of almost R88-billion
                       Since economic recovery and growth prospects    (R56-billion in 2020/21 and R31,7-billion for 2021/22), the
                    depend on sustainable electricity, it was good to   power utility continues to haemorrhage cash, with the
                    see the government act swiftly to source additional,   South African economy being the loser.
                    “emergency” (risk-mitigating) power in the short-     The economy loses in two ways: firstly, the R88-
                    term. It was also encouraging to see the Department   billion could have been – and should have been – spent
                    of Mineral Affairs and Energy’s quick response to the   on infrastructure upgrades, such as rural schools,
                    Requests for Proposals and the subsequent selection   roads, railways, or any such projects, and secondly,
                    of a handful of “preferred” independent power      because although the money has been given to Eskom,
                    producers’ bids.                                   the country still faces load shedding which undermines
                       The organisation’s Group Chief Executive Officer,   business and reduces the tax revenues and job-creation
                    Andre de Ruyter, has warned that although load     which the country desperately needs.
                    shedding has been temporarily lifted, the power       The best decision the government made, in my
                    utility will have no choice but to continue curtailing   opinion, is the inclusion of the private sector in the
                    load to match available supply for many months yet.  generation of electricity. Both the Renewable Energy and
                       Some experts have suggested that load           Risk Mitigation IPP programmes have given the private
                    shedding may be part of our lifestyle for the next   sector the opportunity to provide the additional power
                    five years.                                        needed, create jobs, and stimulate the economy.
                       But the utility faces more than just ageing,       The IPP projects which have already come on
                    unreliable generators. The organisation faces a    stream, demonstrate that the private sector can build
                    double financial challenge: It has so much debt that   power stations on time, within budget and according
                    the amount needed to service that debt is crippling;   to specification.
                    and it is owed so much by some businesses,            It seems best for Eskom’s ageing and unreliable power
                    individuals and municipalities, that it struggles to   stations to be closed and replaced by new power stations,
                    make ends meet.                                    built, owned, and operated by the private sector.

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