‘Nuclear is a lifeline for the long term’
THE chairperson of the South African Nuclear Energy Corporation, Dr Kelvin Kemm, yesterday said that South Africa does not have a luxurious surplus of electricity and insisted that the country should be using much more.
“The paying customer base was eroded, due to the serious energy shortage initiated in 20078. Subsequently the income of Eskom dropped drastically and then very expensive renewable energy was acquired in a rush to plug the shortfall,” Kemm said.
“Now Eskom has to pay for that decision. However, Koeberg nuclear power station remains Eskom’s cheapest electricity and it has many years of life left,” he said.
He told The New Age that according to the projections of a dozen years ago, the country should now be using 50% more electricity than it currently used.
Ted Blom, a partner at Mining & Energy Advisors said that Eskom had a massive and growing surplus of electricity, which was being compounded by the forced implementation of additional, expensive and subsidised renewables. Energy experts warned The New Age that the proposed signing of the 27 power purchase agreements would also lead to electricity hikes for every South African.
“It appears something will have to break before the ruling party will take remedial action,” Blom said.
He said that Eskom’s dire financial situation became one of SA’s worst kept secrets when the utility was thrown a 30day lifeline in February by the Government Employees Pension Fund – without following proper governance procedures.
“When the unions became aware, Eskom and the PIC denied shortcircuiting procedures and promised to repay the R5bn borrowed within 30 days.
“This loan was refunded on March 1, but with only a paltry 7.2% annualised coupon – a bargain by any lending standards given the urgency and risk attached.”
An expert warns that should Nersa grant Eskom the R66bn claimed for past losses, it will immediately translate to a 30% hike over and above the 2030% hike Eskom is believed to be targeting through its midyear tariff increase application before the end of this year.
Nersa has invited the public to comment on Eskom’s request to increase tariffs to recover R66bn lost between 2014 and 2017.
Nersa, however, shortened the time that consumers have to comment on the tariff increase.
Blom says that shortening the time electricity consumers have to object to Eskom’s proposed tariff increase by two weeks is “unfair”.