Eskom looking to cut prices paid to older projects
The government wants to talk to independent power producers (IPPs) about lowering the price Eskom pays for energy projects, public enterprises minister Pravin Gordhan has said.
Eskom supplies more than 90% of South Africa’s power but is drowning in debt after a decade of decline.
It implemented power cuts for five consecutive days last week because of breakdowns at its creaking fleet of mainly coal-fired power stations.
Labour unions and some conservative sections of the ANC blame Eskom’s financial woes on 20-year agreements it signed to purchase power from renewable energy projects launched in 2011 and 2012.
The power prices Eskom pays for later renewables projects are considerably lower because technology and finance costs in the renewable energy sector fell by the time they were agreed.
“The simple assurance is that this is not about scrapping a contract,” Gordhan said.
“This is about exploring possibilities that are created by the rapid fall in costs in the renewable sector, whether that’s solar or wind.
“There are players in the renewables industry who are saying ‘let’s talk’.”
Gordhan said he wanted to reassure IPPs that the government would be careful about how it handled any negotiations over power prices.
“We are a law-abiding country. We need to look after the interests of everyone concerned,” he said.
Gordhan said the government wanted to balance out prices agreed during bid windows one and two of the country’s renewable energy programme – launched in 2011 and 2012 – with lower prices in later bid windows.
President Cyril Ramaphosa has promised to support Eskom’s balance sheet and split the utility into three to make it more efficient.
Meanwhile, Sunday Times reports police and intelligence officers are to be deployed to Eskom power stations across the country to protect them from possible sabotage.
According to the report, the government is putting a ring of steel around Eskom power plants – roping in police, intelligence officers, engineers and energy experts in a huge scramble to keep the lights on.
The multi-pronged emergency plan includes preventing any possible sabotage to the electricity supply by those linked to state capture.
This follows the failure of seven generating units that caused nationwide blackouts last week, prompting suspicion that the power crisis was deliberately created to undermine Ramaphosa’s plans to change Eskom’s structure and business model and to root out corrupt networks.
ANC presidency spokesperson Zizi Kodwa said that after being briefed on the power crisis, the party believed South Africa was facing a threat to national security. –