South Africa Envisions New Entity to Generate Electricity and Rival Eskom

(Bloomberg) --

South Africa should establish a new entity that would generate electricity and reduce the nation’s reliance on state utility Eskom Holdings SOC Ltd., Mineral Resources and Energy Minister Gwede Mantashe said.

The venture should ideally be a partnership between the government and private investors, and use a range of technologies, including gas, solar power and clean coal, Mantashe told reporters at the Investing in Africa Mining Indaba conference in Cape Town on Monday. The idea of establishing another power producer was based on a model used in the Netherlands, and should increase competition and help drive down energy prices, he said.

Cash-strapped Eskom currently generates about 95% of the power used in Africa’s most-industrialized economy, but has been forced to implement rolling blackouts because its old and poorly maintained plants can’t keep pace with demand. The utility also buys power from independent producers of green energy.

Industry should be able “to buy power from other sources,” Mantashe said. “We want to take the pressure out of Eskom.”

Other highlights:

  • The government will allow companies to produce unlimited power for their own use without a license, although projects will still have to be registered. Companies wanting to sell surplus power will require a license.
  • Mantashe is drafting a ministerial determination to raise limits on the amount of power companies can produce and his department will work with the National Energy Regulator to ensure projects aren’t unduly delayed.
  • Anglo American Plc and Sibanye Gold Ltd. are among the companies whose applications to generate their own power are being processed. While Sibanye was given permission to build a 50-megawatt plant in 2017, it never went ahead.
  • South Africa won’t throw money at the problem of energy shortages and considers the price of electricity generated from power barges to be too high.

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