Eskom to sign cogeneration agreements 'very shortly'

2010/03/01

Eskom can no longer be regarded as the country's single energy provider and will "very shortly" sign cogeneration agreements with outside power producers, Public Enterprises Minister Barbara Hogan said on Monday.

The contracts to provide additional power would be signed with companies such as Sasol and Sappi, Hogan said at an infrastructure ministerial cluster briefing in Cape Town.

An independent power producers' framework was "virtually in place" for Eskom to purchase power from people building generators and power stations as well as from suppliers "outside of the country", she said. It is anticipated that cogeneration will add about 1143 megawatts to the power supply. "We anticipate that is going to be signed very shortly, within March," said Hogan. "I think we are facing the fact that a government parastatal is no longer in a position to provide total energy for the country. "We will be looking to supply that energy from independent power producers providing power from whatever source, coal, renewables, whatever, going forward." She said her ministry would have to decide how much of Eskom's R486 billion build programme would be covered by its tariff increase.

Eskom was granted permission to hike its rates by a 24.8 percent for the 2010/11 financial year by the National Energy Regulator of SA (Nersa) last week. "We all know that the tariff has been very low and Eskom has seen a massive plunge in revenue from 1991 until now," Hogan said.

"Eskom projected it would have borrow R123bn (for its build programme). Government would give R60bn. Eskom was hoping to recover the remainder out of the tariff.

Eskom initially wanted a 45 percent hike for each of the next three years, but reviewed this downwards to 35 percent after a public outcry. However, Nersa approved increases averaging about 25 percent a year. "It has gone down 20 percent, so there is a serious implication for Eskom going forward," said Hogan. (Source : Sapa)