Category Archives: Actors

CER RESPONSE TO MINISTER’S STATEMENT IN RELATION TO THE PROPOSED THABAMETSI & KHANYISA IPP COAL-FIRED POWER ST ATIONS

· The Life After Coal Campaign and Greenpeace Africa’s letter to Minister Radebe regarding the proosed Thabametsi and Khanyisa IPP coal-fired power stations (22 March 2018)

Available here: https://cer.org.za/wp-content/uploads/2018/03/LAC-and-GP-letter-to-Minister-Radebe-on-IPPs-22-3-18_signed.docx.pdf

· Annexure A: Greenpeace Africa’s letter of 7 March 2018

Available here: https://cer.org.za/wp-content/uploads/2018/03/Letter-to-Minister-Radebe_March-2018.pdf

 

Comments on the Draft Carbon Tax Bill

Date: 8 March 2018 at 19:08

Subject: Comments of the draft carbon tax bill
To: carbontaxbillcomments, tsepanya, awicomb
Cc: Sharlin.hemraj, memory.machimgambi

Dear Sir/Madam,

Please find attached comments on the the draft carbon tax bill from members of the Energy Governance South Africa (EGSA) network.

EGSA is a network of over 60 organisations and individuals promoting good governance in the energy sector.

Please could you confirm receipt of this email and when our document has been received by the relevant people.

Furthermore we would like to request an opportunity to present at the Public Hearing on the 14th March in Parliament.

Kind Regards

Richard Halsey, on behalf of EGSA

EGSA Comments on Draft CarbonTax Bill 8 Mar 2018.pdf

Renewable energy to form a vital part of SA’s energy mix – David Mahlobo

Minister of Energy at the Africa Energy Indaba, Sandton, 20 February, 2018

Renewables mentioned 16 times in the speech, no mention of nuclear or coal!

Here is an extract:

“23. For instance, in South Africa, we have launched a Renewable Energy Independent Power Producer Programme (REIPPPP) which has been highly successful. This programme has been supported by other governments who assisted us to develop renewable energy roadmaps which provided investors with information on the renewable energy opportunities in the country. Government provided a clear policy framework which guided the procurement process and communicated to the public the opportunities available. The private investors showed willingness and took the risk to invest. The procurement process was well documented and removed all the risks and perceived uncertainties. 24. Since the renewable energy programme inception, a total of 6 422 MW of electricity have been procured from 112 RE Independent Power Producers (IPPs) in seven bid rounds (as at June 2017). Out of these projects, 3 162 MW of electricity generation capacity from 57 IPP projects are already connected to the national grid. Investment to the value of R201.8 billion, of which R48.8 billion (24%) is foreign investment has been spent on the projects. A total of 32 532 jobs have been created for South African citizens. Socio-economic development contributions of R403.7 million to date have been made to develop rural communities in particular”

So perhaps now the outstanding Power Producer Agreements (PPAs) will be finally signed by Eskom and we can look forward to further bid windows and Kusile 5 and 6 being cancelled!

Here is the full speechSpeech-by-Energy-Minister-at-Africa-Energy-Indaba-2018

Eskom given breathing room as lenders approve of new board and chief

Hilary Joffe, Business Live, 25 January, 2018

Talk is that lenders are lining up to lend to Eskom now that a competent and credible new board is in place, along with a well-regarded interim CEO.

 Eskom had risked default because bankers would not roll over short-term loans — essentially working capital — and declined even to talk to the old board. Now, talks are under way with the banks and immediate funding risk seems on its way to being managed.

 The next task is to ensure Eskom provides its auditors, SizweGobodoNtsaluba, with the information that they have demanded and with enough comfort to enable them to sign off the interim accounts in time to avoid the JSE suspending the listing of Eskom’s bonds.

 Talk about the discipline of the market.

 Interventions by lenders include the Development Bank of Southern Africa and the commercial banks.

 All of that, however, is crisis management in the very short term. Eskom will be back with the begging bowl in February or in 2019 if the new board doesn’t act decisively to put a management team in place that can tackle the fundamental problem: that the utility has done little or nothing in recent years to tailor its inflated cost base to its dwindling sales.

 Enter the National Energy Regulator of SA (Nersa), which has signalled strongly that it will no longer allow Eskom to keep asking for ever-higher tariffs to pay for its ballooning costs.

 In December, Nersa threw out Eskom’s application for a 19% tariff increase for the coming year, starting April 1, and instead granted a 5.2% increase.

 Nersa is expected to publish its reasons for the decision within the next couple of weeks and they are unlikely to reflect well on Eskom’s efficiency.

 Meanwhile, however, Nersa has announced timelines for Eskom’s three regulatory clearing account (RCA) applications, totalling R66.6bn, on which Nersa will now pronounce only at the end of September.

 This may be rather a disappointment to Eskom and to those in the market hoping that the coming year’s tariffs might be boosted by some RCA revenue. If the entire R66bn was to be added back to Eskom’s revenue in a single year it would add another 30% or so to tariffs, though the regulator is likely to treat the RCAs with the same or more scepticism than it did the tariff application. And what money it does allow would be phased over several years, starting in 2019.

 The issue that’s likely to loom large though is why Eskom keeps coming back to Nersa with RCA applications that, peculiarly, seem to be for similar amounts of about R20bn each year — and that puts big question marks over its ability and willingness to forecasts its sales and costs accurately.

 The way it works is that Eskom applies for a pot of revenue each year to cover its “efficiently incurred” costs; that revenue is divided by the projected electricity sales to get a per unit cost, which is the tariff. The regulator scrutinises all this and decides what it will allow, which becomes the tariff.

 The applications have been for five-year periods with the latest running from 2013 to 2018, but the regulatory methodology provides for the possibility that as the years of the tariff determination go by, sales or costs could turn out to be different from the forecasts.

 Eskom can therefore put in these RCAs to claw back some more revenue if costs turn out higher or sales turn out lower than it and the regulator had projected. Whatever clawback the regulator agrees to is added to tariffs in future years.

 The RCA was designed to cater for modest variances in the forecasts, not for huge cost overruns or sales undershoots. But R20bn a year is hardly modest and the regulator is clearly becoming less and less tolerant of the fact that Eskom has done little to improve its forecasting models despite being wrong by wide margins year after year.

 It almost halved the R20bn Eskom applied for for the first year of the 2013-18 tariff period, and a lengthy court challenge, which went in Nersa’s favour, has delayed the next round of RCAs. The three years that will now be considered are for the middle of the five-year period; there is still another to come for the final year.

 Nersa has allowed two months for public comment and it will then go through the public hearing process, as it did with the main tariff application, before it makes its decision.

The process promises to be rough, yet again, for Eskom and the message from the regulator, as from the market, will no doubt be that the utility needs to start responding to the discipline imposed on it.

 That in turn means some tough decisions need to be made by the new board and a new executive team, on measures that may well have to include reviewing coal contracts, shutting power stations, cancelling some huge capex programmes and reducing staff numbers.

 The new board and a new executive team have their work cut out. And they will need plenty of political cover if they are to do what needs to be done to eliminate the risk of default, now and in the future.

 Here is the link to the article

Treasury to approach banks in bid to avert Eskom default

Carol Paton, Business Day, 22 January, 2018.

Eskom executives and the Treasury will approach local banks as early as Monday to restore lending as the company races to avoid the suspension of its bonds by the JSE and to dodge a pending letter of default from the World Bank.

The state-owned company needs to raise R20bn over the next few weeks to persuade its auditors that it is a going concern. This will enable it to publish interim financial statements and allow access to foreign debt capital markets.

If the World Bank issues a default letter during a scheduled meeting with Deputy President Cyril Ramaphosa at the World Economic Forum in Davos, Switzerland this week, it will trigger a 14-day recall on its $3.75bn loan, which could trigger a recall on Eskom’s R350bn debt mountain.

On Saturday, the Presidency announced a new board for Eskom, to be headed by Telkom chairman and business leader Jabu Mabuza.

The new interim group CE is Phakamani Hadebe, a former Absa executive and former Treasury official.

If you are already a subscriber, please click on the following link below to go to the full article: Eskom, Treasury to turn to local banks