Category Archives: DPE

Brian Molefe returns as chief executive of Eskom

BusinessDay, 12 May, 2017

Board spokesman Khulani Qoma confirmed his return in an interview on Talk radio 702

Board spokesman Khulani Qoma confirmed his return in an interview on radio 702 www.702.co.za on Friday.

“Definitely‚ he is coming back on Monday‚” Qoma said.

Molefe has resigned as an MP in order to resume his former position.

His return was sparked by a dispute over a reported R30m pension payment that he was awarded after he announced in November that he was stepping down “in the interest of good corporate governance”.

The Sunday Times revealed that he was awarded the hefty “golden handshake” despite being at the power utility for only 18 months.

Public Enterprises Minister Lynne Brown said shortly afterwards that there was no justification for the payment.

(Ed. note: I wonder what Lynne Brown is up to? Trying to save the R30m, getting rid of Koko, looking for another way to get rid of Brian, but without the handshake – waiting for the State Capture report to implicate him so he can be fired?)

Qoma said the Sunday Times story had resulted in Brown instructing the board to review the payout and come up with a mutually acceptable agreement. “We could not agree … so a decision was made to rescind the initial decision by the board for a pension payout.”

That effectively nullified his resignation and he would return to work on Monday‚ he said.

Molefe resigned from Eskom after it was revealed in the State of Capture report by former public protector Thuli Madonsela that he had exchanged 58 calls with Atul Gupta.

The report also detailed how cellphone records had placed Molefe in Saxonwold‚ the Gupta residence in Johannesburg‚ several times around the time of the controversial Tegeta-Optimum coal mine deal signed with Eskom.

Eskom chairperson Ben Ngubane said he was “absolutely delighted” to have Molefe back.

Op-Ed: Eskom, a slow-moving train wreck

Daily Maverick, Dirk de Vos, 12 May, 2017

The South African government, it seems, loves policy-making space and resists anything that would constrain this space. It is therefore a pity that very little policy, good or bad, gets to be implemented. Part of the problem is the top-down approach to policy-making. It means that while we get a never-ending supply of policy documents, too little consideration is given to “the facts on the ground”

Not paying attention to practical implementation makes us vulnerable to poor ideas such as pursuing a nuclear build programme that keeps returning, zombie-like. A recent contribution by Rob Turrell using advice given to the Minister of Science and Technology by the respected National Advisory Council on Innovation (NACI) shows that practically speaking, South Africa simply does not remotely have the capacity to participate meaningfully in any nuclear programme.

As an investment company, Eskom is a slow-moving train wreck. A big part of the problem are the disastrous Medupi, Kusile and Ingula projects, its existing debt and the funds it is yet to borrow. Chris Yelland did a convincing calculation of the massive (up to now) cost over-runs and then the price at which Medupi and Kusile would have to supply electricity to the grid if they were stand-alone operations.

In short, the price that they could supply the grid when (if) they are completed is well above Eskom’s own selling price for electricity. Eskom disputes Yelland’s calculations but refuses to disclose the details of its own. It should be noted that Eskom cannot even provide the required information to the regulator to enable it to make a tariff determination. Bluntly, Eskom is borrowing to continue financing the construction of stranded assets. …

Here is the full, depressing article

Eskom renewables impasse over

BusinessDay, 13 February, 2017.

Eskom caused alarm in the sector in July 2016 when it said it would not sign on any more IPPs to the grid because of concerns about affordability

The deadlock between Eskom and independent power producers (IPPs) appears to have broken, with several IPPs having received budget quotes from the power utility indicating what the cost will be of connecting them to the grid.

(EG-SA Ed. note: Great news!
Now Eskom must be made to compensate the IPPs who suffered losses because of the unnecessary delays to financial closure.
Also Lynne Brown representing the DPE (sole shareholder of Eskom), must be held responsible for the cost of the delays and the damage to the renewable energy industry, and Koko must go before he does further damage.)

The quotes preceded President Jacob Zuma’s undertaking in his state of the nation address that Eskom would sign the outstanding power purchase agreements for renewable energy in line with the procured rounds. Eskom caused alarm in the sector in July 2016 when it said it would not sign on any more IPPs to the grid because of concerns about affordability.

On Friday, South African Renewable Energy Council (Sarec) chairwoman Brenda Martin said she had been informed about the budget quotes sent out.

She had also learnt that Eskom had approached the IPP office in the Department of Energy to set dates for the signing of power purchase agreements with the producers.

“So it does look as if things are moving,” she said.

Martin said the budget quotes had been sent to IPPs regardless of the agreed tariff at which they would sell electricity to Eskom. This is despite Eskom’s insistence it would sign them up only to a price of 62c/kWh.

A total of 21 of the 37 IPPs with outstanding power purchase agreements received budget quotes. This included the 10 small bid winners announced two weeks ago. Martin said Sarec’s remaining concern was that all the bidders get their budget quotes confirmed.

On Friday, Eskom spokesman Khulu Phasiwe said 2,383MW of renewable power purchase agreements — about 37 — remained to be signed. To date, Eskom had signed 64 agreements for 4,000MW and two for open-cycle turbines for more than 1,000MW.

Phasiwe said the unsigned agreements had been approved by the investment and finance committee of the Eskom board and by Public Enterprises Minister Lynne Brown. The National Energy Regulator of SA had provided the necessary assurances for cost recovery of the power purchase agreements.

Mitochondria Energy chairman Sisa Njikelana was optimistic about the deadlock being broken. Hulisani executive director Marubini Raphulu said Zuma’s comments indicated the impasse had been resolved.

“Eskom’s primary objective has always been to deliver reliable energy supply at the least cost to the consumer,” Phasiwe said. “Eskom’s position is that all energy sources, be they nuclear or renewables, should be pursued at a pace and scale that the country can afford.”

Here is the link to the article

THE THICK END OF THE WEDGE: SA’s rot began on a winter Wednesday

BusinessDay, 10 February, 2017.

Behind the years of fraud at Eskom sit the Guptas, writes Peter Bruce

Slowly, the lid of years of fraud at Eskom is being lifted. Thuli Madonsela started it in her report on state capture last year, leading to the resignation of Eskom CEO Brian Molefe.

This week Eskom chairman Ben Ngubane indicated that a half-completed forensic report on Eskom would be released. And then he broke his promise and offered a redacted version to people or institutions who applied for a copy under access to information legislation.

Fortunately, Financial Mail deputy editor Sikonathi Mantshantsha had already seen a few versions of the report, by law firm Dentons.

Like the professional he is, he waited for Ngubane to have his say and then let rip. This week’s Financial Mail is fantastic and Mantshantsha’s reporting on the rot at Eskom — the over-invoicing, the conflicts of interest, the waste of money from a utility that constantly whines about its need to raise electricity prices — is spellbinding.

Here is the rest of the BusinessDay article

 

Op-Ed: Impasse in renewable energy procurement – a political power play

Greg Austin, Daily Maverick, 7 February, 2017.

While it has been interesting to see the level of debate around the price of electricity, much of this is mere noise and overlooks the fundamental questions of how we supply our future energy needs at the lowest cost, in the cleanest fashion, and with the greatest economic development benefits possible. By GREG AUSTIN.

The current impasse related to renewable energy procurement under the Renewable Energy Independent Power Producer (REIPP) programme, blocked by Eskom since August 2016, is political theatre that is highly detrimental to South Africa’s immediate and future economic health. Immediate, as it relates to foreign direct investment into our economy, and longer term because the country’s flagship programme being stalled at the behest of the mandated buyer of the renewable electricity (Eskom), could put the final nail into our ratings downgrade coffin.

Let alone diversifying our electricity supply mix for the long-term future while keeping abreast with the latest in generation technologies. We certainly started in the right direction: in 2014, investment into renewables in South Africa accounted for 84% of all foreign direct investment; in 2016, this had dwindled to close to zero. It’s a shambles and a disgrace.

The illegality of Eskom’s refusal to sign the Power Purchase Agreements (PPAs) with the renewable generators, while clear to those in the industry, is now laid bare for all to see by the recent legal opinion which states, unequivocally, that Eskom is bound by law to comply with the Department of Energy’s REIPP RFP and the subsequent awarding of projects to so-called preferred bidders from Rounds 4 and 4.5 of the REIPPP with whom it has to sign the agreements.

Were Eskom and their government shareholder to simply obey the law, the REIPP procurement process – together with its associated profound economic and socio-economic impacts – would naturally continue to deliver on its reliability, cost effectiveness and low-risk (to the consumer) investment approach…

Here is the full article