Tag: power

Like a seriously unwelcome – but all-too-familiar – guest, loadshedding has returned.

To help South Africans get through the powerless days and dark nights, Orlando Luis, CEO of Brights Hardware, shares a list of eight must-have items that will keep your home (and office spaces) functional during a power outage.

Battery-powered LED lighting

“Battery-powered LED lighting is essential during power outages,” says Luis. “There is a wide range of rechargeable LED light strips, lanterns, and torches available that make keeping the lights on during loadshedding easy. You can even get a rechargeable LED desk lamp so that the kids can continue doing their homework during evening power cuts.”

Another great item to have in the home are intelligent LED light bulbs. These bulbs come in either a screw or bayonet configuration and can be used like a standard light bulb in any light fixture but they stay on during load-shedding as they hold charge for up to four hours.

Solar lighting

In addition to rechargeable and battery operated solutions, there is a wide range of solar powered lighting on the market today. These range from spot lights/security lights to solar lanterns, garden lighting and even pool lights.

“Solar powered lighting is a great solution in a sun-rich country such as ours,” advises Luis “There is no cost to recharge them, and many are practically “set and forget” and will come on automatically after sun down.”

Gas stove/cooker

Boiling water and getting meals prepared during power outages is impossible without a gas stove or cooker. Thankfully there are many different options available to consumers today – whether it is a large six plate gas hob and oven or just a simple, portable table-top one or two-plate gas cooker – and many more options in between.

“Many people are choosing to change their ovens over from electrical to gas. Not only does this mean you can carry on your dinner preparations during a power outage, but your electricity bill will also be reduced through the introduction of gas appliances,” says Luis.

Portable power bank

We all want to stay connected, especially in the dark. No electricity coupled with no means of communication is not a great combination.

“Portable power banks are a fantastic solution to ensure that you don’t run out of cell phone battery life,” advises Luis. “These compact gadgets can also charge other devices such as tablets, portable modems and speakers.”

Surge protector

It is a good idea to purchase a surge protector for your home or office. A surge protector is an electrical device that is used to protect equipment against power surges and voltage spikes that can be caused by power cuts.

“Surge protection can range from plug and play devices to systems installed at the distribution board by a registered electrician.”

Luis goes on to caution that some household insurance policies stipulate that they will not cover damage caused through power surges if the proper surge protection is not in place – “it is worth checking with your insurance provider.”

Uninterruptible power supply (UPS)

An uninterruptible power supply (UPS) is an electrical apparatus that provides emergency power. A UPS differs from a generator in that it will provide near-instantaneous protection from power interruptions by supplying energy stored in batteries. It is a type of continual power system.

“A UPS is typically used to protect hardware such as computers, data centers, telecommunication equipment or other electrical equipment where an unexpected power disruption could cause injuries, fatalities, serious business disruption or data loss.”

Generator

If budget allows, investing in a generator is a great way to make power outages less intrusive. “There are many different models and options to consider,” says Luis. “Entry level 2 stroke generators, such as a 950-watt unit, are unreliable if the petrol/oil mixture is not consistent, so Brights recommends starting with no lower than a 4 stroke 1200-watt generator.”

Inverters

This then introduces the question – what about people who live in complexes and housing estates that are not allowed to run a generator because of the noise pollution?

Luis says that the best option here is to purchase a pure sine wave inverter with batteries. All these units are silent except for the cooling fan which blows on the side. They also switch on automatically during load shedding.

By Khulekani Magubane for Fin24

After President Cyril Ramaphosa delivered his State of the Nation Address last week under the shadow of an under-performing economy, Members of Parliament jostled over whether he was confronted by near-impossible odds or complicit in South Africa’s economic quandary.

MPs held the first day of the SONA 2020 debate in the National Assembly on Tuesday afternoon.

Democratic Alliance leader John Steenhuisen said Ramaphosa failed to capitalise on the optimism at the beginning of his presidency, as economic growth slowed, and direct foreign investment dropped along with tax revenues and employment.

“I am not going to stand here and say that this happened on your watch, Mr President. That would be far too kind. It didn’t just happen on your watch, it happened by your own hand. You, sir, put us in this situation,” claimed Steenhuisen.

Ïn Steenhuisen’s view, most of the positive announcements Ramaphosa made during his SONA were merely DA policies that the president co-opted and appropriated as his own.

“Euthanasia is never easy, but sometimes it’s the most humane option. On Thursday night you should have switched off Eskom’s life support machine, and perhaps supported the DA’s electricity plan, which takes power from the state and gives it to the people,” Steenhuisen said.

Steenhuisen said Ramaphosa’s newly announced sovereign wealth fund was only a great idea for a nation that had a healthy budget, citing Norway and Saudi Arabia as examples.

“But we are running a budget deficit and spiralling deeper and deeper into debt. Where will the money for a sovereign wealth fund come from, Mr President? From your own bank account?” Steenhuisen asked.

Speaking after Steenhuisen, Minister in the Presidency Jackson Mthembu sprang to the president’s defence, saying that Steenhuisen could not expect the president to take his policies from the DA’s election manifesto.

Mthembu said Ramaphosa’s SONA speech focused on the energy crisis, youth unemployment, growing the economy and building a capable state.

“We welcome government’s plan to ensure that Eskom works to restore its operational capabilities, while implementing measures that will fundamentally change the trajectory of energy generation in our country such as putting in place measures to enable municipalities in good financial standing to procure their own power from independent power producers,” said Mthembu.

Mthembu added that the government was moving to respond to unemployment, which he said is high because of the “grossly imbalanced structure of the economy”.

This is exacerbated by the skills mismatch that is so prevalent in the country, he added.

By Lameez Omarjee for Fin24

A flat rate for electricity could help foster a culture of payment among Soweto residents, a local councillor told Fin24.

Soweto ANC councillor Mpho Sesedinyane believes a proposal for a R150 monthly flat rate for electricity could be a starting point to address the country’s non-payment woes. The flat-rate proposal was the brainchild of the South African National Civic Organisation – a non-political organisation which advocates on behalf of communities in engagements with government and other service providers.

Soweto owes Eskom almost R20bn – almost half of the total local municipal debt owed to the electricity utility.

Eskom has started disconnecting power to thousands of Soweto households as a consequence.

The now famous couple from the KFC proposal viral video went on their first outing to the Sowetan Derby on Saturday. (Video supplied by KFC)

Sesedinyane said the culture of non-payment dates back to apartheid when residents were told not to pay for public services as an act of resistance.

“Our people were told not to pay for services, not to pay for electricity,” Sesedinyane said.

The ruling ANC had not come back to residents to communicate it was noble to pay for services, after taking over in 1994, he said. Some residents can afford to pay, but are stuck in the old “mentality” and are still resisting payment, he added.

“We need to bring them back and say, we have won the country now. It is us [the ANC] that are governing now, can we now start to contribute and pay Eskom,” Sesedinyane said. These views have previously been expressed by president Cyril Ramaphosa and his deputy, David Mabuza, among others.

Sesedinyane believes the introduction of a flat rate could be a starting point to create a culture of payment for services.

“We had to agree (with Sanco) to come up with this project. For Eskom to collect revenue, it is important to start somewhere,” he said. That starting point is a flat fee of R150 households should pay per month for electricity.

If a flat rate of R150 is introduced, Eskom would at least generate some kind of income, which is better than none at all, he suggested.

Sesedinyane explained that the majority of Soweto residents are unemployed, living below the poverty line and are reliant on social grants. This means they are unable to pay for electricity.

The flat rate should be set at an amount which everyone can afford, including grant beneficiaries. After three or four years the flat rate can be increased, and at that point people will be used to paying for electricity, he added.

“People will then be in a position to know it is noble to pay for services, especially electricity. And they will be used to paying at the end of the day.”

Sesedinyane said that prepaid meters will not be the solution. “Our people will start connecting themselves illegally and they will not pay for electricity.”

Not sustainable

The South African Local Government Association – an association comprised of 257 local governments – however does not think that a flat rate would work. Spokesperson Sivuyile Mbambato told Fin24 that the proposal was “unsustainable”.

“We do not have the luxury of cheap and excess electricity like we did more than 20 years ago. Everyone must pay for what they use,” he said.

Salga is supportive of a prepaid solution. “Prepaid will be the answer in Soweto and other townships but the residents still reject that. This is an indication of how deep is the culture on non-payment in our communities,” said Mbambato.

The association’s National Executive Committee met last week to discuss solutions for rising municipal debt, among other issues.

The NEC resolved that a two-phased approach be implemented to address rising debt, according to a statement issued by Salga last week.

Phase 1 puts forward stricter enforcement by municipalities on credit control measures. This means municipalities will have to target government properties and businesses, through disconnection if there is “sufficient merit” in line with their credit control policies, the statement read.

Phase 2 involves an analysis of debt to classify debt which must be written off, or is realistically collectable.

The proposal comes after a period in which Salga interacted with various parliamentary portfolio committees on matters relating to debt owed by municipalities.

Government unveils Eskom rescue plan

By Lameez Omarjee and Jan Cronje for Fin24

Eskom is aiming to have completed the unbundling of its generation, transmission and distribution operations by December 2022, according to a new policy roadmap published by Minister of Public Enterprises Pravin Gordhan.

Here is what you need to know:

‘Cost-effective power’

Gordhan repeatedly returned to the point that South Africans deserve cost-effective electricity, which Eskom is not providing at the moment. The fact that tariffs have increased by 500% over the past decade – without an associated boost in generating capacity – has put the economy under strain, and is not sustainable.

Eskom must be restructured to survive

The plan to split Eskom into three parts – generation, transmission and distribution – is going ahead. Of the three, the transmission entity will be spun out first, around March 2020.

All three entities will remain functional subsidiaries of a larger Eskom holding company.

The minister said on Tuesday that monopolies were by their nature wasteful. A large part of the restructuring plan deals with increasing competition and competitiveness within the utility to eliminate waste and inefficiencies.

In the generation space, the plan proposes that Eskom retain its existing generation fleet and each power station concludes a power purchase agreement with the transmission entity. Eskom will also be permitted to build its own renewable energy generation.

There will not be much focus on unbundling the distribution arm in the near future, due to its complexity. Municipalities currently play a key part in selling on electricity to consumers at a markup. “There is a bit more study that we need to do,” he said.

UCT professor Anton Eberhard, a member of President Cyril Ramaphosa’s task team on Eskom, tweeted that the establishment of a separate electricity transmission company would be transformational by creating a transparent platform to buying competitively priced electricity.

Cost savings

Eskom has only been functioning in recent times due to lifelines from the state, as it does not make enough revenue from selling electricity to cover the cost of the interest on its debt. Treasury in February allocated Eskom R23bn each year for the next three years for a total of R69bn. The National Assembly, meanwhile, recently agreed to a special appropriation to grant Eskom R59bn over the next two years – over and above the allocated R69bn – to pay interest on debt.

To save costs, Eskom would be reviewing coal contracts, and government intends to meet with suppliers to review the cost structure, returns and fair price of coal.

Other measures include a review of employee benefits and alternatives to retrenchment, consequences for non-payment of electricity to recoup some of the R25bn it is owed by municipalities, talks with the energy regulator about pricing, and new procurement approach. The financial turnaround also includes a review of independent power producer contracts, and the disposal of non-core assets to raise cash.

State capture

The minister said that the damage caused by state capture was “huge” and “systemic”. Skilled people were “chased out” the company. All these factors had a negative impact on Eskom’s finances, he told journalists. He added that “‘trolls’ would claim that Eskom was to be privatised, but said this was ‘fake news'”.

Just transition

The plan acknowledges the need for a sustainable approach to be adopted for workers and communities impacted by the decommissioning of coal power stations. Alternative economic developments must be considered for affected communities and the state will be obligated to make sure affected communities can adapt to new opportunities. Gordhan said that labour unions and affected stakeholders are being engaged to understand the importance of changes to Eskom’s future structure.

New CEO

Eskom has been without a permanent CEO since May 2019, when Phakamani Hadebe announced his sudden resignation due to the ‘unimaginable demands’ impacting his health.

Despite speculation that he might, Gordhan did not announce a new chief executive, saying the utility’s new head would be announced next week. This would also be accompanied by board and management changes to account for Eskom’s changed structures.

“We have a bright future for Eskom. It still has a few clouds around it now,” Gordhan said.

How Eskom maimed SA’s economy

By Michael Cohen and Paul Vecchiatto for Bloomberg 

It isn’t difficult to find the main culprit behind South Africa’s biggest economic contraction in a decade: Eskom Holdings SOC Ltd., the state-monopoly power provider.

Gross domestic product slumped an annualized 3.2% in the first quarter, after expanding 1.4% in the prior three months, as a series of power cuts — courtesy of Eskom — hammered manufacturing, mining and agricultural output. The utility provides about 95% of the electricity used in Africa’s most industrialized economy.

”Eskom has a grip on the South African economy that is unlikely to be seen anywhere else in the world,” Kevin Lings, chief economist at Stanlib Asset Management Ltd. in Johannesburg, said by phone. “Eskom powers all tiers of the economy right down to the households, and so when it cannot supply electricity all sectors suffer. It is unlikely to change because there is currently no well-articulated plan to cure its problems.”

Driving downward
Eskom, which is buckling under the weight of more than $30 billion in debt, staged days of rolling blackouts, mostly in March, to prevent a collapse of the national grid as its fleet of poorly maintained power plants struggled to keep pace with demand. The outlook looks more promising for the second quarter: The power cuts have abated and the authorities have given assurances that there will be sufficient supply for the winter.

Even so, the economy’s shock performance, which far exceeded the 1.6% median contraction forecast of 16 economists, illustrates the urgency of the need for the government to diversify the power supply. The International Monetary Fund Monday said Eskom was a “major downside risk” to South African economic growth.

A program to purchase green energy from independent producers is in limbo. And little visible progress has been made in implementing President Cyril Ramaphosa’s plan to split Eskom into generation, distribution and transmission units. The proposal, designed to make it easier for other producers to supply the grid, is opposed by labor unions.

The bleak prospects of a speedy resolution to South Africa’s energy crisis are reflected in GDP forecasts for the rest of the year: The central bank anticipates an expansion of just 1% in 2019, the government 1.5% and Bloomberg Economics less than 1%. That’s well below the 3% Ramaphosa was targeting before he took power in February last year, and is a huge obstacle in way of his drive to attract $100 billion in new investment and tackle a 27.6% unemployment rate.

SA blackouts may cut growth close to zero

By Rene Vollgraaff and Londell Phumi Ramalepe for Bloomberg/Fin24

South Africa’s power cuts could bring economic growth for the year close to zero if they continue at the same severity seen in March, the central bank said.

The wave of rolling blackouts that started in November and are among the worst the country has yet experienced could knock 1.1 percentage point off economic growth, the Reserve Bank said in its Monetary Policy Review released Wednesday in Pretoria, the capital.

Expansion of close to zero would be the worst outcome since 2009, when former President Jacob Zuma came to power.

The nation’s embattled power utility, Eskom, implemented so-called stage 4 load-shedding, which removed about 10% from the grid, last month as ageing plants were offline. The company is battling with high debt levels and declining revenue after years of financial mismanagement. It was at the center of alleged looting under the previous administration that’s referred to locally as state capture.

“It has become clearer, however, that the legacy of state capture of which load shedding is one symptom will constrain growth for a longer period,” the Reserve Bank said. “The damage done by state capture is worse than previously understood.”

The country’s economy went through a recession last year and hasn’t expanded at more than 2% annually since 2013. Growth will only pick up once domestic constraints are dealt with, Deputy Governor Kuben Naidoo said in a presentation after the release of the Monetary Policy Review. Gross domestic product increased 0.8% in 2018.

The central bank pointed out that its estimates, which also show 125 000 jobs could be lost, assume load shedding will persist at high levels throughout the year, and don’t incorporate longer-term costs such as forfeited investment.

“It’s unclear to what extent firms and household have now made their own plans to manage or avoid their reliance on Eskom, which could mitigate growth costs,” the Reserve Bank said.

How to choose a UPS for your needs

Judging by the state of Eskom, loadshedding is here to stay. So what is the best solution to get you through the average 4-hour load shedding schedule? A generator, or a UPS with long life batteries?

It really all depends on your circumstances.

If your business or home is located in a low noise area, such as office blocks, flats or apartments, then a silent UPS solution is probably the best way to go, even though the initial capital investment may be three or more times that of a generator.

Of course, the new type inverter type generators are more silent, but the cost is more than double that of conventional generators of the same size.

What most people don’t realise is that even though the upfront cost of a generator may seem an attractive proposition, there are associated hidden costs in the form of fuel costs, maintenance costs and spare parts. If the generator is a “cheapie” from China without local support from an official distributor, then beware. You could be forced to dump it after only a few months.

Installation costs of a generator may also be slightly more than that of a UPS, as you would have to install a manual changeover switch, to switch to either generator power or to grid power, depending on the situation.

With most UPS systems, changeover is an automatic process; when Eskom or City Power fails, the system automatically switches to battery power through an inverter.

Yes, it is true that a generator can be fitted with an automatic change over switch, but with costs exceeding R15 000 to R20 000, you may as well go the UPS route.

With a UPS there are no fuel or maintenance costs. Reputable UPS systems have intelligent battery chargers that ensure maximum battery efficiency for long life. Yes, depending on the type of deep cycle battery used (5 or 10 year lifespan), as well as the frequency of re-charges, one would have to plan ahead to replace batteries when they reach end of life. The benefits however will far outweigh the costs.

A pure sinewave UPS offers seamless, clean and stable power during load shedding, enabling you to power sensitive devices such as computers and modems.

To cut down the initial investment of a UPS, consider a system with fewer batteries.
Do you really need 6-8 hours backup, or will 3-4 hours do? Remember that during load shedding you can extend the length of the rated backup by simply connecting the bare minimum equipment.

For example, in a home environment, lights, TV/DSTV and Internet; or in an office environment, lights, the telephone system, computers and Internet. Most of this can be achieved with a 2-3KVA UPS or generator.

Insistence on buying large generators, far exceeding power requirements during a power outage, results in fuel going to waste.

A generator is only a true necessity if the power outages in your area are over 8 hours or longer.
In those cases, the cost of a UPS with backup batteries would become prohibitive – unless of course, it has a solar power option that would deal with daytime power outages.

Choose wisely and never over-capitalise if the main focus is to simply get through the load shedding sessions.

By Henri Pereira for FocalCom

 

Eskom: a powerless state entity

By James-Brent Styan for Fin24

A week before South Africa shut down for the December holiday, the country was hit with nationwide rolling blackouts.

Things had not been so bad electricity-wise in years.

In fact, since 2014, load shedding had disappeared as Eskom seemed to have gotten its act together.

Indeed, in May 2016 former President Jacob Zuma promised that South Africa will “never, never, ever again” have load shedding.

Alas, it turned out to be a hoax, one that could still lead to thousands of job losses and holds the very real possibility of bankrupting the country.

The Eskom disaster could not have come at a worse time as SA is struggling with high unemployment and low growth.

At the beginning of January, the World Bank released its 2019 Global Economic Prospects publication in which it stated that economic growth in sub-Saharan Africa is expected to reach 3.4% this year.

However, it’s projecting that South Africa’s economic growth will be only 1.3% in 2019.

According to the National Development Plan, in order to tackle the country’s very real socio-economic challenges, SA would need average economic growth of 5% per year by 2030.

Eskom’s problems will no doubt drive the nails even deeper into the coffin of economic growth.

In fact, while 2018 turned out to be an annus horribilis for Eskom, with stage 2 load shedding returning, 2019 may be even worse.

Eskom itself is already planning for stage 8 load shedding.

That could mean load shedding of up to 12 hours per day.

This is an unlikely scenario, but not out of the question – the level 8 load shedding schedules exist.

Eskom’s core issues

Eskom has two fundamental problems. The first is its ability to keep the power on. The second is its finances.

All the other issues – like coal problems, bad debts and political interference – simply exacerbate these two fundamental problems.

The first problem is critical for SA. If Eskom cannot guarantee that the power will remain on, SA will be unable to attract foreign investors – especially the sort we need most, those investors who want to build big factories or mines that are labour-intensive and will help create jobs.

In the past, SA managed to attract investors with the promise of cheap electricity.

Today, not only is electricity no longer cheap, it is also no longer reliable.

At the moment, Eskom has a total installed power generation capacity of roughly 45 000 Megawatts (MW).

But only about 30 000MW can be relied upon to actually work. The rest is broken or shut down.Eskom’s plant performance – or ability to keep the power on – can be measured by looking at the Electricity Availability Factor (EAF).

Ideally the number should be around 85%, with 10% kept in reserve and 5% out for maintenance.

At Eskom’s interim results for the six months to 30?September 2018, the entity stated that EAF was 75.01% to September 2018 and had dropped to 74.2% in October 2018. (Issues like poor coal and old plants contribute to the poor performance).

According to a status update from Eskom in November 2018, the number has kept plummeting to below 70%.

In response, it operates its emergency open-cycle gas turbines at ever-increasing rates to meet demand and avoid load shedding.

It is uncertain how much longer this can be kept up.

The second problem of course affects the first.

Eskom’s finances are dire. In 2008, Eskom held an A1 investment grade credit rating.

At the end of 2018, rating agency Standard & Poor’s maintained Eskom’s rating at CCC+, several levels deep into junk territory (and with a negative outlook).

This rating is unlikely to recover anytime soon and that means Eskom’s debt crisis will only deepen.

Eskom currently borrows money to repay debt. If Eskom were a private sector company it would have been closed down.

Luckily, it is owned by the government, and similar to other struggling parastatals, like SAA for example, government is still bailing Eskom out.

This, of course, comes at a cost to other vital programs.

For example, instead of providing toilets to the 4 000 schools in SA that still rely on pit toilets, the state must use money to rather keep SAA and Eskom going.

Debt is not a problem if a company makes profits and is able to service its debts timeously.

But Eskom is making record multi-billion rand losses.

Eskom suffered a net loss of R2.3bn in 2018, while the 2019 financial results will in all likelihood see the largest recorded loss in Eskom’s history.

The utility noted that a loss before tax of R11.2bn has been budgeted for the 2018/19 year to March 2019.

In September 2018, Eskom indicated that the actual final loss would be worse than budgeted.

Eskom is expecting its debt to increase from R387bn to R600bn within the next four years (as per its results presentation for the year to 31 March 2018).

In 2014, total debt was R255bn.

How are regular South Africans affected?

In 2009, Eskom was selling one kilowatt hour of electricity for 24c.

This year, it is projected to be 97c. That is a fourfold increase and excludes the added costs that municipalities levy.

These tariffs are set to continue to increase exponentially over the next few years, as it is the most viable way for Eskom to get out of its hole.

Eskom’s latest application for tariff increases is in fact happening while you read this.

Public hearings began on 14 January and will continue to 4 February.

If Eskom gets what it wants, the basic price of electricity will increase by 15% per year over the next three years, starting from April.

But even if that increase is granted, there is still no guarantee that SA will be free of load shedding over the next three years.

The increased cost of electricity will also increase municipalities’ inability to repay Eskom. Municipalities – especially in rural areas – already and increasingly cannot afford to settle their accounts with Eskom.

At the end of March 2014, total municipal debt to Eskom was R2.6bn. By the end of March last year, total municipal arrears debt had increased to R13.6bn.

The top 20 defaulting municipalities constituted 82% of total municipal arrears debt, almost 48% of which is owed by Free State municipalities.

In total, 23 municipalities of 257 in the country today have a total arrears debt of more than R100m each.

These numbers exclude the total arrears debt of Soweto. Soweto’s debt is notable because of the size and the difference in response compared to poor, rural municipalities. (It is important to note that Soweto is not a municipality and is provided with power directly by Eskom.)

The total Soweto debt, including interest, was R8.6bn in March 2015.

Total invoiced Soweto debt in March 2018 was R12bn, of which arrears debt constituted about 98%.In addition, Soweto’s debt was written off in 2003.

So this is new debt.

With SA going to the polls this year, this political hot potato will in all likelihood continue to be ignored and Eskom will be unable to collect the R12bn owed.

The crisis that’s coming

Even if Eskom gets all its ducks in a row regarding maintenance and energy availability, it cannot avoid the fact that its existing fleet is old and falling apart.

These plants were always meant to be decommissioned after 40 to 50 years, but Eskom has been running some beyond the 50-year limit.

Plans tabled in Parliament in 2015 stated that a total of 14 800MW of Eskom-owned power stations has to be decommissioned by 2030.

It appears that several units have already been taken offline at old power stations like Komati and Hendrina.

There is a chance that some of these plants could continue to operate a while longer, but at significant cost.

And it’s clear that Eskom no longer has money.

So, while it is true that a new build programme is ongoing (Medupi and Kusile), the new build programme will not be sufficient to replace the power stations that will have to be decommissioned over the next ten years.

And there is no more money to expand the build programme.IPPsOne option to address the demand for electricity is Independent Power Producers (IPPs).

IPPs go some way to reducing the country’s dependence on Eskom, which is a giant monopoly.

However, IPPs have their own problems.

Currently there is 3 774MW of IPP power operational in SA.

In April 2018, Eskom signed agreements with 27 new RE-IPP projects totalling an additional 2 405MW.

Because Eskom runs and owns the transmission grids (the power lines criss-crossing the country), Eskom buys the electricity the IPPs generate and then distributes it.

So the cost for IPP electricity must also be covered by the tariffs Eskom charges consumers.

In addition, the cost of IPP electricity is still higher than the electricity generated by Eskom.

In the 2018 financial year, Eskom purchased 9 584 GWh from IPPs at a cost of R21.3bn (March 2017: 11 529 GWh at R21.7bn).

This came in at an average cost of 222c/kWh (March 2017: 188c/kWh) that Eskom paid.

The average price that Eskom sells electricity for was 85.06c/kWh.

This means that while the IPP portion of total electricity sold by Eskom is small, it is not recoverable via the current tariffs Eskom can charge.

The other challenge with renewable power generation is availability.

In 2018, renewable IPPs in SA achieved an average load factor of 31.5% during the year.

In 2017 it was 30.7%. That means – in a nutshell – if the IPPs were needed 100% of the time, they would only have been able to provide power for 31.5% of the time.

Over the next decade, South Africans will in all likelihood enjoy very little reassurance about the state of Eskom.

But there are two final issues that may take some of the pressure off Eskom. One is the private sector, especially in terms of renewable energy, as well as businesses going off the grid as they opt not to rely on Eskom.

The other is economic growth.

If the country keeps sputtering along on 1.3% economic growth, then load shedding may be manageable, a fact that is utterly depressing.

If a miracle occurs and the economy picks up, load shedding will most certainly become a major reality moving forward.

The country simply, at this stage and for the foreseeable future, no longer has the power generation capacity to drive a growing economy.

For the first time in 20 years, the Presidency has started to compose regulations for a state of emergency.

Rapport, sister publication of News24, saw the draft regulations in terms of the State of Emergency Act 64 of 1997.

In terms of these draft regulations, any security official will have far-reaching powers to act within his or her own judgement, arrest people, search property or cut communication channels such as cellphones or the internet.

The Constitution allows the president to declare a state of emergency when war, invasion, revolt, natural disasters or other dangers threaten the nation’s safety.

Former president PW Botha declared such a state of emergency on July 25, 1985. Activists were held captive in unknown places for undetermined periods.

At least 575 people were killed within six months of this announcement.

Concern over ‘vague’ guidelines

The Act of 1997 replaced the notorious apartheid-era laws, but the regulations that set out what should happen during a state of emergency have never been promulgated.

According to an internal memorandum from the military, President Jacob Zuma appointed a team to compose the regulations, but it is dragging its feet.

Over the past few weeks, the security sector has been urged to urgently provide contributions to complete the project.

National director of Lawyers for Human Rights advocate Jacob van Garderen has read the draft regulations and is concerned about how vague they are.

“It reminds one of the 1980s when the apartheid government used the declaration of a state of emergency to suppress political dissent.”

He said the regulations are vague about how much power various role players such as the military and the police would have and how much force they would be allowed to use.

“It is almost a matter of one size fits all,” he said.

Broad wording

The army decided after a workshop to support the project and develop an operational plan.

Army spokesperson Simphiwe Dlamini said the army was just a role player and was not in charge of the sudden review.

The Presidency didn’t respond to Rapport’s questions.

According to the draft regulations, no person may write, publish or broadcast something that could be threatening to somebody else or his family.

Members of the security forces are allowed to use as much force to restore law and order as deemed necessary under the circumstances, as long as it is proportional.

Van Garderen said the wording is very broad.

‘I can see it end up in court’

“Any meeting, even if it is not public, could be prohibited.

“The context of the regulations concerns me. Civic organisations opposed the amount of force used by police during the xenophobic violence a few years ago and at Marikana.

“If these draft regulations go through, I can see it end up in court.”

According to commissioner of the Human Rights Commission advocate André Gaum, any legislation, and therefore the accompanying regulations, is subject to the human rights provisions of the Constitution.

According to the Constitution, a state of emergency may not last longer than three months, while the president’s proclamation can be overturned and some constitutional rights – such as the right to dignity and life – can never be overturned, even in a state of emergency.

By Erika Gibson for Rapport 

Debt and corruption scandals at Eskom Holdings SOC Ltd. make the utility the biggest risk to South Africa’s economy and the government needs to replace its management, Goldman Sachs Group said.

Eskom plans to raise almost R340 billion ($26 billion) in the next five years, while meeting R413 billionof interest and debt repayments, which amount to 8% of South Africa’s gross domestic product.

The utility is caught up in allegations of corruption related to contracts it signed with companies linked to the Gupta family, who are friends of President Jacob Zuma. It’s also without a permanent chief executive officer and has suspended its finance director. Zuma and the Guptas deny any wrongdoing.

“We are having discussions on solutions,” Colin Coleman, a partner of Goldman Sachs and head of sub-Saharan Africa, said in an interview in Johannesburg on Thursday, without elaborating.

“Government has got to put the governance in place and clean it out. It needs a permanent credible, independent non-conflicted chairman and a credible board and from that, credible managers.”

The New York-based lender in 2015 provided informal advice to the South African government on the sale of state assets to raise money for Eskom and proposals on how to improve the utility’s cash flow, people familiar with the matter said at the time.

Eskom faces lower demand, with South Africans last year using the least amount of electricity generated by Eskom in more than a decade.

The utility is also spending billions of dollars on new power plants that are years behind schedule and over budget. The company disclosed R3 billion of irregular expenditure in its financial results on July 20, a figure which its auditors said they couldn’t independently confirm.

“Eskom is the biggest single risk to the South African economy,” Coleman said.

“If you strip out corruption and sort out procurement, I’m sure there are efficiency gains there. There are self-help initiatives that can deliver a company that’s a lot more efficient. You’ve got to incentivize efficiency.”

The South African government, which saw its budget deficit widen to 92.2 billion rand in July, is hamstrung by an economy that’s barely growing, political infighting, and losses at other state-owned companies such as South African Airways.

Two ratings agencies cut South Africa’s foreign debt to junk in April, citing the firing of former Finance Minister Pravin Gordhan at the end of March and poor governance at state-owned enterprises.

Eskom, which has used R218.2 billion in government guarantees, hasn’t held a public auction for its debt in South Africa since 2014, relying on development finance institutions and export credit agencies for loans.

The power utility is confident it can reduce its dependence on the government by targeting funding sources that do not require explicit guarantees, the power utility said in an emailed response to questions.

“Eskom continues to access various debt markets, which include funding from development finance institutions, domestic and international bond issuances, funding supported by export credit agencies as well as short-term commercial paper bill issuances,” the company said.

Source: Bloomberg

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