http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.49Change: -0.02
R/$ = 11.88Change: 0.20
Au 1214.08 $/ozChange: 19.92
Pt 1149.50 $/ozChange: 15.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Jun 05, 2009

Eskom plans to use economic downturn to reduce capital costs

Back
Africa|Environment|Eskom|Nuclear|PROJECT|Projects|rail|Storage|Africa|Energy|Nuclear|Wind Energy|Power
Africa|Environment|Eskom|Nuclear|PROJECT|Projects|rail|Storage|Africa|Energy|Nuclear|Wind Energy|Power
africa-company|environment|eskom|nuclear-company|project|projects|rail|storage|africa|energy|nuclear-industry-term|wind-energy|power
© Reuse this



Changes in market conditions present a significant opportunity for Eskom to reduce the capital costs of its new build programme, acting MD of the enterprises division Braam Conradie told delegates at the South African National Energy Association (Sanea) Action for Energy conference on Friday.

Eskom was spending R385-billion on its capital expansion projects over a five-year period, with Conradie noting that this formed an integral part of government’s response to the global economic crisis.

The power utility was planning to make good use of the economic downturn, he noted, saying that it was expecting to get better prices from suppliers and that it would also try to renegotiate certain contracts.

Eskom would look for savings everywhere, including its capital expenditure and its operating expenditure, with Conradie noting that “everything is up for debate”. He admitted that there would be some offsetting factors, such as the price of equity.

This meant that there could be some decreases in some costs and some increases in others, but he emphasised that the utility was obligated to look at every opportunity.

Conradie said that Eskom was still experiencing a funding problem and that a number of variables could impact on whether it delays any further projects.

Eskom had already delayed some of its projects, including a wind energy project, the Majuba rail project, the Tubatse pumped-storage project and its Nuclear 1 project, owing to the economic environment.

He explained that Eskom obtained its funding from three sources, namely debt, equity and tariffs. The extent to which it would be able to close its funding gap with the contribution from these three sources would be a key consideration in deciding if any other projects had to be delayed.

Everything was a trade off between what it could afford and what it could not afford, he noted.

The average wholesale price of electricity was 16c/kWh in the previous financial year, while the cost of producing electricity at its new Medupi and Kusile power stations would be at least three times that amount.

The utility would have to fund these higher costs somehow.

Conradie asserted that ultimately all these costs would have to be funded through tariffs, saying that debt and equity would only provide additional time for tariffs to be increased.

Eskom has made an application with the National Energy Regulator of South Africa (Nersa) for an interim tariff increase of 34%.

Public hearings on the matter would be held on Monday and Tuesday.

Edited by: Mariaan Webb
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
 
Latest News
South Africa’s crude steel production dropped by a sizeable 17.2% year-on-year to an estimated 530 000 t in April, amplifying a global trend that saw world steel production decline by a comparatively marginal 1.7% to 135-million tons in the fourth month of the year....
The Treasure the Karoo Action Group (TKAG) on Friday called on government to delay publishing final regulations and issuing rights for shale gas exploration in the Karoo, until a 24-month strategic environmental assessment (SEA) has been concluded. TKAG CEO Jonathan...
More
 
 
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
 
 
 
 
 
This Week's Magazine
While economic forecasts for the African continent are most favourable, African airlines may not be able to benefit from the expected growth in the region’s gross domestic product (GDP), International Air Transport Association VP: Africa Raphael Kuuchi has warned....
The Automotive Production and Development Programme (APDP) will need to change substantially post 2020, says Metair Investments South African operations COO Ken Lello. “We must not make tweaks. We have to change. What we are doing is not sustainable.”
Banking group Absa’s forecast is for the rand to end the year at around R13 against the dollar, weakening further to R13.50 by 2016, says Absa sectoral analyst Jacques du Toit. He warns that possible interest rate hikes in the US may see capital being pulled from...
The Dispute Resolution Centre at the Bargaining Council for the Civil Engineering Industry (BCCEI) is now open to handle party-to-party disputes. The BCCEI represents the interests of all level four to nine Construction Industry Development Board companies.
FREDRIK JEJDLING Sustainability becomes an important part of a business’ decision-making process
Communications technology firm Ericsson sub-Saharan Africa head Fredrik Jejdling says the company’s commitment to sustainability and corporate responsibility has been integrated into all facets of its operations, which has provided it with sustainable revenue...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96