Apr 17, 2009
Eskom's capex programme to peak at R104bn in 2010/11Back
Eskom|Three Gorges Dam|China|South Africa|USD|Mining|Transmission Infrastructure|Transport|Duane Daws|Jacob Maroga
© Reuse this
Therefore, CEO Jacob Maroga argued recently that its build programme was effectively a ready-made stimulus package, which could help South Africa in militating against the worst effects of the global economic crisis.
In dollar terms, its programme to build two new coal-fired power stations, as well as a pumped-storage peaking plant in the Drakensberg, is worth $23-billion - only $2-billion short of what China spent on the giant Three Gorges Dam project, which was currently ramping up its hydroelectric capacity.
The three projects, Medupi, Kusile and Ingula, would not only add nearly 11 000-MW of generation capacity, but would also stimulate investment into related transport, mining and transmission infrastructure. Further, it would support the development of new communities as well as social facilities such as houses, hospitals and schools.
But speaking at the Gordon Institute of Business Science earlier this month, Maroga indicated that this expenditure programme would place strain on the company's financial ratios
Therefore, he hinted to the possibility that it might have to approach government for yet more support beyond the R60-billion subordinated loan and the R176-billion in guarantees already extended to help it finance its R385-billion, five-year capital programme.
"Government has given us a guarantee . . . but we may require more," he said.
He added that part of the reason for the delay in its formal tariff application, lay in its desire to present not only a request for a price adjustment, but also an integrated funding blueprint.
The delay in approaching the National Energy Regulator of South Africa (Nersa) was also a consequence of the "fundamentally" changed environment for infrastructure funding, in light of the economic meltdown.
Maroga that the application would be informed by an "integrated funding model" that ensured a sustainable business for both current operations and the build programme.
However, given the substantial delay in Eskom's submission, which was initially expected late last year, the tariff adjustment would also be delayed.
There was already concern about the prospect of a material spike beyond the nominal increase granted, should Nersa allow Eskom to recover the full increase in the remaining months once the determination is finally made.
Maroga also did not comment on whether the tariff request would be confined to covering rising operational costs as has been suggested, conceding only that these cost had increased considerably.
Short-term coal contracts, which were entered into last year to replenish depleted stockpiles, were the major contributors to surging costs. But Maroga said that maintenance; employee and other running costs had also escalated over the year.
He reported that the group had spent a record R46-billion on capital projects during its 2008/9 financial year, which ended on March 31.
Should the utility refrain from seeking to secure additional funding for its build programme from the consumer, the prospect of it turning to government for more support would certainly increase.
Resorting to either the consumer or the taxpayer for the additional capital was likely to lead to significant opposition either way.
South Africa's largest labour federation, the Congress of South African Trade Unions (Cosatu), had already stated that it would strongly oppose even an increase that was in line with Nersa's previously indicated price path of between 20% and 25%.
In fact, Cosatu warned that it would again call for a national protest action by its members if Nersa allowed an "excessive" increase.
Edited by: Martin Zhuwakinyu© Reuse this Comment Guidelines
Other News This Week News
Recent Research Reports
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
Road and Rail 2013: A review of South Africa's road and rail infrastructure (PDF Report)
Creamer Media’s Road and Rail 2013 Report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Liquid Fuels 2013 (PDF Report)
Creamer Media’s 2013 Liquid Fuels report examines South Africa’s liquid fuels market, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing,...
Projects in Progress - Second Edition (PDF Report)
Creamer Media’s second Projects in Progress supplement considers some of the major project developments under way, including high-profile energy and transport projects, as well as a few of the lower-profile public and private developments. What remains apparent is...
Water 2013: A review of South Africa’s water sector (PDF Report)
Creamer Media’s Water 2013 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.
Canadian Mining Roundup for June 2013 (PDF Report)
The June 2013 roundup includes details of the development of TSX-V-listed Aldridge Minerals’ flagship Yenipazar polymetallic project, in Turkey; the Canadian Nuclear Safety Commission’s renewal of Cameco’s uranium mining licence pertaining to the Cigar Lake...
This Week's Magazine
Mitsubishi Motors South Africa (MMSA) has introduced a 4x2 derivative of its Pajero Sport sports-utility vehicle (SUV), which will give it access to a substantial slice of the full-size SUV market, where it will compete with the likes of the Ford Everest, Chevrolet...
South African Energy Minister Ben Martins has affirmed that the government wants the country to be globally competitive in the nuclear sector. "Our responsibility has always been ... to ensure that, in nuclear energy, South Africa can compete with the rest of the...
Mercedes-Benz South Africa (MBSA) president and CEO Dr Martin Zimmermann describes the new S-Class as “a special place to be”, with the car creating a sense of “wellness” once you are seated inside the German brand’s flagship model. It is difficult to argue...
Water scarcity and water-quality issues are broadly recognised and understood in most political, business and civil organisations in South Africa, but solving water issues will require wide and continuous action in catchments and municipalities by organisations and...
Work is well under way on the R212-million Imvutshane dam, 30 km north-west of Stanger, in KwaZulu-Natal, which is a key link in supplying people in rural Maphumulo with a reliable source of safe drinking water.