http://www.engineeringnews.co.za/article/ontheair-09022007-2007-02-09

On-The-Air (09/02/2007)

Published 09 Feb 07        By: Yolande Botes
Every Friday morning, SAfm's AMLive's radio anchor John Perlman speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday's At the Coalface transcript:

Perlman: A big spotlight on transport especially with 2010 coming up. I believe Joburg is going to do some big things.

Creamer: Yes, the city of Johannesburg is aims to have a R2-billion rapid bus transport system operation by 2009, just ahead of the 2010 Soccer World Cup. This is a 94 km bus system. They are talking about busses coming on in the peak period every minute to three minutes and in the non-peak every five minutes to 10 minutes. They have chosen out six routes, one of these is from Alexandra township to Soweto's Regina Mundi, from Randburg to Johannesburg, from Dobsonville to Troyville and they picked out the taxi areas - where is the taxi commuter route. The idea is to follow the pattern of 40 other countries in particularly Bogota where taxi operators became the bus operators at a new economic level. So, that is the aim here, to actually convert the taxi operators into bus operators and have a totally new system of road networks linking in with the Gautrain, particularly at Park station, Johannesburg station, Sandton and Rosebank and using a smart card so that it is cashless, which is intermodal being able to go onto rail and rapid bus.

Perlman: Interesting, last week we talked about power - the six pack station. Some more energy related developments, but I believe with an environmental focus.

Creamer: That's right, clean-coal. Coal-fired power is a fact of life in South Africa. We burn 100-million tons of it a year; 90% of our electricity comes from it. Even when you look at the new generation stations and take the top six in the military phonetic culture of Alpha, Bravo and Charlie, all are going to be coal fired and the ones that have been announced, both Alpha and Charlie, are also coal-fired. But, it has a tremendous emission problem. We know that the world over, investors are looking to coal as there is an abundant supply of it and the world is investing in coal to a greater extent than it is in oil. They have got more faith in it, but there is just one big caveat: coal has to clean up its act. You can't have the emissions going through. So, enormous funds are being poured globally into cleaning coal - clean-coal technology. Eskom has been working on this for the last few years. In 2003 they joined the International Energy Agency, there is 23 countries working on this and will share the information. Big action is taken in the FutureGen project in the US where Anglo American, BHP Billiton, Xstrata and Rio Tinto are coming together to produce what would be near-zero emission coal at these new stations and then migrate that technology around the world. Meantime, Eskom also has a few aces up its sleeve particularly with underground coal-gasification at Majuba instead of combusting the coal on surface to actually combust underground and create a gasflow where the combustion actually take place underground in areas where you can't mine coal so you might as well use that huge abundance of coal and create a combustion under the ground so that you are virtually emission free on service.

Perlman: Martin, funding BEE deals has always been a complex question. I believe some new players who think that they have got some answers.

Creamer: It is also a tidal wave of private-equity activity. Every time we open a paper we see this private-equity. Now, there is a new R649-million black-economically empowered private-equity fund and this is the Kagiso Infrastructure Empowerment fund. They will be looking across the board and, of course, also having to recapitalise because to be meaningful they will need to do that, but their early activities will be in a secondary market, assets probably in toll-roads, prisons and telecommunications sectors. They are known to be talking to Kelvin Power Station, there has been a lot of trouble after the privatisation of the Kelvin Power Station. Johannesburg City Council used to own it, it was privatised, the new private sector owners couldn't run the thing and it has actually been taken back by the banks. So there will be talks for this new BEE private-equity fund to see where there is an opportunity to do some dispersement into that activity. So, across the board they will be looking at potential and all greenfields and the idea and strategy will be that if they have got this BEE funding coming in, as we know private-equity only stays there for five to seven years, and, while it exists, Kagiso wants to make sure that there are BEE operators to succeed it. Kagiso has conformed to the good code of BEE practice as outlined by the government and soon to be gazetted.

Perlman: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly, he'll be back with us at the same time next week.

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