Mantashe: Govt to approach investors to start generating company outside of Eskom

Image credit: Twitter/Department of Mineral Resources and Energy

Struggling state power utility Eskom could soon have a competitor, according to Mineral Resources and Energy Minister Gwede Mantashe.

Mantashe made the revelation while delivering the opening address at the 26th Investing in African Mining Indaba in Cape Town on Monday.

He said, “We have taken a decision that we will talk to investors to start a generating company outside of Eskom.”

Competition will lower electricity prices

The Minister added, “That is a security measure so that as Eskom is grappling with all the crises and problems, we must have a fail-safe option for delivering energy, particularly with the pressure to close a number of old power stations.

“We must start generating energy and ensure that we go back to the comfortable days where we had a surplus of energy because once we have that surplus of energy and competition in electricity generation, the price of electricity will be pushed down.”

Eskom supplies around 95% of South Africa’s electricity. However, it can no longer guarantee reliable electricity supply despite building two new power stations, Medupi and Kusile. It also has a massive debt of around R450 billion.

The power utility has therefore become a huge risk to the country’s economy. The International Monetary Fund (IMF) recently cited electricity supply constraints as a major reason for downgrading its 2020 economic growth forecast for South Africa to less than 1%.

Electricity self-generation

In his address, Mantashe also highlighted the government’s recent decision to allow mining companies to generate their own electricity.

He added, “Furthermore, in December 2019, we issued a Request for Information (RFI) inviting responses from the market on innovative potential solutions to deliver power generation to the grid as expeditiously as possible.

“We welcome all inputs from the market, these will give the Department a sense of possible immediate generation options available in the next three to 12 months to fill the short to medium term gap.”

Eskom is currently implementing load shedding until Thursday this week as it grapples with high levels of unplanned generating unit breakdowns.

These frequent and unpredictable breakdowns have been blamed on poor maintenance of Eskom’s plants over a number of years.

Eskom’s new CEO, André de Ruyter, said last week that the utility will start implementing a new, 18-month plant maintenance plan within the next three months.

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