SA looks to independents to ease energy crunch

CAPE TOWN – South African state utility Eskom will become the sole buyer of power from the nation’s independent producers in a move to spur investment in power generation and ease an energy crunch, the government said yesterday.

Eskom, struggling to meet growing demand for electricity in the booming South African economy, plans to draw 30 per cent of new power generation capacity from independents, government spokesman Themba Maskeo said as he announced the decision. It will pay a market rate for the power it buys from these suppliers and guarantee the purchases.”The sense is that a lot of the major investors needed some kind of certainty that if they invest billions of rands into power generation capacity, that power will be bought,” he said after a cabinet meeting in Cape Town.”Government is basically giving some confidence to the market, that if you invest billions into power generation capacity in South Africa we, as the state in the form of Eskom, will actually buy that power.”He added that the arrangement with private sector suppliers would also help to keep the cost of electricity down for consumers in Africa’s economic powerhouse, where inflation is rising.Pressure on Eskom to boost its capacity increased last year when South African cities, including the financial hub of Johannesburg and top tourist destination Cape Town, were darkened by a wave of blackouts.The utility blamed the problems on an overloaded and ageing national power grid and said the situation should improve as it embarked on a massive multi-billion dollar upgrade of its power generating systems.Nampa-ReutersIt will pay a market rate for the power it buys from these suppliers and guarantee the purchases.”The sense is that a lot of the major investors needed some kind of certainty that if they invest billions of rands into power generation capacity, that power will be bought,” he said after a cabinet meeting in Cape Town.”Government is basically giving some confidence to the market, that if you invest billions into power generation capacity in South Africa we, as the state in the form of Eskom, will actually buy that power.”He added that the arrangement with private sector suppliers would also help to keep the cost of electricity down for consumers in Africa’s economic powerhouse, where inflation is rising.Pressure on Eskom to boost its capacity increased last year when South African cities, including the financial hub of Johannesburg and top tourist destination Cape Town, were darkened by a wave of blackouts.The utility blamed the problems on an overloaded and ageing national power grid and said the situation should improve as it embarked on a massive multi-billion dollar upgrade of its power generating systems.Nampa-Reuters