Finance minister Enoch Godongwana is open to helping Eskom with funds to increase spending on maintenance of its creaking coal-fired power stations, even though the cash-strapped power utility has not yet approached his department for the money.
“If the need arises [the Treasury] will respond to that,” Godongwana said.
He was speaking at a media briefing on Monday alongside other ministers appointed to serve on the energy crisis committee after President Cyril Ramaphosa’s speech last week to outline measures to ensure long-term energy supply in SA.
A key feature of the energy crisis response plan presented by Ramaphosa is, over the next 12 months, to expand Eskom’s budget allocation for critical maintenance.
Matthew Mflathelwa, GM of strategy and planning at Eskom, said at an event last week that by increasing maintenance on old power stations and fixing the design faults on its two new power stations, Kusile and Medupi, Eskom will be able to bring back about 3GW of generation capacity, setting the utility well on its way to meeting its immediate generation gap of between 4GW and 6GW.
“Eskom has not come to us [yet] about the cost of maintenance, so we don’t know how much it will be,” Godongwana said. However, he said, a figure of R2bn had been mentioned, over and above the R8bn budgeted by Eskom for maintenance, but it was still too early to say what the full amount would be for Eskom to sufficiently expand and speed up its maintenance programme.
Godongwana’s magnanimity towards Eskom’s potential financial needs for a larger maintenance plan was, however, not shared by public enterprises minister Pravin Gordhan, who said at Monday’s briefing that Eskom should stick its hand in its own pocket before approaching the government for additional funding.
“Eskom must find the cash for maintenance from within its own resources,” said Gordhan. He also said the utility could save some of the money now being spent on maintenance if it could “get rid of exploitation and overpricing by contractors”.
Gordhan said six plants had been identified to be targeted for maintenance to increase generation output: Kendal, Majuba, Tutuka, Kusile, Matla and Duvha.
Godongwana said that no amount had been settled on for the plan being formulated by the National Treasury to transfer a significant portion of Eskom’s almost R400bn debt to its own balance sheet.
“It is accepted that [Eskom’s] debt is unsustainable; this poses a risk to the sovereign. To avoid that risk, the sovereign must step in,” said Godongwana, who is to release details of the Eskom debt solution in the medium-term budget policy statement on October 26.
Other interventions
The ministers also provided some information about how other interventions announced by the president would be carried out by the various departments.
The strategy announced by Ramaphosa calls for faster procurement by the state of renewable energy, gas and battery storage by, for example, “maximising” the capacity of wind and solar that can be procured through bid window 6 of the Renewable Energy Independent Power Producer Procurement Programme.
Bid window 6 was initially set to produce 2,600MW of new generation capacity, but Ramaphosa said this would be doubled to 5,200MW.
To allow new bidders an opportunity to submit bids under bid window 6, the deadline for submissions would be extended from August 11 by an additional 45 or 60 days, said mineral resources & energy minister Gwede Mantashe.
Trade, industry & competition minister Ebrahim Patel said that in response to Ramaphosa’s announcement that government departments would work together to ensure all projects from bid window 5 of the renewable energy programme can start construction on schedule, certain allowances would be made in terms of local content requirements for new renewable installations.
“Bid window 5 has provisions that require certain components to be manufactured locally for the construction of wind and solar plants […] but our localisation targets should not retard the speed at which Eskom and independent power producers can get new power on the grid,” said Patel.
In response, the department had developed “a flexibility framework” for bid window 5 that covered solar PV panels.
For some of the elements used in the construction of solar PV panels and installations, including specifically the solar PV module, the current 100% local requirement would be reduced to 35%. If there were any delays or challenges with supply within this requirement, further exemptions may apply.
“For future bid windows, the localisation targets will be incrementally increased again,” Patel said.
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