Eskom upbeat about World Cup

Johannesburg - Power utility Eskom is confident it will be able to meet this year's power demand, including during the World Cup, but supply will be tight from 2011-2012 unless new capacity is brought on stream.

Brian Dames, head of Eskom's generation business, said the Medupi and Kusile coal-fired power plants will provide a buffer once their first units come on stream in 2012 and 2014 respectively. The plants will each generate 4 800 megawatts.

But before they are commissioned, the system will be tight, he said, and power supply will also be stretched again after 2017 due to fast-rising demand.

He said a decision on the next baseload plant would need to be taken this year to avoid a repeat of a crisis that brought the mining industry to a halt for days in early 2008, and hurt other sectors, costing South Africa billions of dollars.

"If we want a power plant by 2018-2019, somebody needs to decide this year what it should be, where it should be and who should do it ... we don't want to be in the same (critical) position again," Dames told Reuters in an interview on Thursday.

He said power demand in Africa's biggest economy rose 8% during the first quarter from last year after the country started emerging from recession, and is expected to grow annually by 3% for the next 20 years, leading to a doubling of present demand levels of around 37 000 MW by 2030.

Funding gap

Dames, touted among the candidates for Eskom's chief executive job, said the company was keen to have private players participate in the generation business, especially as Eskom is battling a R190bn funding gap.

"We have no plans to privatise Eskom, but we need new players in," he said.

The World Bank granted the utility a $3.75bn loan this month to help finance the Medupi power plant, but its Kusile plant still faces a funding gap which the utility plans to close by selling up to 49% of Kusile to private investors.

Dames said he expected clarity on the plant's funding options within 2 to 3 months, adding Eskom had already received interest from potential investors, some proposing to put money into Kusile in return for power supply security.

The government is currently drafting a national energy plan to decide how much of new capacity will come from what energy source and who would supply it. The target is to have private players supply some 30% of the country's energy.

Dames said up to 15% of the energy mix in South Africa, now relying on coal for more than 90% of its supply, could come from nuclear, while he also saw great potential for power produced from solar and biomass.

Eskom, Africa's largest power utility and the 10th biggest in the world, is studying the possibility of producing solar power on a larger scale and is also investing in underground coal gasification to clean up its energy portfolio.

Dames said he expected Eskom to be a regional leader, help unlock projects by better integrating the regional transmission network, develop joint projects and help attract investment.

- Reuters