'No hope for Eskom Kusile plan'

Midrand - There is little likelihood of finding a private partner for the Kusile power station. Experts believe that Eskom should rather reduce the size of the Kusile project or postpone it, or try to sell one or more of its older power stations.

Ian Langridge, chairperson of the Energy Intensive Users Group, said that a large part of the benefits that a private investor can get in a power station are garnered in the project's construction phase, in its financing, the management of the funding risks and how the engineering work is integrated.

Most of this work for Kusile has already been done and the relevant contracts signed.

The Energy Intensive Users Group comprises Eskom's 38 largest clients, including Anglo American and BHP Billiton.

In Thursday's submissions to the National Energy Regulator electricity-industry players without exception threw cold water on Eskom and government's plans to find a 30% to 49% equity partner for Kusile.

Enlisting a partner is a precondition for reducing Eskom's tariff hikes over the next three years from the original 45% to the 35% for which Nersa received representations in Midrand.

In one of the submissions Eskom was even advised to halt Kusile, which is going to cost R140bn, and get private electricity producers to build smaller power stations.

Langridge recommended that Eskom should rather sell one or more of its older power stations. He said that Eskom had done the planning for Kusile when the cost of building power stations was at its height. But it's currently low.

Eskom reduced its original application for increases from the initial 45% over three years to 35% for three years on the assumption that it would find a partner for Kusile.

There are other power stations in Eskom's fleet that have a history of reliability that are much more attractive to potential investors, said Langridge in his submission.

- Sake24.com

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