Renewables will also cost SA over R1trn - Joemat-Pettersson

11 October 2016

Cape Town – Renewable energy will also cost South Africa in excess of R1trn and it’s up to Eskom to say if they can afford it, as it will be funded from the power utility’s balance sheet, said Energy Minister Tina Joemat-Pettersson on Tuesday.

The minister and a delegation from her department as well as Eskom briefed the Portfolio Committee on Energy on government’s intended nuclear build programme.

While reiterating that renewable energy remains government policy and part of a balanced energy mix in the country, Joemat-Pettersson said Eskom is well within its rights to say whether it can afford a renewables programme.

“If Eskom says it can’t find further funding for renewables, we have to listen. That doesn’t mean the CEO of Eskom (Brian Molefe) is making any policy pronouncements. He has an organisation to run to ensure the country has sustainable and stable cost-related energy tariffs,” she said.

Molefe set the cat among the pigeons earlier this year when he refused to sign any further independent power producer deals that related to renewable energy, claiming that the power utility could not afford it.

At the time, National Treasury responded, saying Molefe was not in a position to make statements about energy policy.

At the same briefing on Tuesday, Eskom’s head of generation, Matshela Koko, repeated a previous statement that the power utility would be able to fund nuclear power from its balance sheet. In a letter in Business Day, he previously remarked that there had been a significant improvement in Eskom’s finances and improved revenue emanating from a better operating plant and the completion of the build programme.

He emphasised on Tuesday that Eskom will have cash balances in excess of R150bn and that these cash resources could be deployed to fund the new nuclear build programme. He added that Eskom’s 2016/17 corporate plan has significantly increased the borrowing programme of Eskom to R327bn.

His utterances come after Joemat-Pettersson confirmed that Eskom would be the owner operator of South Africa’s nuclear build programme, as the power utility’s financial situation changed significantly since her department had been assigned the task of procuring the nuclear build programme earlier.

In 2014, in the light of funding constraints and load shedding at Eskom, the board said it could no longer provide funding for any new build power development beyond Medupi, Kusile and Ingula. However, the situation changed. Eskom now has a positive balance sheet, Joemat-Pettersson said.

The energy minister also revealed on Tuesday that her department would not present the Integrated Resource Plan and Integrated Energy Plan to Cabinet as had been the intention.

These two energy plans, which haven’t been officially updated for years, will serve as the guideline for South Africa’s future energy needs.

This article first appeared on Fin24, see here.