Electricity will need to be rationed by 10% across all sectors of the economy
immediately to end shortages that have paralysed
SA's mining sector, the government said yesterday, moving to head off a looming
threat to long-term growth and investment.
Enough power would be restored to mines for production to resume by tomorrow. A
top industry official has estimated the cost of the
shutdowns at R1,8bn *1.
Minerals and Energy Minister Buyelwa Sonjica said yesterday, after a meeting
between the government, industry, mines and municipalities: "We are making an
urgent call for a 10% reduction in electricity consumption across all sectors
with immediate effect.
"We need the co-operation of all sectors ; this is urgent," she said after Eskom
had discussed steps with its main users to save power.
The cutbacks will have to stay in place until 2010,
but officials say there is enough electricity wastage that can be saved for this
to happen without curbing economic activity or derailing official plans to
achieve an annual growth rate of 6% by 2010 *2.
The government would do all it could to ensure new investment was not affected
and that 6% growth was on track, she said.
Business leaders said it was possible for industry, business and manufacturers
to cut their usage without affecting output.
"It's feasible that there can be 10% energy savings without affecting production
while also allowing for new projects, " said Vic van Vuuren, chief operations
officer for Business Unity SA.
"It will need careful planning, it's not impossible but it will be
a tall order."
Public Enterprises Minister Alec Erwin confirmed for the first time yesterday
that the cost of Eskom's five-year expansion plan had doubled to R300bn, saying
the government would help fund the programme.
"The purpose is to make people use energy more efficiently. I'm confident they
will adjust.
"If we fast track some of the build programme, then the recapitalisation of
Eskom in some form or another is inevitable," he said.
"We will have to reassess the long-term trajectory of energy prices because they
determine the strength of Eskom's balance sheet which enables it to borrow. It's
a complex question but we will make a decision this year."
US rating agency Standard & Poor's has given Eskom three months to finalise its
spending plans in a way that will not weaken its balance sheet or it will
downgrade Eskom's credit rating.
Eskom CE Jacob Maroga said electricity tariffs would have
to rise 20% in each of the next five years *4 to help cover the cost of
expansion. Rising costs are being fuelled partly by
a 30% surge in the price of coal, Eskom's main energy source.
Eskom's proposals to respond to SA's power crisis showed that load shedding for
consumers and business was likely to remain in place for the next four to five
months, although it aimed to make the shutdowns more predictable.
Eskom aims to cut overall electricity use by 4000MW in the next four weeks
more than 10% of its existing maximum capacity of 38000MW. Heavy rain, which has
complicated problems in coal production, could extend this period.
In the following four months, Eskom wants demand to fall
3000MW, a reduction it says is required until 2010.
In both of these stages big industrial users will provide about 40% of the
cutbacks, with households and other businesses accounting for the rest. Health
services and water industries will not have to cut back.
Erwin said big new electricity-dependent projects would
not be ruled out *5 but would be discussed and scheduled carefully with
investors.
With acknowledgements to
Mariam Isa, Charlotte Mathews and Business Day.
*1This is in a few days.
*2Lucy (LSD) in the sky with diamonds.
*3Where is the 3 000 MW going to come from in 2010, just
two years away?
*4Something is very fishy here (as usual when the ANC and
Alec Erwin are involved) and I think that this may be the crux of the biscuit.
It just doesn't make any sense to me whatsoever how and why there can be such a
massive national electric power crisis in summer and when there are no
calamitous power stations failures such as with Koeberg in 2005.
It is clear that Eskom needs massive capital (first R300 billion in six years
and then another R720 billion in 20 years) and consequently needs massive tariff
increases (20% for 5 years = 149%) firstly to pay for the capital expansion and
secondly to have a credit rating in order to initially borrow the money.
This current situation with power shortfalls, load shedding, (selective)
customer dumping and threatened power rationing is so diabolical that I think
that Eskom is precipitating such "problems" in order to scare us all into meekly
accepting its tariff increases.
QED.
In the meantime there are hundreds of thousands, if not millions, of Eskom
"customers" who are not even paying for their power either because they just
refuse to do so or because they've gyppo-ed their pay-as-ye-go meters.
If Eskom recovered all the amounts due to it as well as stopped this leakage
they could probably avert a load dump and pay for our next coal power station @
R110 billion for Hitachi and R50 billion for the ANC.
*5The reason that big new electricity-dependent projects
would not be ruled out lies in the BEE shareholding behind them.
How is it possible to allow Coega Aluminium with a power requirement of 1 300 MW
to come on stream in 2010 when there is a current shortfall of 3 000 MW and the
two new baseload power stations only come on stream in 2013?