1 March 2017, 08:24
Eskom won’t renew contracts due to country’s power surplus
Truckers want government to slow its renewable-energy program
Coal-truck drivers brought traffic to a standstill on roads surrounding South Africa’s capital on Wednesday as the state-owned power utility said it won’t renew their contracts because of an electricity surplus.
Truck drivers whose employers are members of the Coal Transportation Forum used their vehicles to blockade the main roads entering Pretoria, Talk Radio 702 reported. The blockade disrupted business in the city, with the nation’s Competition Tribunal canceling hearings because of the congestion, it said in an emailed response to questions. The protesters didn’t obtain permission for the stoppage, Mayor Solly Msimanga said on his Twitter account.
Eskom Holdings SOC Ltd., which supplies about 90 percent of the country’s power, won’t renew agreements with 48 transport companies because weak demand, slow economic growth and the introduction of renewable-energy supply from independent producers has resulted in a 3 million metric-ton coal surplus, Acting Chief Executive Officer Matshela Koko told the Johannesburg-based broadcaster. The company will be closing its Camden, Grootvlei, Hendrina and Kriel coal-fired plants by the end of March 2020, resulting in as many as 20,000 job losses, he said.
The trucking companies say the utility’s move to buy from independent power producers is “having a direct impact on their operation,” Eskom spokesman Khulu Phasiwe said in an interview on Johannesburg-based eNCA television. “They’re saying to us ‘Why do you sign these contracts for these renewables at a pace which is essentially going to drive us out of business?”’
Eskom uses coal to generate more than 90 percent of its supply to Africa’s most-industrialized economy. President Jacob Zuma said last month that the company must sign agreements to buy power from private producers, which the utility had stalled. The company said it no longer requires additional renewable energy, arguing that it’s expensive, isn’t always available during peak demand periods and will push up prices for consumers.
About 40 million tons of coal is delivered by truck from mines to power stations, a figure that will drop to 30 million tons by 2021, Phasiwe said by phone. Eskom uses about 120 million tons of the fuel a year.
“The Coal Transportation Forum wants the government to protect the jobs in the mining and related industries,” it said in an e-mailed statement. “The IPP program must be slowed down to reflect the current electricity surplus and the fact that electricity demand is declining. Government has to own up to the unintended consequences of the renewable IPP program.”
The renewable-power program has drawn 194 billion rand ($14.8 billion) of investment, and 2,200 megawatts have been connected to the national grid from 44 projects. Developers have been waiting for Eskom to sign offtake agreements on another 37 projects worth 58 billion rand that will generate 2,354 megawatts. There are also plans to get electricity from independent producers using coal and liquefied natural gas.
“We’re going to sign the renewable-energy projects,” Phasiwe said. “It’s a done deal. So the issues really are between government and the truckers as to how they’re going to resolve them. From our side, we’re implementing a government decision.”
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The facilities Eskom intends to close are all more than four decades old. The idled Camden and Grootvlei plants were restarted in 2008 to help end a supply crisis caused by a four-year delay to the government giving Eskom permission to expand. The lack of power curbed economic growth, caused rolling blackouts and reduced supply to the mines and smelters that produce the country’s biggest exports including gold and platinum.
The four-year transport contracts with trucking companies were issued in 2014, according to Phasiwe. At the time, South Africa was battling a supply crisis and Eskom implemented power cuts for about 100 days in 2015. Energy shortages have subsequently eased as new generating capacity was brought on line, maintenance backlogs were addressed and a stagnating economy curbed demand.
“There’s not much we can do,” Phasiwe said. “They’re protesting a government decision. If government says maybe we should reduce the scale and pace in which we are signing the renewables, then that will be a new decision that we will implement.”
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