As Eskom goes through its worst image crisis around the acrimony between its board and CEO Jacob Maroga, CIC Energy said this week that it does not believe that the current uncertainty will directly impact the evaluation and approval process for the Mmamabula Energy Project.
Eskom, the South Africa’s power utility, is one of the possible off takers of electricity to be generated from Mmamabula (over 75%) with discussions ongoing, but affected by lack of laws governing independent power producers or IPPs.
Greg Kinross, CEO of CIC Energy, the Botswana Stock Exchange (BSE) quoted company, said they have been following developments with interest.
“Like many others interested in the electricity sector in South Africa, as well as the public in general, we have been following, with interest, the recent stories in the press in relation to the leadership situation at Eskom,” he said.
“We think that it is important, however, that stakeholders in the Mmamabula Energy Project consider these events in the context of the recently published Electricity Regulations on New Generation Capacity.”
Acting Eskom chairman Mpho Makwana stated this week that: “The Minister of Public Enterprises has confirmed to me after the resignation of [Chairman Bobby] Godsell and Maroga. Maroga’s offer to resign was clear and unambiguous and was accepted by the board.”
The problem at hand is the funding model for Eskom, which is being sought, that might delay Power Purchase Agreement (PPA) although the utility company needs electricity from different sources to meet its needs.
The other off taker, Botswana Power Corporation (BPC), could only approve its PPA after Eskom approval because 75 percent of the electricity will be sold to South Africa while 25 percent is destined for the BPC grid.
Kinross revealed that while the practical application of these Regulations is still being developed, the company’s understanding of the Regulations is that Government, and not Eskom, is now the decision maker with respect to the Mmamabula Energy Project.
CIC Energy has an ongoing process of direct engagement with the relevant stakeholders in the Government of South Africa, in the context of which the Company has commenced discussions regarding the evaluation and approval process for the Mmamabula Energy Project under the regulations.
The Electricity Regulations on New Generation Capacity were published by the Department of Energy of South Africa on August 5, 2009.
The Regulations provide that the Minister of the Department of Energy shall make determinations on the procurement of generation capacity, with the concurrence of the Minister of Finance in the case of procurement of generation capacity through an independent power producer.
In addition, the Regulations provide that the buyer that will enter into a power purchase agreement with an independent power producer will also be determined by the Minister of the Department of Energy.