Thursday, May 30, 2024

Eskom explains why CIC Energy is not included in recent IPPs deal

Eskom, the South Africa’s power utility, said on Friday it has not incorporated CIC Energy into its short term plans for Independent Power Producers (IPPs) as the deal it struck recently is for short term.

The corporation recently signed contracts with a couple of independent power producers in a bid to offset the looming power crisis as the Africa’s largest economy recovers from recession.

“We have signed up almost 400 megawatts of power from independent producers. This is in terms of the Medium-term Power Purchase Programme,” Hilary Joffe, Eskom Spokesperson told Sunday Standard.

There were fears in the market that the signing of the deals has locked out CIC Energy, the Botswana Stock Exchange (BSE) listed and Virgin Island-based company, out of any further deals with the South Africa’s power monopoly.

However, Eskom said the move was to fill the short term needs of the country as CIC Energy wants a long term contract.

“The list does not include CIC Energy. They seek a much longer term contract than is provided for under the Medium-term Power Purchase Programme,” explained Joffe.

The list of IPPs brought on board by Eskom includes Sasol, Sappi Saicor and IPSA Newcastle.

Eskom is of the view that bids ‘such as that of CIC Energy would have to be decided in terms of the government’s Integrated Resource Plan (IRP)’.

The Department of Energy has released its draft IRP 2010 for public comment and the paper is expected to be finalised by early next year.

IRP is a blue print that will give CIC Energy, the developers of Mmamabula and other IPPs the green light to begin building their power stations. Without a Power Purchase Agreement (PPA), the power plant cannot go ahead.

However, the company said it was disappointed by the draft although it said it will make an input by in commenting on the draft. It is of the view that the draft may delay the project further.
“CIC Energy is disappointed by the first draft of the IRP2010 as it is not a realistic solution to the electricity crisis in South Africa,” Erica Belling the company spokesperson said. ┬á

The draft IRP2010 has revealed a gloomy picture of the power situation in South Africa from next year until 2016 as the country will experience continuous power black outs.

Eskom is concerned about the delays in commissioning of Medupi and Kusile power stations and there are also difficulties for Botswana government as South Africa has started reducing exports to Botswana.

Mmamabula had positioned itself to fill this gap as it is the most advanced large IPP project under development and well positioned to be able to supply substantial quantities of electricity to South Africa in the shortest possible time frame.

“While CIC Energy’s Mmamabula Energy Project is catered for in the draft IRP2010, the timeframe for the start of commercial operations is well beyond what CIC Energy has been planning for,” Belling added.

Mmamabula, comprising 2 x 600 MW (combined 1200 MW) units, was expected to start supplying the Eskom grid by 2013, but it appears the draft by South Africans may take that to a period after 2015, according to estimates.

The South African media has indicated that Eskom is ready to sign up 1 000 megawatts of renewable energy from Independent Power Producers (IPPs) and another 1 000Mw from gas turbines.

RELATED STORIES

Read this week's paper