Page 10 - AfrElec Week 45

AfrElec
NEWS IN BRIEF
AfrElec
INVESTMENT
AfDB head says Eskom must be saved
South Africa’s struggling power utility must be fixed because energy security in the region largely depends on it, according to the African Development Bank, Bloomberg reported.
Eskom, which is buckling under R450 billion of debt, is “too big to fail” because it powers Africa’s most-industrialised economy and much of the region, AfDB president Akinwumi Adesina said in an interview Sunday in Johannesburg.
The utility produces about 95% of
South Africa’s power and almost half of the electricity used on the continent, according to its website, and it forms part of the interconnected Southern African Power Pool. Of its total energy sales, exports to the region make up 6%.
Eskom relies on government support to remain solvent and is seen as the biggest single risk to South Africa’s economy. While the government has announced it would split the producer into three operating businesses, details about this and how it would reorganise the utility’s debt are still outstanding. The company also doesn’t yet have a permanent chief executive officer.
There is considerable regional demand that it can’t meet due to a lack of investment in transmission infrastructure, the utility said in its 2019 annual report. Eskom’s current operational challenges are also negatively
affecting power exports, it said.
The government’s plans to turn Eskom
around are commendable, but it must ensure that the utility is managed more efficiently and effectively, Adesina said.
The company must invest in the correct energy systems to deliver more affordable power and guarantee continued manufacturing capacity for South Africa and the Southern African Development Community, he said.
The Abidjan-based lender has invested $4bn in Eskom and has assured the South African government of its support in fixing the power producer, Adesina said.
France offers support to Eskom
The French government is interested in providing Eskom with financial support, according to a report in South Africa’s Sunday Times.
French ambassador Aurelien Lechevallier told the Sunday Times that the country
was already working on plans to provide
the failing power utility with international support.
“With our French development agency, we are ready to provide some kind of financial support to assist with the restructuring of Eskom,” Lechevallier said.
International financial support for Eskom will most probably come from a multi-partner loan which includes other European nations
and banks, the ambassador added.
“It will not be France alone, it could be France with maybe Germany, maybe with
South African development banks, maybe the Brics bank,” he said.
Last year, France provided Eskom with
a ZARR1.5bn loan for a renewable energy initiative, following previous funding which was provided to the South African power utility.
Eskom faces serious financial challenges and is crippled by a ZAR450bn debt as well as poor productivity and corruption.
The government recently published a turnaround plan to rescue the state-owned power utility, but this was met with a lack of confidence by investors.
Stakeholders said the government sidestepped some of the biggest problems at Eskom, like its bloated workforce, and was not decisive enough in its turnaround plan.
Another problem is that Eskom’s turnaround plan is nothing new. In fact, the government has unveiled numerous similar plans over the last decade.
Despite this, the deterioration of the company continued, with an increase in corruption, debt, and mismanagement.
GAS-FIRED GENERATION
Egypt’s new wealth fund
eyes stake in Siemens-built
power plants
Egypt’s new sovereign wealth fund plans to acquire a stake of about 30% in power plants co-built by Siemens AG, with international investors taking the rest, part of its drive
to spur greater foreign participation in the Middle East’s fastest-growing economy.
The fund’s initiative is the latest involving the three state-owned plants, which cost $6.62bn and were inaugurated in mid-2018 as one of a string of major infrastructure projects in the North African nation under President Abdel-Fattah El-Sisi, Bloomberg reported.
The acquisition will be part of the fund’s “project pipeline into the sector, then an investor would be selected to hold the remaining stake,” Chief Executive Officer Ayman Soliman said in an interview in Cairo.
He said six unidentified international investors have expressed interest, and negotiations will be arranged by a financial adviser to be selected next week. Soliman expects the pact to be finalized in 2020.
Egypt is emerging from a tough
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Week 45 14•November•2019