Page 10 - AfrElec Week 31

AfrElec
NEWS IN BRIEF
AfrElec
POLICY
Moody’s says Eskom needs
government support to
stabilise debt
A successful turnaround at debt-ridden power utility Eskom will require “signi cant external support,” according to Moody’s.
e power utility’s nancial performance has deteriorated, which has created challenges for Eskom in meeting its debt obligations without government support. Eskom’s gross debt grew 13% to R441bn as of the end of March 2019.
“A successful turnaround of the company’s business ... will require signi cant external support - as evidenced by the recent increase in the government transfers - and clear
focus on improving Eskom’s operational and nancial performance,” said Moody’s senior vice president and lead analyst for Eskom, Joanna Fic.
“Eskom’s nancial performance continues to be a ected by the legacy of past corruption and misconduct,” Fic added.
Moody’s, however, acknowledges that the power utility’s new management is focusing on improving corporate governance at the entity.
e nancial situation is exacerbated
by the power utility having to deal with
low demand for electricity due to the weak economic environment and low tari s, which have been granted by the national energy regulator, while still ful lling its mandate
of providing electricity by ghting o load shedding.
“ e president and the government of South Africa have recognised that cost savings
alone will not be su cient to put Eskom on a sustainable footing,” Fic said. For this reason, Treasury allocated R69bn to the power utility over the next three years and, in the near term, a special appropriations bill has been tabled by Finance Minister Tito Mboweni, providing Eskom with cash transfers totaling R59bn over 2020 and 2021.
“We view the additional cash transfers
as credit positive, but the increased support has become necessary for Eskom to remain a going concern in the context of a number of negative developments a ecting its cash ow generation.”
GRID
Lesotho seeks to export
power, renewables to drive
development
Lesotho will use the Africa Oil & Power 2019 conference to launch an energy investment and diplomacy drive later this year. Minister of Energy and Meteorology Hon. Tsukutlane Au will discuss new hydropower, wind and transmission projects with African ministers and over 1,000 investors at the Africa Oil & Power 2019 conference in Cape Town on October 9-11.
Lesotho’s 2015-2025 Energy Policy commits the government to provide universal power access, up from just over one third of households today. In line with the AOP 2019 theme #MakeEnergyWork, the government has stated its intention to use energy to create new jobs, stimulate private sector involvement and increase Lesotho’s competitiveness
within the Southern African Development Community region.
“ rough the Africa Oil & Power conference, the Ministry aims to signi cantly raise the pro le of Lesotho in the international and pan-African energy dialogue, to promote Lesotho’s petroleum and power projects,
and to bring attention to the great work of Lesotho-based companies,” said the Minister in a letter addressed to the nation’s energy sector actors. “We are proud to endorse this conference.”
Key projects to be discussed include
the building of new hydropower and wind generation facilities, and transmission infrastructure to meet increased demand. New transmission lines would also link Lesotho with South Africa, and potentially make Lesotho an exporter of energy. e Ministry of Development Planning will attend AOP 2019 alongside the Ministry of Energy and Meteorology in order to promote national infrastructure development projects. All domestic generation is renewable with abundant further potential for wind, hydro and solar power.
COAL
Standard Bank gets tough on coal power
Standard Bank has announced that it will only nance coal- red power plants that meet the bank’s set emission and plant size parameters.
e bank revealed last week that it has adopted a group-wide policy on lending to coal- red power projects and is in the process of developing a policy on lending to coal- mining operations.
Standard Bank’s Coal-Fired Power Finance Policy stipulates that only coal- red power plants with emissions between 750 and 850 g CO2/kWh qualify for nance. Read the full policy document here.
e bank said in a statement: “Coal- red power has historically been an important source of energy supply in several countries in Africa including South Africa, and the Paris Agreement recognises that emission reduction will take longer for developing countries. ere is, therefore, a clear requirement for
the bank in its nancing of power projects,
to balance the need for broad access to electricity, with the choice of technology used to mitigate the risks of climate change as embodied in the Paris Agreement.”
Plants that exceed certain emissions levels and installed capacity will not be eligible for
P10
w w w . N E W S B A S E . c o m
Week 31 07•August•2019