Page 9 - AfrElec Week 05

AfrElec
NEWS IN BRIEF
AfrElec
POLICY
South Africa to create another state-run generator
South Africa’s Minister of Mineral Resources and Energy, H.E. Gwede Mantashe, announced on Monday that the government is looking to establish a new electricity generation company, which would reduce the country’s reliance on state-owned Eskom.
Eskom currently owns 95% of the electricity used in South Africa and also purchases power from independent producers of green energy. e proposed new electricity company, based on a model used in the Netherlands, could be state owned or a public- private partnership, and would utilize a range of energy sources, including gas, solar power and clean coal. e model was welcomed in principle by the government and will require the creation of a regulatory framework.
“ at is what we are having in mind, the Dutch model, where you can buy electricity from Johannesburg from a generator in Cape Town. It is through the transmission, and you pay the price that you agree with the seller. We think that will push the price of electricity down,” said Minister Mantashe.
Additionally, the Minister said that government has made progress in creating
a conducive environment for the mining industry, which would receive a major boost from the proposed generation company, as mining companies will be allowed to produce energy for their own use. e mining industry is working towards generating up to 1.5 gigawatts in the next three years.
“We have agreed to allow mining companies to generate energy for self-use. You will not need a license for that. You will be registered to run a head with the project,” he said.
Eskom could, at a later stage, venture into
renewables and not be restricted to coal.
POLICY
South Africa’s Ramaphosa
open to Eskom debt
proposal
South African President Cyril Ramaphosa is “favourably disposed” to a proposal by the country’s largest trade union federation to use funds from a state-owned asset manager to reduce the debt of beleaguered utility Eskom.
Union federation COSATU proposed a package of rescue measures for Eskom - which struggles to meet the country’s power needs and doesn’t generate enough cash to service
its debts - at a meeting with Ramaphosa and business leaders on February 3.
e cornerstone of its plan is for the Public Investment Corporation (PIC) and two local development nance groups to invest about ZAR250bn ($17bn) in Eskom via a special purpose vehicle to reduce its ZAR450bn debt.
International ratings agencies regularly cite Eskom as one of the biggest risks to South Africa’s strained public nances, and Moody’s is the only major agency le that hasn’t downgraded the country’s sovereign debt rating to junk.
e root causes of Eskom’s nancial woes lie partly in massive cost overruns at two huge coal plant projects, but it has also been hamstrung by mismanagement and corruption scandals under previous executives.
Business leaders agree Eskom’s debts must be drastically reduced but they are wary of interfering with the investment mandates
or risk-management processes of the PIC or the other two local groups, the Development
Bank of Southern Africa (DBSA) and the Industrial Development Corporation (IDC).
e PIC is one of Africa’s largest fund managers with more than ZAR2 trillion
in assets and stakes in many of the biggest companies listed on the Johannesburg Stock Exchange.
Although state-owned, the bulk of its funds are invested on behalf of private individuals, mainly government employees.
Ramaphosa agreed at the meeting that the mandates or duciary duties of the PIC and other institutions should not be undermined.
e PIC said any approach for funding must be supported by a credible business case and geared towards delivering sustainable returns for its clients. It said it was already a major investor in Eskom bonds, as provided for by its investment mandates.
INVESTMENT
AFDB calls for more than
growth to boost African
economy
Africa’s economies are growing strongly, but growth alone cannot meet the needs of the continent’s poorest citizens, because “nobody eats GDP,” the African Development Bank’s President, Akinwumi Adesina, said as he unveiled the Bank’s agship economic report.
e 2020 African Economic Outlook (AEO) showed that the continent’s economies are growing well, higher than the global average. e report projected a steady rise in growth in Africa from 3.4% in 2019 to 3.9% in 2020 and 4.1% in 2021.
According to the report, these gures do not tell the whole story. Across the continent, the poor are not seeing enough of the bene ts of robust growth. Relatively few African countries posted signi cant declines in extreme poverty and inequality, which remain higher than in other regions of the world.
Inclusive growth occurred in only 18 of 48 African countries with data, the report revealed.
According to Adesina “Growth must be visible. Growth must be equitable. Growth must be felt in the lives of people.”
e theme of the 2020 Africa Economic Outlook report, Developing Africa’s workforce for the future, calls for swi action to address human capital development in African countries, where inclusive growth has been held back by a mismatch between young workers’ skills and the needs of employers.
Week 05 06•February•2020
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