Page 6 - AfrElec Week 06

AfrElec TA R I F F S AfrElec
Eskom loses tariff appeal
SOUTH AFRICA
THE Pretoria High Court has dismissed Eskom’s lengthy legal action against energy regulator NERSA over 16.6% and 16.7% tariff increases for 2020 and 2021. The ruling on February 10 means that Eskom can only raise its tariffs by the previously agreed 6-7%.
The decision suggests that Eskom is now on the back foot in its legal conflict with the state pricing regulator NERSA, and is a major blow for the Eskom management’s strategy of raising tariffs to cover the firm’s operational costs.
In her ruling, Judge Jody Kollapen, a former commissioner of the SA Human Rights Com- mission, stated that while Eskom has a prima face case to raise tariffs, she did not accept the state-owned utility’s claims that it would suffer immediate and irreparable harm if the urgent relief sought was not granted.
Eskom has tried to raise tariffs in a bid to claw back revenue set to be lost in 2020 and 2021, as NERSA only permitted tariff rises of 8.1% in April 2020 and 5.2% in April 2021, rather than the 16.6% and 16.7% put forward by Eskom.
Eskom stated in court papers that it had lost ZAR166bn ($10.9bn) of revenue dating back to 2014, and ZAR27bn ($1.8bn) in 2018-19 because NERSA had refused to raise tariffs as Eskom had wanted.
Eskom warned that it needed the high tariff increases in order to avoid an “existential crisis that would cause catastrophic harm to Eskom and the national economy.”
In its own legal case, NERSA claimed that Eskom was being “alarmist.”
Meanwhile, Chriss Yelland at EE intelligence has warned that continued Stage 2 loadshed- ding, which means that the power systems is 2,000MW short of capacity 24 hours per day, costs the economy ZAR20 ($1.3) per kWh not supplied, or ZAR1bn ($66mn) per day.
Yelland said that the figure of ZAR20 ($1.3) per day is the cost of unserved energy (CUE), which is the cost to the economy of Eskom not delivering electricity to an economy that wants to use it.
The legal action has occurred as Eskom has suffered sustained load-shedding, or power cuts, in recent months, threatening economic growth and placing the government’s proposed reforms of Eskom right at the top of the political agenda.
Critics of Eskom and the government claim that the utility is a major power base of the rul- ing ANC, and that the government has hesitated over reforming the company because of political opposition from the ANC, which favours keep- ing the company together.™
GAS-FIRED GENERATION
BP mulls sale of Algerian gas project
SOUTH AFRICA
BP is on the search for a buyer for a major gas project in Algeria, responsible for almost 10% of the country’s national output, sources told Reu- ters on February 6.
The UK major had been in talks to transfer its 45.9% stake in In Amenas gas plant to Russia’s state oil giant Rosneft, Reuters reported.
But negotiations broke down because BP’s partner in the venture, Norway’s Equinor, did not want to work with Rosneft. The Russian firm, in which BP has a 19.75% stake, has been under US sanctions since 2014.
Equinor also controls a 45.9% interest in the project, which in addition to the plant includes pipelines and four wet gas fields in the Sahara Desert. The remaining 8.2% is held by Algeria’s national oil company (NOC) Sonatrach.
BP is hoping to fetch around $2bn from the sale, Reuters sources said. The UK major is in the midst of a major divestment programme, having
already shed $9.4bn of assets since the start of 2019. It aims to announce a further $5bn in deals by mid-2021.
As of press time, BP, Equinor, Rosneft and Sonatrach have not commented on the sale plan. But sources told Reuters that BP had in recent months got in touch with a number of international oil companies (IOCs) to test the
market’s appetite.
The In Amenas project has a production
capacity of 9bn cubic metres of gas, while total Algerian output averages around 92 bcm per year. In Amenas was the site of a deadly terrorist attack in January 2013 that led to 40 employees losing their lives. The security situation has since improved, as a result of an increased military presence.
BP is also partnered with Equinor and Sonatrach at a second, dry gas project in the Algerian Sahara, known as In Salah. ™
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w w w. N E W S B A S E . c o m Week 06 13•February•2020