Page 9 - AfrElec Week 25

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otherwise the company will run out of money, Ramaphosa said.
“ is we must do because Eskom is too vital to our economy and it must not be allowed to fail,”
However, he disappointed many investors and government critics for not going further, and for failing to provide any detail about what the bailout would involve, or how the unbundling process would be carried out.
e president did not commit the govern- ment to taking over any of Eskom’s debt in a cash-for-equity swap, preferring to follow its existing strategy of cash injections.
Eskom currently has debts totalling $30bn, much of, which is guaranteed by the state, mean- ing that any default would damage South Africa’s last investment grade credit rating, e ectively reducing the whole economy to junk status.
He also con rmed that Eskom would appoint a new CEO a er the resignation of Phakamani Hadebe.
Perhaps more importantly, Eskom would also receive a new Chief Restructuring O cer to oversee the break-up of the company.
While these limited reform proposals are
welcome, Eskom really faces three major strate- gic problems that more bailouts from the gov- ernment can only partly deal with.
It faces serious corruption and misman- agement issues, which the unbundling may go someway to solving.
Secondly, cash problems to date means it has a maintenance backlog and di culty in com- pleting new infrastructure project. Lastly, bill collection rates are extremely poor, meaning revenues are always lower than they could be.
Eskom is a highly political company, and is an easy target for allegations for ANC-connected corruption.
Yet making people pay bills, promoting clean management and breaking up the company will have to be done in the face of vested political and trade union interests.™Indian generator NTPC and Power Grid Corporation of India (PGC) have formed a joint venture to create the new National Electricity Distribution Company in a bid to break into the distribution market.
The federal government aims to achieve universal access to power. Tackling the dysfunc- tional and virtually bankrupt distribution sector will play a key role in this policy.™
HYDRO
GE, Chinese set to build Zambesi HPP
CHINA
ZIMBABWEAN President Emmerson Mnan- gagwa said that GE Power and Power Construc- tion Corp. of China are to build the 2.4-GW Batoka Gorge hydro project on the Zambezi River.
Mnangagwa was speaking last week in Maputo, although the Zambezi River Authority (ZRA) has yet to o cially announce the award of the $4.5 billion contract.
“Zambia and Zimbabwe have agreed on this project. We have all agreed that we give it to China Power and GE together. It’s critical that we move fast on that front because as we indus- trialise we need electricity,” he said.
e ZRA, which is a joint body run by the Zambian and Zimbabwean governments to oversee the Zambesi River and to operate the Kariba Dam, also shortlisted Salini Impreglilo of Italy and a joint venture of China’s ree Gorges Corp., China International and Water Electric Corp. and China Gezhouba Group.
e ZRA had originally announced the short- list at the start of June, saying at the time that the winner would be announced in September.
e ZRA said that the project would be pur- sued on the Build-Operate-Transfer (BOT) model. e ZRA expects both GE and China Power to provide most of the $4.5 billion needed for the project, while the World Bank and the African Development Bank (AfDB) have said they will nancially support the project.
Zimbabwe and Zambia signed a memoran- dum of understanding (MoU) for the project in February 2012. e AfDB was named as the lead nancier and co-ordinator for the project in April 2017.
The HPP will be built 54 km downstream from the Victoria Falls, and aims to enable both countries to be self-su cient in power in future.
Both countries currently su er from black- outs because of low water levels at the Kariba Dam and other hydro installations. Zimba- bwe is also heavily in debt to South Africa and Mozambique for power imports. Zimbabwe currently has 1,300 MW of installed capacity, while demand reaches 1,900 MW. e project is expected to lower Zimbabwe’s dependence on fossil fuels and reduce its emissions.™
Week 25 26•June•2019 w w w . N E W S B A S E . c o m P9