Tag: electricity

Small towns are collapsing across South Africa. How it’s starting to affect farming

Wandile Sihlobo, University of the Witwatersrand

Farming and agribusiness play a crucial role in sustaining the economies of small towns and rural areas. There is a lot of evidence of this in the economic literature and in the popular media. This dependency has its inherent risks.

International literature tends to focus on the devastation of small towns in times of drought or when farming lobby groups argue for particular policies. In South Africa, a different pattern has emerged. This is when municipalities fail to provide basic services to their communities and businesses. These services include water and sanitation, electricity, roads and technological infrastructure.

South Africa has a three-tier system of governance. National government sets national economic development policy and drives the search for investment by both domestic and international investors. Provincial government plays a big role too in searching for investment and executing government’s policies and programmes. The most successful province has been the Western Cape, which has achieved the status of the country’s technology hub. But where the investors are located within a province depends on municipalities, specifically how well run they are.

South African municipalities are in deep trouble. For many years households and residents have felt the impact. They have resorted increasingly to mounting protests across the country. But lately, there is growing evidence that governance and service delivery failures are also directly affecting the functioning and efficiencies of farming and agribusinesses in small towns.

A case in point is the recent decision by the food and beverages group Clover to move its cheese production from Lichtenburg, a town in the North West province of South Africa, to an existing plant outside Durban in KwaZulu-Natal due to “ongoing poor service delivery”.

Lichtenburg is part of the country’s maize producing triangle. Three provinces – Free State, Mpumalanga, North West – account for 84% of the country’s maize production, according to latest estimates of the 2020/21 season.

State of collapse

South Africa’s finance minister, Tito Mboweni, recently painted a gloomy picture of the state of municipalities in the country. There are about 278 municipalities in South Africa. Mboweni said that 163 municipalities were in financial distress, 40 were battling to deliver basic services, and 102 had adopted budgets for 2021/22 that they cannot fund.

A growing number are also failing to collect revenue from residents and businesses for electricity, water and property taxes.

Mboweni added:

And, for the first time in our democracy, the national executive has been ordered by a high court to constitutionally intervene in the affairs of a municipality owing to
a financial and service delivery failure.

Municipalities in rural areas and small towns are worst off. A recent study by the Tshwane University of Technology researchers stated that

the level of service delivery in rural communities is less compared to urban areas, and there is no sign of improvement.

Consequences

The multiplier effects of Clover’s decision to relocate are likely to be large. The closure of the firm in such a small town is likely to have a number of negative spillover effects across the local economy.

The company, according to official statements from the government, provided 380 permanent jobs and 40 temporary jobs. It also employs 20 general workers and 20 truck drivers and cleaners.

In addition, the plant gave farmers market access for their produce, and a range of businesses bought and sold products from the company. The income from these activities would have supported many other businesses in the community.

Clover is not the first major company to decry poor municipal services. There’s the long running case of Astral Foods, a poultry producer that also supplies animal feed, and the Lekwa Municipality. Astral has lost millions of rands in production because of failures by the municipality in the Mpumalanga province to provide its poultry plant with water and electricity.

These two cases illustrate how efficiency and economic sustainability of agribusinesses depend on delivery of basic services. Without them, levels of investment in the businesses will shrink in such towns. Importantly, this may affect the sustainability of agribusinesses as some might incur more costs as they try themselves to provide the services that were supposed to be provided by local governments.

The farmers face a similar challenge, directly and indirectly. The agribusiness provides a range of solutions and market access to local farmers. If agribusinesses’ sustainability is threatened, farmers suffer too. More directly, poor roads, unreliable electricity supply and water supply directly affect the profitability and sustainability of farming operations.

Importantly, these are all entities that provide job opportunities to the least skilled South Africans and indirectly sustain the communities around small towns.

The way forward

President Cyril Ramaphosa set out an economic reform and recovery agenda for the country in October 2020. In it he identified agriculture and agro-processing (food security) as one of the drivers of economic growth and job creation, especially in small towns.

But a vibrant agriculture and agribusiness won’t develop if poor service delivery by municipalities continues.

There are some basic practical interventions the government could make. These include ensuring that a municipality has competent management, financial officers, civil and electrical engineers, as well as competent political leadership.

The Financial and Fiscal Commission, an independent constitutional advisory body on financial fiscal matters in the country, recently argued municipalities should look closely at their wage bills. This would ensure that salaries didn’t crowd out money for critical service delivery functions. These include waste removal, waste management, sewerage systems, roads and water provision.

These improvements need to happen simultaneously and not before or after agriculture revitalisation, which is supported by the government’s Agricultural and Agro-processing Master Plans. These seek to expand and grow South Africa’s agriculture and agro-processing.

But a healthy farming sector rests on towns that are functional and that have the basics in place.

This is a challenge that the South African government should face head-on.The Conversation

Wandile Sihlobo, Visiting Research Fellow, Wits School of Governance, University of the Witwatersrand

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Why South Africa has blackouts and ‘load shedding’

Rolling blackouts last year had South Africans firing up candles, flashlights and generators after crisis-plagued Eskom Holdings SOC Ltd., which provides most of the country’s electricity, failed to meet demand. The power crunch has since eased thanks to fewer unplanned plant breakdowns and the use of diesel-powered generators to augment supply. But Eskom’s problems run far deeper than temporary shortfalls. The state-owned utility is mired in debt and isn’t selling enough power to cover all its costs, leaving it scrambling for money to replace aging plants. Now South Africa is weighing a plan to split Eskom into three entities in the hope of reviving its fortunes.

1. What caused the power shortages?

Theoretically Eskom should be able to generate about 47,000 megawatts of power, but output slipped to as low as 26,000 megawatts last year when several of its plants were being serviced or broke down. Less than three quarters of installed capacity has been available this year, in part because a lack of money forced the utility to cut back on maintenance and repairs. It also lacks key technical skills needed to carry out the work, despite having a bloated workforce. Plants that produce more than half the utility’s power are at, or nearing, their ideal retirement age.

2. How did this happen?

South Africa was able to produced more electricity than it needed when white-minority rule ended in 1994, but the government didn’t foresee how sharply demand would spike as the economy expanded and previously neglected black areas were connected to the grid. Eskom announced a series of multi-billion dollar investments after the government awoke to the severity of the problem in the mid-2000s, but the projects came too late and took too long to build. The first wide-scale outages occurred in late 2005. The Medupi and Kusile coal-fired plants, which were supposed to add almost 9,600 megawatts to the grid and be fully operational in 2015, are still years away from completion. Their projected costs have more than doubled to 292.5 billion rand ($21.5 billion).

3. Where was management?

The utility went through repeated board and management changes during the almost nine years Jacob Zuma was South Africa’s president. Investigations by lawmakers and the nation’s graft ombudsman alleged that the upheaval was part of an orchestrated attempt by Zuma’s allies to raid Eskom’s coffers with his tacit consent. Accusations that the utility was looted are now being investigated by a judicial commission. Zuma and his allies deny wrongdoing. Eskom’s board and management were replaced in January 2018, the month after Cyril Ramaphosa succeeded Zuma as head of the ruling party, the African National Congress. Since then, there’s been a concerted effort to stamp out graft, and a number of senior executives and staff have left the company. Ramaphosa was named president in February 2018, after the ANC forced Zuma to step down.

4. How precarious is Eskom’s financial position?

Very. By its own admission, it’s in a “death spiral.” It is saddled with 419 billion rand worth of debt that it’s battling to service, and it anticipates showing a loss of about 20 billion rand for the year ending in March. Sales volumes are at a decade low and continue to fall as the economy stagnates. Increasing numbers of businesses and middle-class consumers have moved off the grid as the price of renewable energy drops. Meanwhile, near-bankrupt municipalities are falling behind in in paying their bills as many customers in impoverished townships default on their debts or steal power through illegal connections.

—From: Bloomberg.

Medupi online as Koeberg switches off

Medupi’s Unit 6 has officially gone online.

It was launched by President Jacob Zuma in Limpopo on Sunday.

The unit will pump a much-needed 800 megawatts into the country’s electricity supply.

President Zuma says the economy will benefit from the switch-on.

But at the same time, Koeberg’s Unit 2 will be offline for three months of scheduled maintenance, starting on Tuesday.

It will see about 930 megawatts taken off the grid.

Despite this, Eskom says it doesn’t foresee power outages linked to the Koeberg work.

Israel turns off power to Palestinians

The Los Angeles Times reports Israel cut the power to more than 700,000 Palestinians in two of Palestine’s largest urban areas, Nablus and Jenin, for more than 45 minutes “and warned that more outages are coming if Palestinian officials don’t pay millions of dollars in outstanding debt.”

Citing Yiftah Ron-Tal, the director of Israel Electric Corp. (IEC), the Times reports:

“Customers who do not pay electric bills are disconnected; yet here we have an entire population that doesn’t pay while we continue to supply electricity,” he said. “The Palestinian Authority owes the IEC — meaning the paying consumers — nearly 2 billion Israeli shekels [about $500 million]. A year has passed since I said this last and nothing has changed. Starting today, we will begin restricting electricity.”

The irony here, of withholding the months of tax revenue while demanding payment of a debt, on top of occupation policy preventing Palestinians from being self sufficient, is not lost on anyone. More from the Times:

“This is clearly collective punishment against the Palestinian people,” [Ghassan Shakaa, the mayor of Nablus and chairman of the board of the North Electricity Company, which supplies Nablus, Jenin] said. According to Shakaa, the IEC cut power shortly after notifying his company that it owed more than $10 million, and did not wait for an answer or for payment……

Rashid Fadda, who lives in Nablus and works as a technician for the local electric company, said the power cuts came as a surprise.

“We heard the Israeli company threatening to cut power supply to the West Bank but no one really thought it will happen,” he said. “My work depends on electricity and so when the power was cut off, we had to stop work.”

In more winter news, IMEMC reports settlers from the Gilo settlement have “opened its barrages, throwing all excess rain and melted snow water” flooding Aida Refugee camp near Bethlehem.

Israel opened dams near the border of Gaza on Sunday morning, flooding the valley causing hundreds of Palestinians to evacuate their homes.

Source: mondoweiss.net

Zuma reiterates that Eskom’s problems are the fault of whites and ‘apartheid’

President Jacob Zuma used the ANC’s January 8 birthday rally to absolve his government from responsibility of the energy crises gripping the country, according to reports from the ANC shindig in Cape Town.

Zuma told over 50 000 of ANC supporters gathered at the Green Point Stadium on Saturday that “the ANC government should not feel guilty for the lack of power in the country”.

“The energy problem is not our problem today. It is a problem of apartheid which we are resolving,” he said.

Zuma reaffirmed comments he made in the past that apartheid was responsible for the rolling blackouts affecting the country.

“The reality is that we are dealing with the legacy of apartheid, which was skewed to deal with the minority and not the majority,” the president said.

Once upon a time, under National Party rule, South Africa had the cheapest power in the world, with excess production exported or sold at risible rates to aluminium smelters. Yet yesterday the country had to contend with a new round of “load shedding” as the state utility Eskom ran out of electricity again. The power utility said it was due to “high electricity demand and the unavailability” of some generating units. Stage one allows for up to 1 000MW of the national load to be shed, stage two for up to 2 000MW and stage three for up to 4 000MW.

Eskom has been fanatical about affirmative action and has laid off scores of white engineers, leaving the company without engineering and financial expertise but with high-salaried affirmative-action freeloaders.

“When commentators comment on energy they forget this (that apartheid was responsible for the lack of energy). They want to put the blame on the democratic government,” said Zuma.

The Mail & Guardian reported on Friday that Eskom would run out of money by the end of January.

However, Zuma refuses to shoulder any blame for the electricity mess in South Africa.

“The ANC government is accelerating the pace to bring the Medupi and Kusile power stations onto the grid and we are licensing independent power producers,” he said.

“We continue to evaluate options to maximise our energy mix including coal, gas, nuclear, solar and renewables,” he added.

A nuclear plan has also been announced by Zuma.

“The ANC is therefore putting energy as one of our apex priorities,” he said.

‘Monopoly capital’
Zuma’s speech focussed on the Freedom Charter, a Marxist document drawn up by Rusty Bernstein and others in 1955 and has since served as a central party manifesto to both the Communist Party and the ANC. He warned against monopoly capital:

“We must break the stranglehold of monopoly capital on our economic development. It is imperative that the Competitions Commission continues to address monopolistic, collusive and anti-competitive behaviour and become even bolder in their preventative and punitive measures.”

Zuma’s statements on the economy were warmly received by the Communist Party and its main trade union, Cosatu.

Cosatu President Sdumo Dlamini said he was “satisfied that the president raised the debate of racial transformation in the financial sector”.

“But it will remain a speech if there is no implementation,” he added.

Zuma wants banking to become more affordable too.

“Banking has become much more accessible to the majority of South Africans, but the excessive bank charges and fees mean that many people still cannot afford bank services,” he said.

The ANC is also preparing to implement a Zimbabwe-style “land reform” in South Africa, pushing white farmers off the land.

“We commit that the land will be returned to our people and the ANC calls on its government to act with the necessary speed to put the legislation in place, this year, to ensure that this happens.”

Fracking, climate change, solar in the security mix

The global oil market is going through an upheaval, with non-OPEC production led by North American producers surging while OPEC’s traditional price-setting role changes. First, US oil production and proven oil reserve growth over the past several years is astonishing. Despite the current oil price decline, US oil production growth in 2015 is expected to grow around 1 million barrels per day. However, those growth rates probably won’t be sustained over the long term.

Second, if you look at the world’s largest oil reserve holders and countries that have reserve-to-production ratios in excess of 100 years, they are almost exclusively OPEC members. The cartel’s market influence has diminished in the face of robust non-OPEC production, but the group’s power is likely to endure over the long term purely due to the sheer volume of oil its members collectively control.

The Saudis will remain the de facto leaders of OPEC until another country can build comparable spare production capacity, which in the Saudis case is currently around 2 mmb/d. Saudi Arabia has 266 billion barrels of proven high-quality, cheap-to-produce oil reserves. The US, in contrast, boasts only 44.2 billion barrels of mostly expensive-to-produce oil reserves. Technology is a wild card that has the potential to unlock additional petroleum resources and reduce production costs, but it would be a mistake to discount Saudi Arabia’s power as an oil country, particularly over the long term.

That means, of course, that the Bahrain-based Fifth Fleet will remain a key asset. Add the Iranian nuclear talks, the predations of the Islamic State of Iraq and the Levant (ISIL), and the simmering tensions between Israel and its neighbors to the oil that flow through the Strait of Hormuz and there seems little doubt we will keep substantial naval, air and expeditionary forces in the area for the foreseeable future.

Oil-sea-routes-map

But these shifting energy markets raises larger strategic questions.

Colin spoke with one of the wisest analysts about the energy sector and its national security implications, Tony Cordesman of the Center for Strategic and International Studies. A former senior Pentagon and NATO official, Cordesman also served as director of policy and planning for resource applications at the Department of Energy. He doesn’t foresee any immediate major strategic shifts created by the energy market changes. At the same time, he acknowledges that major technological and market shifts have usually gone unnoticed until they hit us in the face.

Cordesman points to the solar and nuclear markets, where we have all been expecting or hoping for major technological breakthroughs “since the Nixon administration.” Then he notes that, in the oil market, “no one predicted that the most critical technological breakthrough would prove to be fracking.” Can we expect a breakthrough in the solar, nuclear or biofuel arenas? “It may take 25 to 50 years or it will happen almost without warning,” he predicts.

The current situation in the alternative energy world: We’re seeing the strong growth of renewable energy, albeit from a low base. The growth rate of installed US solar power capacity has been impressive, but that growth rate has slipped in the past few years as the technology has gained market share. “U.S. solar power capacity would need to grow at an annual rate of 22 percent in order for solar to provide 10 percent of the nation’s electricity in 2030, from less than 1 percent now,” Breaking Energy recently reported.

Wind and solar are used to generate electricity but coal will remain a significant source of US power generation for decades, although its market share looks likely to decline — for environmental reasons. The renewable energy story is important, and while it is changing the way utilities do business, wind and solar are only beginning to compete with fossil fuels on price. In most cases, their competitiveness is a result of tax incentives often referred to as subsidies. Also, the intermittent nature of these resources is a technical challenge that must be overcome in order to efficiently integrate large volumes of wind and solar energy into the power grid during times of peak demand. Creative financing and technological advances – particularly in energy storage – will help renewable electricity sources compete over time, but coal and natural gas will remain significant components of the US power generation mix for the foreseeable future.

At the international level, the issue of burning coal to generate power is far more complex. It is cheap and represents a comparatively cost-effective way to electrify large portions of the global population that currently have no access to power. Indeed, nine countries are collectively about to build roughly 550 gigawatts of new coal-fired capacity over the next two and a half decades.

And Then, Climate Change

In many ways, reducing emissions from coal-fired power generation is the key to dealing with climate change. China has been acting to address coal plant emissions due to its dangerous air pollution levels, which is an important piece of the climate change puzzle.

This poses a great conundrum for China. The Communist Party’s leaders are trying to forge a China united between rural and urban areas and that requires huge and fast economic development — much of it dependent on the use of cheap and readily available coal. Weaning themselves off of coal may be promising in terms of reducing emissions, but Cordesman says they are unlikely to be able to accept the economic tradeoffs.

For the same reasons, many other developing countries including India, Bangladesh and Pakistan are increasing their coal-fired power generation fleets.

Some think the ship has already sailed on preventing the impacts of climate change and now focus on adapting to extreme weather and other consequences as opposed to mitigating emissions such that they limit global temperatures from increasing more than 2 degrees Celsius.

Optimists remain however, and international agreements are not the only thing to focus on when thinking about what the world is doing to address the issue. “At every level—individuals, families, cities, states, provinces, even multinational corporations—efforts to cut CO2 are underway,” David Biello, associate editor for environment and energy at Scientific American, wrote in a recent post. He goes on to point out, “these are first steps and they are coming at a quickening pace, which suggest a possible future free of catastrophic climate change. More and faster should be the new slogan for action to address global warming. How much more and how much faster should be the only issue for negotiation.”

Zuma blames ‘apartheid’ for South Africa’s power crisis

South Africa’s energy problems were a product of apartheid and government was not to blame for the current blackouts, President Jacob Zuma said.

“The problem [is] the energy was structured racially to serve a particular race, not the majority,” Zuma told delegates at the Young Communist League’s congress in Cape Town.

He said the ANC had inherited the power utility from the previous regime which had only provided electricity to the white minority.

Twenty years into democracy, 11 million households had access to electricity, double the number in 1994, Zuma said in a speech prepared for delivery.

Government was taking action to address the energy situation.

The development of the Medupi and Kusile power stations was being accelerated in order to bring them on to the grid.

“Projects in the region with the potential to produce power in the short term are being assessed and we continue to evaluate options with the intention to maximise all sources of energy including coal, gas, nuclear, solar and renewable energy options, Zuma said.

Crisis, what crisis? – Eksdom

THE country is not experiencing a power supply crisis, Eskom said on Monday.

“There is no crisis at Eskom. I think the way Eskom gets reported on creates the perception of a crisis,” CEO Tshediso Matona told reporters in Johannesburg.

Mr Matona said the power utility needed financial stability and additional power to make sure electricity supply was reliable.

He said Eskom sold power cheaply.

“We sell electricity below cost compared to other countries. We have spoken about this before … It is a matter of policy implementation, which we do not do ourselves.”

Eskom did not anticipate implementing its stage-three schedule of rolling blackouts again this month, he said.

“We will probably not go into stage three from this difficult patch, but that will rely on additional power capacity going forward,” Mr Matona said.

Stage one allows for up to 1,000MW of the national load to be shed, stage two for up to 2,000MW and stage three for up to 4,000MW.

Stage-two blackouts went into action on Thursday and stage three on Friday.

Eskom was doing everything possible to manage the outages, Mr Matona said.

“It really pains us to have to load-shed. We know the public is not pleased.”

He said a complete blackout would spell disaster for the country.

“We load-shed out of responsibility … A complete blackout would be catastrophic and can take weeks to recover from.”

Group executive Matshela Koko said he led an investigation into the collapse of the silo at Majuba.

“Majuba is urgent … yes, we had a second crack at Majuba, and we will soon take the public into (our) confidence,” Mr Koko said.

Mr Matona said the blackouts had also affected customers in neighbouring countries.

“There is a perception that we load-shed but continue supplying neighbours with electricity. That is not so, cross-border customers are also affected.”

Mr Matona said electricity supply was expected to be constrained in February and March because of budgetary constraints.

“Our financial director is looking at options in this regard,” he said.

The power supply would depend on the availability of diesel during the period.

Eskom used 140-million litres of diesel to produce power in November.

“We have had situations during this past week where the ordering of diesel was delayed due to budget constraints,” said Mr Matona.

“Sometimes, in terms of logistics, things do not go smoothly between us, PetroSA and other suppliers,” he said.

No power cuts says Eskom

There will not be power cuts as a result of the Majuba power station crisis anywhere in the country, Eskom said.

“There will be no load shedding today . We managed to restore coal supplies to two of the six units at the Majuba power station. This means that one third of the power station’s normal capacity is back in service,” said spokesman Andrew Etzinger.

“As a result Eskom is not needing to implement load shedding during the day. However, the power system remains under pressure and consumers are urged to use electricity sparingly for the remainder of the week.”

A coal storage silo at the Majuba power station in Mpumalanga cracked on Saturday and later collapsed. Etzinger said as a result coal conveyor systems were damaged.

Yesterday, alternative measures were put in place to deliver the coal needed.

“For units one and two, we had to bring in coal through an alternative delivery mechanism involving the trucking of coal,” he said.

“Then the coals were placed on mobile conveyors using front-end loaders, and the current rate 1200 tonnes of coal per hour were being brought in.”

Eskom was working on a similar solution for delivering coal to units five and six. He said units three and four were not affected.

The operation involved excess manpower and cost but Etzinger could not immediately provide figures.

Source: Sapa

Nuclear trumps shale and gas

The signing in Vienna – at the margins of the 58th session of the International Atomic Energy Agency General Conference – of a strategic nuclear partnership between Russia and South Africa, has met with criticism from the mining sector.

The agreement lays the foundation for a large-scale nuclear power plant procurement and development programme of South Africa based on the construction of new nuclear power plants with Russian VVER reactors with a total installed capacity of up to 9,6 GW or 8 units.

These will be the first based on the Russian technology to be built on the African continent.

The signed agreement provides for comprehensive collaboration in other areas of nuclear power, including the construction of a Russian-technology based multipurpose research reactor, assistance in the development of South African nuclear infrastructure, and education of South African nuclear specialists.

The creation of new highly-skilled workplaces will also allow South African companies to further participate in Rosatom’s projects in third countries.

South Africa’s industry will become dependent on sources other than shale and coal, critics say. While industry and certain role players obsess about shale and gas, Mozambique’s gas resources will also need expensive infrastructure.

The questionable benefits that shale gas might offer, will be short-lived, unlike nuclear.

This agreement would naturally limit South Africa’s importation of energy from Namibia or Mozambique.

Also, this will probably mean an end to preferential electricity contracts that offer power at a rate far below the level other industrial users pay, to companies like BHP Billiton.

The R9,5bn lost in embedded derivatives, as reported by Eskom, is the cost of the remaining time on these preferential electricity contracts, some of which still have years to run.

Other energy sources will be hydroelectric power from the future Inga III dam in the Democratic Republic of Congo.

South Africa’s nuclear power ambitions had attracted several proposals.

French group Areva, which built South Africa’s only nuclear plant at Koeberg, had proposed to provide the country with its new generation of EPR reactors.

Government had also solicited an offer from the US-Japanese group Westinghouse.

SA and Russia sign nuclear agreement

Russia and South Africa have signed an intergovernmental agreement on strategic partnership in nuclear energy sector opening the possibility of construction of nuclear reactors in the country using Russian technologies, state nuclear corporation Rosatom said Monday.

“The agreement creates a basis for the development of South Africa’s program on construction of nuclear power plants equipped with Russian VVER-type reactors with total generating capacity of up to 9.6 GWt (up to eight units),” a Rosatom spokesman told RIA Novosti.

“Those would be the first nuclear power plants on the African continent using Russian technology,” the official said.

South Africa currently has two nuclear reactors generating 5 percent of its electricity.

Russia will supply eight nuclear power units to South Africa until 2023 under the agreement signed in Vienna on Monday.

These will be the first nuclear power plants using Russian technology in Africa, with a combined capacity of 9.6 gigawatts.

“Rosatom is ready to assist South Africa in creating a world-class industrial cluster from the initial stage of the nuclear fuel cycle to engineering and production of equipment,” Rosatom Head Sergei Kiriyenko said at the signing ceremony held on the sidelines of the 58th session of the U.N. General Assembly of the International Atomic Energy Agency (IAEA).

He said this would allow Russia and South Africa to carry out joint projects in third countries in the future. The project will also create thousands of new jobs and generate local contracts worth up to $10 billion.

Kiriyenko earlier evaluated the project at$40 billion to $50 billion.

Russia is also ready to provide a low-interest loan for the project.

Experts say that it will allow South Africa to build its own nuclear power industry, achieve 40%-60% localisation, create about 30,000 new jobs and bring in $16 billion in investment as well as $5 billion worth of budget revenue.

The South African government has determined three sites for building new nuclear power plants.

Source: RIA Novosti/ItarTASS

‘I do not whip people’

As House Minority Whip, Rep. Steny Hoyer made a racist joke about “whip[ping] people” to a group of black African leaders visiting the U.S. for a major diplomatic summit.

“First of all, let me tell my friends from Africa, I do not whip people,” the Maryland Democrat told a crowd at the U.S.-Africa Leaders Summit Wednesday.

Some in the black audience laughed, clearly embarrased for Hoyer’s sake.

“And if you watch ‘House of Cards,’ it is not accurate,” Hoyer continued, referencing a show aired on Netflix about the inner workings of Washington D.C. politics.

Wednesday’s event, titled “Dialogue with African CEOs,” was hosted by the Congressional Black Caucus.

Hoyer’s speech covered initiatives meant to boost economic productivity in Africa. He also spoke about the lack of access to electricity on the continent, remarks which would undermine the punchline to his “joke,” which relied on the audience being able to view “House of Cards.”

“Right now, there are 600 million sub-Saharan Africans living without reliable access to electricity,” Hoyer said at the event, according to prepared remarks at his congressional website. “That’s 70 percent of the population – and a significant barrier to growing Africa’s middle class.”

Source: Daily Caller

Eskom suffers another shock

electricityEskom has suffered yet another setback that could see its funding costs rise or keep taxpayers shelling out for its debts.

A surprise credit rating downgrade comes on top of higher-than-expected coal prices – which could allow the state-owned energy company to pass on its increased costs to consumers.

Credit ratings agency Moody’s downgraded Eskom’s standalone credit quality by one notch on Friday, making it more difficult for it to raise money for its future expansion plans.

Eskom has been trying to get an investment-grade standalone rating so that it can raise the billions it needs without government guarantees.

Acting chief financial officer Caroline Henry diplomatically called the downgrade “a challenge” yesterday.

It adds to other pressures Eskom is facing, which could see it approach energy regulator Nersa for a higher tariff increase.

CEO Brian Dames said recently the high coal price increases gave Eskom the right to approach Nersa for an increase.

Primary energy costs, including for coal, have rocketed 36% over the past year, Eskom’s latest set of financial results reveal. These costs have gnawed into its margins and have seen it earn less than half the profit it did the previous year.

Eskom’s new build programme, with which it aims to keep the lights on, has a capacity expansion budget of about R400-billion up to this year and is expected to grow to more than a R1-trillion by 2026.

Shaun Nel, spokesman for the Energy Intensive User Group, which represents large industrial consumers, said yesterday the downgrade “will obviously increase the cost of capital”.

Eskom has tried to get a stand-alone credit rating since 2008, but Nersa has thwarted its plans several times, most recently in February when it allowed an increase of 8% a year for the next five years although Eskom requested 16%.

The lower increase means a revenue shortfall of about R220-billion over the next five years and was cited by Moody’s as a major factor in its decision.

“This means Eskom would need to borrow more because it will not be able to generate the funds from its own revenues,” said energy analyst Chris Yelland.

The downgrade comes after management two weeks ago admitted that the first power from its Medupi power station would realistically hit the grid only in the second half of next year.

Eskom is running on a very thin reserve margin and would now likely face another winter, when consumption climbs, without Medupi’s added capacity.

According to Nel, the supply constraints have started having a serious impact on the economy.

Industrial users now consume less than they did in 2006, indicating that factories and foundries were closing, said Nel.

“Though Eskom said it would not have to go back to Nersa for two years, it seems like a foregone conclusion that it would have to,” Nel said.

Yelland does not necessarily see Eskom going to the regulator. But he thinks it could go to the government for more credit guarantees.

Outgoing chief financial officer Paul O’Flaherty said two weeks ago that Eskom would not be able to attain an investment grade standalone rating – which would allow it to raise the funds it needs at decent rates – in the “next few years”.

It would continue needing massive state support, he said.

About R250-billion still needed to be raised, O’Flaherty said.

Dames said yesterday that Eskom was “comfortable with the measures [it was] taking with the continued support of [the government]”. – timeslive.co.za