Eskom needs more money, says electricity minister

South Africa’s electricity minister called for more state funding and exemptions on emissions limits at coal-fired power plants to help ease the nation’s energy crisis.

The measures are among a raft of proposals Kgosientsho Ramokgopa will submit to President Cyril Ramaphosa’s cabinet this month to end daily blackouts that are hobbling Africa’s most industrialized economy.

According to Ramokgopa, debt-strapped Eskom doesn’t have the money to invest in its capital equipment, so it will have to seek funding elsewhere.

The choice facing the authorities is to either protect the nation’s balance sheet and risk the collapse of the South African economy or provide “additional fiscal support, which has its own downside implications,” but will help save the economy, Ramokgopa said.

Working on compiling an estimate of the required cost of addressing power-plant refurbishments is underway, he added. “This is expensive, but we need to find money from somewhere,” the minister said. “It is not my space to say where money must come from.”

South Africa has been subjected to rotational blackouts since 2008 due to Eskom’s inability to meet demand from an unreliable fleet of coal-fired plants that are prone to breakdowns.

While Ramaphosa has announced a series of measures over the past year to tackle the crisis, including doubling wind power purchases from private contractors to 3,200 megawatts in a recent round of bids, none of those projects was selected because they couldn’t be connected.

Ramokgopa, who was appointed to the position a month ago, has spent the past two weeks visiting South Africa’s power plants after Ramaphosa tasked him with reducing outages, improving Eskom’s plant performance and accelerating the procurement of additional generation capacity.

Among the constraints on maximizing the use of installed capacity is a cap on emissions. Ramokgopa said his colleagues in the cabinet would have to consider a temporary exemption on pollution controls and accept some damage to the environment in order to support the economy.

“I want to save the country now, so allow me these exemptions, and I can illustrate what steps I will take in the short term and in the long term,” he said

Addressing the energy crisis is key to the nation securing additional foreign investment, Trade, Industry and Competition Minister Ebrahim Patel said in an interview last week in Johannesburg.

“If there is a single issue that I would focus on for the next cycle of investment, it’s cutting the energy problem,” he said. “To the extent that we are able to address our energy challenge rapidly, I think that’s going to inject more confidence in the investor community.”

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