HomeNewsS.Africa: local manufacturer impacted by Eskom decision

S.Africa: local manufacturer impacted by Eskom decision

In South Africa’s Eastern Cape, the Industrial Development Corporation (IDC) is concentrating its efforts in keeping local wind tower manufacturer, DCD Wind Towers, in business.

Engineering News reported that the factory, which is located in the Coega Industrial Development Zone (IDZ), completed its last tower section in October last year.

They added that further operations were suspended in December, when the plant’s orders were depleted.

“DCD Wind Towers attributes this depletion directly to Eskom’s refusal to sign new power purchase agreements (PPAs) with renewables independent power producers (IPPs),” Engineering News reported.

The wind projects that remain in limbo, would of required an estimated 480 towers, media reported.

DCD Wind Towers: international players to step in

Speaking to Engineering News online, IDC divisional executive for mining and metals Abel Malinga, said that talks with a possible international buyer are at a “sensitive stage”, however remains hopeful that good news is on the horizon.

Malinga says it is premature to name the potential buyer, but indicates that the firm’s international exposure could open up export opportunities for the Coega plant, which could enable a resumption of some operations despite the absence of local demand.

If the transaction is not successful, media reported that the firm could go into liquidation, or the facility will be placed on care and maintenance until domestic market prospects improve.

Decisions to be made

DCD strategic business manager Dirk Els, said: “What I can’t understand is how government policy can be sabotaged by a State-owned entity, where government, as shareholder, is within its rights to instruct that government policy be implemented.”

Els tells Engineering News Online that a decision about the future of the business will have to be made in the coming weeks, with a trade sale preferred but also that liquidation or a mothballed operation were also under consideration.

“However, he cautions that the prospect of a protracted delay in the signing of further PPAs could undermine the proposed trade sale, as it constrains the immediate outlook for orders,” media reported.

Els added: “The IPP developers and the original equipment manufacturers that supply these have developed expensive organisations to support their operations and their anticipated project pipelines, which they will soon no longer be able to afford to carry.

“Front-end suppliers like us are folding, but there is also a knock-on effect on to construction companies and the transport and logistics firms that have emerged as a result of the renewables programme.”

Ashley Theron
Ashley Theron-Ord is based in Cape Town, South Africa at Clarion Events-Africa. She is the Senior Content Producer across media brands including ESI Africa, Smart Energy International, Power Engineering International and Mining Review Africa.


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