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Industry meets with Eskom

22 January 2008 – Eskom met with 131 top industrial clients this week with a view to slashing power demand by 10%-20% over the next few years and find ways to ease the current electricity crisis and its effect on the economy.


Eskom CE, Jacob Maroga

Ideas discussed included incentives and penalties for power rationing, subsidising home solar water heating systems and generating electricity from industrial by-products.

Also discussed were incentives to commercial clients for voluntary reductions in consumption.

"The biggest lever we can pull is reducing demand — and here we are all going to have to stand together," said Eskom CE, Jacob Maroga. "I am confident there will be a solution. It might not be a short-term one but I am comfortable we will do this — business leaders are committed."

Eskom’s frank approach has been praised by Chamber of Mines assistant adviser, Dick Kruger. "It’s going to take time to establish the capacity needed and it’s useless to whine and scream and beat the floor — we must all work together to get through the next five to seven years," he said, adding that he hoped the mining industry would not continue to bear the brunt of the power cutbacks.

"We would like to see load-shedding spread to commercial and domestic users. We have made huge sacrifices already and some new projects will have to be held in abeyance because there is not enough power," he said.

Said Eskom CE, Jacob Maroga, who has been in his post for less than a year, "As CE of Eskom, the buck stops with me."

Speaking about the distruption to society and the loss of confidence in South Africa’s economy, he said "These are things we don’t want to undermine. We have to come out of this without damaging the economy."

More than a fifth of Eskom’s generation capacity is currently out of action – either for maintenance or repairs, although Maroga expects the current load shedding schedules to stop by the end of this week.

However, this does not meant that power blackouts will be things of the past. Until additional generation capacity is added and surplus capacity brought back to comfortable levels (not before 2013), blackouts will persist.

Eskom is working on brining three mothballed stations back into commission by the end of 2011 and has reduced power exports to neighbouring Namibia, Lesotho and Zimbabwe. It has been reported that Eskom may face intense scrutiny on the environmental impact of these mothballed stations, once they are back on-line.

Environment minister, Marthinus van Schalkwyk said last week that Eskom should not expect "the same leniency" it had experience previously as regards environmental standards.

"They are quite aware of that and we will look very properly at what the environmental standards of the new power stations are," he said.

Financing of Eskom’s five year expansion plan is still to be finalised, but with a cost of US$53 billion, rating agencies are already warning that the company may face a credit downgrade, unless there is confirmed support from the South African government, Eskom’s only shareholder.

Maroga said that tariffs were set to rise by "double digits" over the next five years to help finance the expansion.