S.Africa looks to independents to ease energy crunch
Thu 6 Sep 2007

CAPE TOWN (Reuters) - South African state utility Eskom will become the sole buyer of power from the nation's independent producers in a move to spur investment in power generation and ease an energy crunch, the government said on Thursday. Eskom, struggling to meet growing demand for electricity in the booming South African economy, plans to draw 30 percent of new power generation capacity from independents, government spokesman Themba Maskeo said as he announced the decision.

It will pay a market rate for the power it buys from these suppliers and guarantee the purchases. "The sense is that a lot of the major investors needed some kind of certainty that if they invest billions of rands into power generation capacity, that power will be bought," he said after a cabinet meeting in Cape Town. "Government is basically giving some confidence to the market, that if you invest billions into power generation capacity in South Africa we, as the state in the form of Eskom, will actually buy that power."

He added that the arrangement with private sector suppliers would also help to keep the cost of electricity down for consumers in Africa's economic powerhouse, where inflation is rising.
Pressure on Eskom to boost its capacity increased last year when South African cities, including the financial hub of Johannesburg and top tourist destination Cape Town, were darkened by a wave of blackouts.

The utility blamed the problems on an overloaded and ageing national power grid and said the situation should improve as it embarked on a massive multi-billion dollar upgrade of its power generating systems. A failure to provide electricity and other basic services also has been at the heart of a series of violent protests in black townships and other parts of the country, prompting the government to renew its pledges to improve service delivery.

Eskom, which relies on coal-based power stations, plans to spend 150 billion rand on improvements, which include the refurbishment of mothballed coal plants and construction of new coal and conventional nuclear facilities. South Africa's government also is pushing a project to build pebble bed modular plants, the new-generation nuclear reactors.

http://africa.reuters.com/business/news/usnBAN646224.html