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S.Africa may face power cuts without loan
South Africa may need to enforce power cuts or raise electricity prices further if a disputed $3.75 billion loan from the World Bank is not approved, a senior government official said on Thursday.
The United States and Britain have threatened to withhold support for the loan for a coal-fired plant in South Africa, expanding the battleground in the global debate over who should pay for clean energy.
"If they say no, we will either increase the tariffs or we will face serious blackouts," Director General at the Ministry of Energy Nelisiwe Magubane told Reuters in an interview.
South Africa's state-owned utility Eskom is seeking the loan, intended to help expand power generation capacity to meet fast-rising demand in Africa's biggest economy.
Eskom failed to get the 35 percent annual tariff rises it wanted this year, but the regulator still approved hikes of around 25 percent each year for the next three years, stoking inflation fears and anger from unions, businesses and consumers.
Eskom was forced to step up investment after power cuts paralysed the critical mining industry in early 2008.
Magubane said she was surprised by the apparent opposition to the loan given that South Africa had not been asked to provide an alternative to coal in its application.
She said South Africa, reliant on coal for 95 percent of its electricity needs, had shown sufficient proof of plans to cap emissions and reduce them after 2030.
She said the target could be met even with the planned coal-fired plants because older, less efficient ones would be retired. Some $700 million of the loan is also meant to pay for renewables.
RENEWABLES
Magubane said the government was revising its current target for renewable power to a "more aggressive" one. She said the World Bank's Clean Technology Fund has already approved a $500 million loan for clean energy in South Africa.
Should the bigger loan be approved, she said South Africa would seek to speed up Medupi to bring it back to its original schedule of having the first turbine commissioned by April 2012.
But the second planned power plant Kusile, which like Medupi is expected to supply 4,800 MW, is likely to remain delayed.
She said the government was discussing alternative means to help fund Eskom, which reported a 9.7 billion rand loss for its last financial year. Part privatisation and further government guarantees are still options, she said.
Although Magubane saw no cheap alternative to coal for now, she sees nuclear power playing a critical role in the future, with the next new plant in operation by 2022 at the latest.
South Africa's industry could also supply up to 5,000 MW via cogeneration which can be available in the short term, she said.
A comprehensive plan, outlining the country's energy mix for the next three years, will be written into law by September.
Speaking about fuel security, Magubane said the government supported both the 400,000 barrels-per-day refinery planned by national oil firm PetroSA and the 80,000 bpd coal-to-liquids plant eyed by petrochemicals group Sasol, but timelines for Sasol's Mafutha project may change.
Earlier this week, Sasol's chief executive said the plant would not go ahead if the government did not help foot the bill.
Magubane said the refineries were needed to replace ageing plants. A deadline for present refineries to conform with clean fuel specifications will be announced in September, she said.
--reuters--
The United States and Britain have threatened to withhold support for the loan for a coal-fired plant in South Africa, expanding the battleground in the global debate over who should pay for clean energy.
"If they say no, we will either increase the tariffs or we will face serious blackouts," Director General at the Ministry of Energy Nelisiwe Magubane told Reuters in an interview.
South Africa's state-owned utility Eskom is seeking the loan, intended to help expand power generation capacity to meet fast-rising demand in Africa's biggest economy.
Eskom failed to get the 35 percent annual tariff rises it wanted this year, but the regulator still approved hikes of around 25 percent each year for the next three years, stoking inflation fears and anger from unions, businesses and consumers.
Eskom was forced to step up investment after power cuts paralysed the critical mining industry in early 2008.
Magubane said she was surprised by the apparent opposition to the loan given that South Africa had not been asked to provide an alternative to coal in its application.
She said South Africa, reliant on coal for 95 percent of its electricity needs, had shown sufficient proof of plans to cap emissions and reduce them after 2030.
She said the target could be met even with the planned coal-fired plants because older, less efficient ones would be retired. Some $700 million of the loan is also meant to pay for renewables.
RENEWABLES
Magubane said the government was revising its current target for renewable power to a "more aggressive" one. She said the World Bank's Clean Technology Fund has already approved a $500 million loan for clean energy in South Africa.
Should the bigger loan be approved, she said South Africa would seek to speed up Medupi to bring it back to its original schedule of having the first turbine commissioned by April 2012.
But the second planned power plant Kusile, which like Medupi is expected to supply 4,800 MW, is likely to remain delayed.
She said the government was discussing alternative means to help fund Eskom, which reported a 9.7 billion rand loss for its last financial year. Part privatisation and further government guarantees are still options, she said.
Although Magubane saw no cheap alternative to coal for now, she sees nuclear power playing a critical role in the future, with the next new plant in operation by 2022 at the latest.
South Africa's industry could also supply up to 5,000 MW via cogeneration which can be available in the short term, she said.
A comprehensive plan, outlining the country's energy mix for the next three years, will be written into law by September.
Speaking about fuel security, Magubane said the government supported both the 400,000 barrels-per-day refinery planned by national oil firm PetroSA and the 80,000 bpd coal-to-liquids plant eyed by petrochemicals group Sasol, but timelines for Sasol's Mafutha project may change.
Earlier this week, Sasol's chief executive said the plant would not go ahead if the government did not help foot the bill.
Magubane said the refineries were needed to replace ageing plants. A deadline for present refineries to conform with clean fuel specifications will be announced in September, she said.
--reuters--
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