South African Utility Seeks Clarity on Power Procurement Program

  • Fifth auction for independent producers is due this year
  • Eskom says utility bears burden of costly IPP power generation

South Africa’s state utility Eskom Holdings SOC Ltd. wants to discuss the future of the country’s program to procure power from private energy projects after almost a year without electricity cuts.

The Department of Energy is scheduled to hold its fifth auction for independent renewable power producers this year, after attracting at least 193 billion rand ($13.5 billion) of investment since 2011. Eskom Chief Executive Officer Brian Molefe has complained that the utility has to carry the burden of costly generation from those projects.

"We have committed ourselves to all the companies that the government has already contracted," Khulu Phasiwe, a spokesman for the utility, said in a phone interview. “Now that we have some stability on the power system to the extent that we are now beginning to export capacity, what shall we do now?”

The utility has over the past 12 months averted the power cuts that previously hobbled Africa’s most industrialized economy and spurred the development of the IPP procurement program. Eskom Chairman Ben Ngubane wrote a letter to Energy Minister Tina Joemat-Pettersson, saying that the utility won’t sign further power purchase agreements without engagement over the issue, Johannesburg-based newspaper Business Day reported Thursday.

Joemat-Pettersson expanded the program last year and said a request for proposals for the fifth procurement round would be ready in the second quarter of 2016.

The Department of Energy and its IPP office didn’t immediately respond to e-mails seeking comment.

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