Mteto Nyati, the chairman of Eskom's board of directors said on Wednesday that South Africa’s energy sector needs more investment from private businesses. File Picture: Henk Kruger / Independent Newspapers
Mteto Nyati, the chairman of Eskom's board of directors said on Wednesday that South Africa’s energy sector needs more investment from private businesses.
Nyati called for more businesses to get involved, during an interview with Reuters stating, “Private sector participation, yes, but the asset is going to end up with the government”.
In the 2024 Budget Review, Treasury said that it has been working in partnership with the International Finance Corporation to agree on the short-term options for off-balance sheet financing to help in this investment prospect.
“A pilot project will be implemented to test the market appetite for the proposed option, with a request for proposals expected to be issued by end-July 2024,” Treasury said.
“It is through the combination of private investment in new energy projects, rooftop solar installations and improvements in Eskom’s generation fleet that load shedding will reduce, and reliability and security of supply improve,” Finance Minister Enoch Godongwana added in his Budget speech.
“To promote further investments in renewable energy, this budget proposes an increase in the limit for renewable energy projects that can qualify for the carbon offsets regime, from 15 megawatts to 30 megawatts,” the minister added.
Nyati noted that the country is struggling with capacity, and to ensure that these renewable projects are able to be connected on the national grid would mean more transmission capacity.
"We probably need close to R350 billion over the next 10 years to build the transmission infrastructure. We do not have, from our own operations, the capacity to fund that," he advised.
Eskom has the money to fund the much needed infrastructure development, but for only three years, according to the chairman.
Private investment is needed after those three years.
National Treasury also disclosed in the Budget Review that from 2022 to 2023, Eskom generated a loss of R24 billion.
The state-owned entity (SOE) also continued to rely on government support for liquidity.
“The electricity, gas and water sector contracted by 5.4% in the first nine months of 2023 compared with the same period in 2022, mainly due to Eskom constraints,” Treasury said.
Government acknowledged that the “financial sustainability of Eskom is compromised by poor generating performance, declining sales, the utility’s increasing primary energy costs, escalating municipal arrears debt and high debt-service costs”.
“Eskom’s operational performance has deteriorated significantly over the years. The power system remains unpredictable and unreliable, with power cuts expected to continue until the capacity shortage of 4,000MW to 6,000MW is addressed,” Treasury added.
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