Eskom – Centre Stage, Yet Under Pressure To Empower NDP Goals

Parastatal organisations, as organs of the State and custodians of the various National Development Plan (NDP) Strategic Integrated Projects (SIPs), have a duty to lead by example in ensuring that; not only does sustainable social and economic development take place, but also to ensure their continued financial viability and compliance with the laws of the... Read more »

Parastatal organisations, as organs of the State and custodians of the various National Development Plan (NDP) Strategic Integrated Projects (SIPs), have a duty to lead by example in ensuring that; not only does sustainable social and economic development take place, but also to ensure their continued financial viability and compliance with the laws of the land.

It is no coincidence then, that Eskom is a central figure in achieving the objectives of the NDP and related SIPs and, I suppose, the bigger question is – are we seeing sufficient commitment from Eskom to its custodian duty?

Holistically, according to Eskom Holdings (SOC) Limited, the parastatal supplies in excess of 95% of South Africa’s electricity, and 40% of what is required in Africa.  However, Eskom’s coal demand as at 2012 was of the order of 130mtpa – according to the utility’s Primary Energy Division – and this figure is set to grow by no less than 20% in the short term to 2020, where demand is expected to increase to a total of 4100m tonnes by 2050.

If we consider then that as of 2013, the total uncontracted quantity of coal was of 2100m tonnes, we can recognise that these are already classified as ‘at risk’ volumes, especially since Eskom must now compete in the global coal markets – particularly India and China – for South African ‘C-Grade’ coal.

There are, however, various strategies that Eskom may employ to secure the ‘at risk’ volumes, and key amongst them may be development of black emerging miners to dilute the power of existing suppliers and promote black economic empowerment in mining.

Others include sourcing coal from the Waterberg region in Limpopo, that will be further facilitated by rail and water supply infrastructure in this area; establishing an integrated coal transport logistics network – that may be underpinned by certified coal fines conglomeration technologies, coal handling and rapid loading hubs at strategically located points within the network; a resource development fund – in which Eskom will partner with development finance institutions, such as the IDC, NEF and DBSA, as well as the private 
sector – to secure coal volumes; and the migration of coal transport from 
road to rail.

Looking at the bigger picture – and based on Eskom’s own future demand forecasts to 2018 – the required new capacity relating to thermal coal expansion projects is between 100mtpa and 130mtpa. Even in the short term, it has become critical for Eskom to implement clear and effective strategies that will see the parastatal secure the needed ‘at risk’ volumes of coal, if it is to see its custodian duty through in support of achieving the goals of the NDP.

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