Registered users can save articles to their personal articles list. Login here or sign up here
 
  1 COMMENT

  It is only fair that you move them over to the bigger power plants and give them a share in some of the trucking that is outsourced to the Zuptas. Why should the Zuptas have all the tenders. The indep...  

 Registered users can save articles to their personal articles list. Login here or sign up here

Coal trucks block Pretoria in power-accord feud

Eskom won’t renew contracts due to country’s power surplus.

Coal-truck drivers brought traffic to a standstill on roads surrounding South Africa’s capital on Wednesday as the state-owned power utility said it won’t renew their contracts because of an electricity surplus.

Truck drivers whose employers are members of the Coal Transportation Forum used their vehicles to blockade the main roads entering Pretoria, Talk Radio 702 reported. The blockade disrupted business in the city, with the nation’s Competition Tribunal canceling hearings because of the congestion, it said in an emailed response to questions. The protesters didn’t obtain permission for the stoppage, Mayor Solly Msimanga said on his Twitter account. 

Eskom Holdings, which supplies about 90% of the country’s power, won’t renew agreements with 48 transport companies because weak demand, slow economic growth and the introduction of renewable energy supply from independent producers has resulted in a 3 million metric-ton coal surplus, acting chief executive officer Matshela Koko told a Johannesburg-based broadcaster. The company will be closing its Camden, Grootvlei, Hendrina and Kriel coal-fired plants by end-March 2020, resulting in as many as 20 000 job losses, he said.

The trucking companies say the decision is “having a direct impact on their operation,” Eskom spokesman Khulu Phasiwe said in an interview on Johannesburg-based eNCA television. “They’re saying to us ‘Why do you sign these contracts for these renewables at a pace which is essentially going to drive us out of business?”’

Eskom uses coal to generate more than 90% of its supply to Africa’s most-industrialised economy. President Jacob Zuma said last month that the company must sign agreements to buy power from private producers, which the utility had stalled. The company said it no longer requires additional renewable energy, arguing that it’s expensive, isn’t always available during peak demand periods and will push up prices for consumers.

About 40 million tons of coal is delivered by truck from mines to power stations, a figure that will drop to 30 million tons by 2021, Phasiwe said by phone. Eskom uses about 120 million tons of the fuel a year.

‘Unintended Consequences’

“The Coal Transportation Forum wants the government to protect the jobs in the mining and related industries,” it said in an e-mailed statement. “The IPP programme must be slowed down to reflect the current electricity surplus and the fact that electricity demand is declining. Government has to own up to the unintended consequences of the renewable IPP programme.”

The renewable-power programme has drawn R194 billion ($14.8 billion) of new infrastructure, and 2 200 megawatts have been connected to the national grid from 44 projects. Developers have been waiting for Eskom to sign offtake agreements on another 37 projects worth R58 billion that will generate 2 354 megawatts. There are also plans to get electricity from independent producers using coal and liquefied natural gas.

“We’re going to sign the renewable-energy projects,” Phasiwe said. “It’s a done deal. So the issues really are between government and the truckers as to how they’re going to resolve them. From our side, we’re implementing a government decision.”

Government Decision

The facilities Eskom intends to close are all more than four decades old. The idled Camden and Grootvlei plants were restarted in 2008 to help end a supply crisis caused by a four-year delay to the government giving Eskom permission to expand. The lack of supply curbed economic growth, caused rolling blackouts and reduced supply to the mines and smelters that produce the country’s biggest exports including gold and platinum.

The four-year transport contracts with trucking companies were issued in 2014, according to Phasiwe. At the time, South Africa was battling a supply crisis as demand eclipsed supply and subsequently implemented power cuts for about 100 days in 2015. Energy shortages have subsequently eased as new generating capacity was bought on line, maintenance backlogs were addressed and a stagnating economy curbed power demand.

“There’s not much we can do,” Phasiwe said. “They’re protesting a government decision. If government says maybe we should reduce the scale and pace in which we are signing the renewables, then that will be a new decision that we will implement.”

© 2017 Bloomberg

   One comment so far

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up here

It is only fair that you move them over to the bigger power plants and give them a share in some of the trucking that is outsourced to the Zuptas. Why should the Zuptas have all the tenders. The independant truckers should rather request an investigation into who was given the tenders to do the trucking for the bigger power plants.

Latest Currencies

ZAR / USD
ZAR / GBP
ZAR / Euro

SEARCH CLICK A COMPANY
Enter company name or share code:

Podcasts

Moneyweb Investor Issue 22

Radical economic transformation can only be enabled by growth, and growth by saving. This month's issue of The Moneyweb Investor is packed with useful information for investors – from understanding share buybacks to a ranking of online stockbrokers.
server: 172.16.0.12