South Africa’s Chamber of Mines is calling for a new electricity dispensation for the country and a prospective Botswana-based independent power producer (IPP) is already working directly with the South African government and bypassing the troubled State-owned power utility, Eskom.

“Something quite fundamental needs to be done, one ensuring that Eskom does not remain both the player and the referee,” Chamber of Mines CE Zoli Diliza tells Mining Weekly.

Simultaneously, the TSX- and Botswana-listed CIC Energy says that South Africa’s new electricity regulations on generation capacity 
published in August provide for South Africa’s Energy Minister – and not the State-owned Eskom – to determine what buyers will pay when entering into power purchase agreements with IPPs.

CIC is engaged in the advancement of Botswana’s Mmamabula energy complex, where a thermal power station project, an 
export coal project and a potential coal-to-hydrocarbons project are planned.

Diliza says that Eskom’s proposed electricity tariff increase of 45% a year for the next three years is unacceptable to the South African mining industry and says that the chamber is willing to 
engage with government and with Eskom to arrive at new solutions.

He adds that it is imperative for the South African mining industry to have access to an “effective and reliable electricity supply” in order to allow it to continue to create wealth and to provide job opportunities.

“Currently, what we see and hear about what is happening within Eskom is unacceptable, and the 45% tariff increase each year, for the next three years, is something that is exorbitant.

“We are quite willing, as the industry, to engage with government and Eskom to find ways that can look at how best the issues can be mediated. We’ve done it already with the supply of coal, and there is more that we can do,” Diliza adds.

He queries whether the Eskom model remains the panacea for all the country’s power needs and suggests that not enough is being done to facilitate the emergence of alternative sources of energy supply, in the form of IPPs and cogenerators.

He warns that IPP investment is unlikely while the status quo persists.

He urges that government considers the possibility of separating the transmission of electricity from the generation of electricity, and advocates that an independent entity be established to manage transmission.

Demand-side management should also be dealt with by an organisation other than Eskom, which has a vested interest in electricity consumption.

Disturbed by a seeming duality 
of command at Eskom, Diliza queries the stage at which the shareholder – the State – should play a commanding role, while the board is responsible for holding executives to account.

“Without fear of contradiction”, Diliza says that he is prepared to add his voice to the guarantee that former Eskom chairperson Bobby Godsell – a former Chamber of Mines president – is not a racist, as the African National Congress Youth League alleges. “I worked with him for a number of years and I never saw any racism in the man.”

CIC Energy says that it does not believe that the current uncer-
tain leadership situation at Eskom will impact on the evaluation and approval process for its over-the-border Mmamabula energy project, in Botswana.

“We think that it is important, however, that stakeholders in the Mmamabula energy project consider these events in the context of the recently published electricity regulations on new generation capacity,” CIC Energy president Greg Kinross says.

While the practical application of the regulations is still being 
developed, the company’s understanding of them is that the South African government, and not Eskom, is now the decision-maker 
on the Mmamabula project.

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