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Projects and Energy Weekly Snippets

10 July 2017

South Africa

Weekly projects and energy updates in South Africa

Eskom urged to be less secretive with its operating data

Eskom came under criticism at the National Energy Regulator (NERSA) subcommittee hearings for attempting to keep some of its operating data secret.

This especially related to the utility’s coal costs that were overshadowed by its dealings with the Gupta family.

This comes amid widespread criticism of the parastatal for recently submitting a one-year revenue application for 2018-19 that seeks permission from NERSA to deviate from the multiyear price determination (MYPD) methodology and minimum information requirements used for tariff applications.

Business Day, 10 July 2017

Eskom has over recovered ZAR7.6bn in renewables-related costs since 2014

The affordability of South Africa’s growing fleet of renewable energy plants has been questioned on several occasions by Eskom and Public Enterprises Minister Lynne Brown also weighed in recently, telling Parliamentarians in late June that, while electricity arising from the renewables plants was costing Eskom ZAR2.14/kWh, the utility was only able to charge consumers ZAR0.84/kWh.

However, new analysis into the impact of renewables on Eskom’s financial position shows that the state-owned utility is, in fact, benefiting both financially and operationally from the power stations that have been brought into commercial operation as a result of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP).

Engineering News, 7 July 2017

Eskom reserves boosted as Medupi and Kusile units plug in

Half of Medupi power station is operational and a third of Kusile station is adding electricity to Eskom’s total generating capacity, the utility says.

The five additional generating units at the power stations add to Eskom’s reserve margin of about 20%. The two power stations will deliver a combined 9600 MW of power when completed in 2022. The two coal-fired power stations would cost an estimated ZAR310 billion when complete, Eskom said.

Business Day, 7 July 2017

Civil society, business speak out against Eskom for MYPD noncompliance

Eskom has requested a “blanket condonation” from NERSA to deviate from the MYPD methodology.

The amended NERSA rules require greater operational transparency from Eskom, including transparency with regard to its coal-burning operations.

However, Eskom on Friday reiterated that it would be unable to meet certain requirements of the MYPD methodology, as well as certain minimum information requirements for tariff applications.

Engineering News, 7 July 2017 

Eskom secures US$1.5bn loan from China

Eskom signed a US$1.5 billion (ZAR19.6 billion) loan agreement with China Development Bank on Thursday, to partly finance its Medupi coal power plant, acting CE Johnny Dladla said on Thursday.

The loan is the second tranche of a US$5 billion funding facility Eskom is seeking, after signing a US$500 million credit facility with China Development Bank in 2016.

Business Day, 6 July 2017

Agri SA says will not support fracking as set out under current legislation

Addressing media at a briefing in Centurion, on Wednesday, Agri SA president Johannes Möller said there were still uncertainties with respect to water supply and contamination issues associated with shale gas development, as well as infrastructure and landscape concerns.

“Agri SA remains committed to assisting government in ensuring the economic development of South Africa; however, given South Africa’s precarious water position and the threat to food security, Agri SA maintains that this endeavour in South Africa must be approached with the utmost caution,” he said.

Exploration for shale gas in the Karoo has raised concerns among many industry bodies and nongovernmental organisations regarding environmental damage weighed against the potential economic benefits.

Engineering News, 5 July 2017

Congo's Inga 3 hydro project start-up delayed until 2024/25 – Government

Democratic Republic of Congo said late on Monday that its Inga 3 hydroelectric project is not expected to begin producing power until 2024 or 2025, not 2020 or 2021 as originally planned.

The US$14 billion, 4800 MW project has struggled to attract financing and was dealt another blow last year when the World Bank said it had suspended funding after the presidency took control of the project, raising transparency concerns.

Last month, Congo asked the final bidders - one consortium led by China Three Gorges Corporation and another that includes Spain's ACS (Actividades de Construccion y Servicios SA) - to submit a joint bid.ga 3 hydro project start-up delayed until 2024/25.

Engineering News, 4 July 2017

Metair acquires 25.1% of German battery manufacturer in ZAR111m deal

The JSE-listed Metair group has acquired a 25.1% shareholding in Germany-based battery manufacturer and supplier, Akkumulatorenfabrik Moll (Moll), at a cash price of €7.425 million (ZAR111.4 million).

Metair is a global manufacturer, distributor and retailer of energy storage solutions and automotive components.

This investment in Moll is in line with Metair’s globalisation strategy, said the company in a statement released on Tuesday.

Engineering News, 4 July 2017

The above reflects a summary of certain news articles published during the preceding week. It is not an expression of opinion in respect of each matter, nor may it be considered as a disclosure of advice by any employee of Hogan Lovells.

For more information contact Charles MaraisPhilip van Rensburg or Mzimasi Mabokwe.

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