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Hogan passes the buck for power delay  Comments

Hogan fingers energy department

November 26, 2009

By Donwald Pressly


The minister of Public Enterprises, Barbara Hogan, yesterday blamed the ministry of energy for the delays in introducing private players in the electricity generation industry.

The government remained committed to its stated objective that at least 30 percent of new power generation should be provided by private electricity producers but it could only do so in a supportive enabling environment where long-term power purchase agreements were possible, it emerged yesterday in a reply in Parliament.

Hogan noted that there were some sticking points that could only be resolved by her sister department of energy.

Hogan was asked by DA MP Manie van Dyk whether private electricity producers would continue to supply "up to 30 percent" of the local electricity requirement and why Eskom, the state-owned enterprise, had not entered into a power purchase agreement with a particular independent electricity production company.

Hogan said: "Government has a stated objective that at least 30 percent of new power generation should be provided by private electricity producers. The new general regulations as published by the Department of Energy in August set forth the process for the integrated resource plan."

She said this had considered whether new generation would be done by the private sector or built by Eskom.

Hogan said Eskom was, indeed, keen to finalise agreements with independent power producers (IPPs) "but can only do so in a supportive enabling environment where it can be in a position to enter into long-term power purchase agreements".

Some elements of this enabling environment included the confirmation of an integrated resource plan by the Department of Energy, "which would indicate which capacity is allocated to IPPs".


It would also require approval of an appropriate cost recovery mechanisms by the National Energy Regulator of SA (Nersa) that provided an assurance to the procurer of energy - currently Eskom - and the seller (an IPP) that the costs associated with the power purchase agreement would be recoverable from the tariff for the life of the agreement.

There also needed to be a tariff agreement that clearly catered for the purchase of this power, Hogan told Van Dyk.

Bheki Khumalo, the energy spokesperson, said Minister Dipuo Peters would issue a full statement today.

Hogan said in the last financial year, Eskom did not enter into any power purchase agreements because the cost recovery mechanisms "were uncertain". Asked about the names of 23 shortlisted bidders from the private sector, Hogan said h they could not be identified "due to the confidentiality of the commercial process".

However, she noted that the 23 bidders were pre-qualified and an additional four bidders were conditionally qualified in the fourth quarter of last year.

The IPPs qualified, she reported, to participate in the procurement process for 4 500 megawatts of base load generation capacity from the private sector.

Hogan reported: "Eskom is prepared to issue the request for proposal as soon as there is clarity on the enabling environment. "Eskom is engaging with the departments of energy, public enterprises, finance and Nersa to ensure the enabling environment (issue) is resolved."
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Showing page 1 of 1 comment pages, 5 total comments
10 Weeks ago Hogan we want solutions not excuses wrote :
Hogan stop passing the buck everytime you comment about Eskom. You need to own the problem as the government, that's the only time you will jointly look for the solutions rather than dividing the team. As the public we are not interested on which part of the government is not doing what, that is not helping us, unless you want to paint yourself as the only holly person. Hogan we want solutions not excuses.
10 Weeks ago The Night Watchman. wrote :
It sure is sad when people latch on to democracy with no proper grasp of the most popular language in the world, - namely, English. This often leads to asking for what you want and then only getting exactly what you asked for: e.g. - our South African voters who badly wanted a Pre-qualified, ready-to-rule Government, and got a not-yet-qualified and still-not-qualified-to-rule political party. The real truth, of course, has revealed that, although unqualified to perform and deliver truly honourable service to the benefit of our nation, they all seem to be more than qualified enough to look after their own, very extravagant interests; and this without any regard for the welfare of the so-called, previously disadvantaged; who now qualify to be rated as the presently, by far more seriously disadvantaged than ever before. The only consolation that comes with our pre-qualified "public servants" - (like hell) - is their keen ability to blame others for minor or serious mishaps or dysfunctions: and nobody ever seems to get upset; this simply because nobody gives a damn and there are, in whatever case, never serious consequences or disciplines to face up to. So, please, Mrs Hogan, do try to keep up the good work of pacifying all your fellow service-providers in their sterling, energetic efforts to keep our entire nation and the whole world in the dark. Maybe dear Eskom will come to their rescue if things really get too tough or too light for them. Excuse Puns.
10 Weeks ago Anonymous wrote :
Its high time the grid was nationalised and becomes a state asset. In this way Eskom just becomes another service provider as would other independent power produces. Then you could decide if you wish to purchase your power from a wind farm or coal powered station etc... or switch to a company that does not lump you with their problems and 45% tariff hikes.
10 Weeks ago Graham F wrote :
This goes back 7 or 8 years when the government was told there would be an energy crisis in 2007 and did not pursue the matter. Mbeki said that no-one was to blame because a joint cabinet decision was made!!
10 Weeks ago Lennon wrote :
"Pre-qualified (definition): Qualified before they are qualified." ?!? Is that like pre-heated and pre-planning? Doesn't anybody speak English around here?
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