Cape Town – The Department of Energy is trying to perform a balancing act between signing agreements with independent power producers (IPPs) and addressing Eskom’s affordability concerns.
Speaking to journalists at a media briefing following her department’s budget vote, Energy Minister Mmamoloko Kubayi on Friday said a report would be made public in the first week of June on how government will continue with the IPP programme.
A task team comprising officials from the Departments of Energy and Public Enterprises is currently considering the programme's funding model and operational challenges.
Kubayi stressed that government is committed to the IPP programme, but her department and Eskom have “disagreements” about it that need to be ironed out before agreements can be signed.
Eskom has been delaying the signing of agreements with IPPs for almost two years over concerns that costs are too high and that it doesn't need additional power because of a surplus of supply.
Kubayi in April also put the signing of IPP agreements on the backburner, pending the outcome of the task team's findings.
Earlier in her budget speech, Kubayi announced that the IPP programme will soon resort under the Central Energy Fund (CEF), which will be restructured to overcome governance problems.
“The future of the IPPs lie within the CEF,” she told journalists later. “We want to ensure that the IPPs have a sustainable governance model and the CEF can assist with managing the investment process.”
Kubayi said her department cannot ignore Eskom’s concerns about the affordability of IPPs. “We must be speaking with one voice. Eskom has concerns about the IPPs’ pricing model. Although we want the IPP programme to succeed, Eskom needs to be sustainable as well.”
IPP and nuclear energy - no either or
The minister emphasised that she does not intend to promote nuclear energy at the expense of the IPP programme.
“The department is committed to an energy mix,” she said, “and nuclear energy and the IPP programme have a role to play. In the same way we are reviewing the nuclear programme, we are reviewing the IPPs. Is it meeting its objectives? What are the lessons we can take forward?”
Asked about the risk of an over-supply of energy, Kubayi said her department is concerned about the security of energy supply well into the future.
“We may not build nuclear power stations for today, but we need to respond to projections for the future. We don’t want to end up with load shedding again and the context of our work is therefore also to prepare for the future.”Read Fin24's top stories trending on Twitter: Fin24’s top stories