Eskom CEO says he wasn't aware Mantashe would announce idea for new power generation entity

Eskom's CEO Andre de Ruyter says he was not informed in advance that Minister of Mineral Resources and Energy Gwede Mantashe would on Monday announce that government hoped to create a new power generation entity distinct from Eskom.

De Ruyter on Tuesday spoke to journalist Ferial Haffajee of the Daily Maverick for a webinar. 

Mantashe made the announcement during the first day of the African Mining Indaba in Cape Town. He told reporters during a briefing that he had invited investors to either partner with the government or invest on their own in the creation of an alternative power generation entity.

"By this time next year we hope we can say we have a site for energy generation outside of Eskom. We want people to sell energy through transmission. We want to take the pressure off of Eskom," he said. 

"We were not aware in advance of plans for another state-owned generation company," said De Ruyter, when asked by Haffajee whether the minister's statement took him by surprise.

"We are in principle not averse to anyone else investing in electricity generation. It is clear that the country will benefit from those investments and it will give rise to increased competition and therefor efficiency in electricity generation."

De Ruyter told Haffajee that Eskom was currently studying the minister's statement.

"We obviously need to understand the extent to which this statement indicates a change in government policy," he said. The CEO said Eskom still needed to discuss what the minister was reported to have said "in some detail" with the government and the department of public enterprises.

Attendees at the mining indaba had hoped that Mantashe would go into more detail about the scope of the proposed new generation entity on Tuesday afternoon during a panel discussion, but the event was cancelled.

The minister did not provide much detail about the new entity on Monday. Asked by reporters for more information, Mantashe said the entity would depend, in part, "on the appetite of investors". Industry should be able “to buy power from other sources,” he said. “We want to take the pressure out of Eskom.”

  • Other takeaways
  • De Ruyter told Haffajee that for the next 18 months there would be an increased likelihood of load shedding as Eskom undertook maintenance. 
  • He said that, relative to world electricity prices, SA's electricity is not 'wildly overpriced". Quoting 2018 figures, he said Eskom produced electricity at around 9 US cents per kilowatt hour (kWh), compared to 33 c/kWh in Germany.  
  • He said that while Eskom was committed to reducing its carbon footprint over time, this cannot happen overnight.  
  • Asked about how his family experiences load shedding, De Ruyter said "we take our pain like any other South African family," using candles and rechargeable lights when the power goes off.  

- Additional reporting by Khulekani Magubane 

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