- Murray & Roberts' power business has faced a challenging working environment.
- Company CEO Henry Laas says the unit is struggling to keep its head above water.
- Renewable energy opportunities within the mining sector might provide relief to the business.
Murray & Roberts is hopeful that the recent reforms in the country's energy sector will boost its loss-making power business, following the government announcement to increase private participation in the generation of electricity.
The engineering and mining company said its power business platform had no significant projects in the short term and new sizeable project awards within the next six-month period were limited. However, some green shoots were starting to emerge in the form of the Renewable Energy Independent Power Producers Procurement Programme (REIPPP) and self-generation projects are in the pipeline for some of the country's intensive electricity users.
"The REIPP Window 5 opens opportunities for participation," said Steve Harrison, the company's head for Power, Industrial and Water platform.
"We are likely to see awards and revenue generation within the next 9 to 12 months".
In March, the Department of Mineral Resources and Energy opened Bid Window 5 of the REIPPP, which will procure a further 2 600 MW of renewable energy from independent power producers (IPPs).
As part of shoring up its business, Murray & Roberts is bidding for some Eskom tenders, but it describes the process as slow.
"I would hope that some of those awards happened sooner than later, but they are currently under adjudication," Harrison said in a presentation to investors.
With an order book of R0.4 billion, which company CEO Henry Laas described as not enough to "support a sustainable business", opportunities in the renewable sector may be the he much-needed panacea to the business out of the doldrums.
"It is currently a loss-making business, the opportunities are there but the timing of these opportunities are uncertain," said Laas.
Figures provided by the company showed that its order book in 2016 stood at R6.7 billion, and at current levels, Laas said the business was trying hard to keep its head above water under challenging conditions.
While the power platform struggled, the Energy, Resources and Infrastructure and the Mining platforms were described as the "engines driving profitability" for the company.
Murray & Roberts' participation in the power sector will extend to development projects with consortiums or development partners to supply power to private users on long-term power-purchasing agreements, as well as secure engineering, procurement and construction.
The renewable energy generation projects planned by mining companies in a bid to reduce their reliance on Eskom's unstable power supply presents another growth prospect for the company, with the Minerals Council of South Africa indicating that there was potentially R27 billion that miners could invest to power generation projects to procure 1.6 GW of power.
Companies such as Harmony, Anglo American Platinum and Gold Fields having outlined their renewable energy plans for the future.
In May, Gold Fields said its board had approved the R660 million construction of a 40 MW solar plant at the firm's South Deep gold mine, after it was granted a licence by the National Energy Regulator of South Africa in February.
Following the government's announcement this month of increasing the threshold for the exemption of licences for energy self-generation by companies to 100 MW, Gold Fields said it could potentially expand the plant's capacity to 70 MW, with further expansion possible on other identified sites.
AngloPlat's pilot projects include our a planned 75 MW solar PV project at its open-pit Mogalakwena mine in Limpopo.
"The appointment of a developer will be approved internally in September and we plan for the plant to be operational by the second quarter of 2023, subject to the required approvals and project development schedules," according to the company.
Gold producer Harmony also intends to source push renewable energy and significantly reduce its reliance on Eskom by 2030. The process will see it acquire 30 MW of solar energy and eventually ramp up to 100 MW, with a phased construction of a solar plant expected to start this year.
The company's alternative energy project would also include other renewable sources. The solar projects would reduce the dependance on electricity generated power by 4%. Eskom still controls the largest share of the country's power generation.