President Cyril Ramaphosa told parliament today that the severe operational and financial challenges that are currently being experienced by Eskom are not caused by the Independent Power Producer (IPP) programme and in particular, the renewable energy projects.
Ramaphosa was responding to a question by EFF leader Julius Malema on what the total cost is to the power utility of the IPPs that signed the latest round of power purchasing agreements (PPAs) with Eskom and, secondly, whether it has been found that the PPAs will collapse the power utility if not cancelled immediately. The president said Eskom’s challenges have been driven by a number of factors, which include massive costs and time overruns on the new build programmes of power stations.
Ramaphosa said the effects of state capture and corruption also contributed to these cost overruns. “The collapse and weakening of governance structures at Eskom also had an impact and unsustainable debt levels that Eskom accumulated,” Ramaphosa said.
The maintenance of Eskom’s current plants is another problem, with the age of some of these plants a concern. “On average, some of the plants are 37 years old.
The IPPs are investing their own debt and equity to construct the projects they are awarded,” Ramaphosa said.