Eskom in R1bn gas investment as Zesa struggles

HARARE - While Zimbabwe’s power utility Zesa Holdings (Zesa) is floundering and increasingly struggling to meet electricity demand, South Africa’s Eskom intends on investing R1 billion on diversifying its energy mix.

Eskom said the massive capital — targeted at underground coal gasification (UCG) research projects — will be released over the next five years.

The State-owned Zesa faces a myriad of challenges including antiquated equipment, a nearly $1 billion debt and consumer bills payment default. It is battling to supply ample electricity to both domestic and commercial consumers.

Its five power stations are currently producing approximately 1 200 megawatts (MW) against peak demand of 2 200 MW, covering the deficit by importing.

Recently, Zesa said it was failing to pay for electricity imports and maintain its power stations due to increasing consumer default.

In April, government formed a company solely responsible for electricity transmission, the National Grid Services Company, as part of the unbundling exercise of the troubled parastatal.

However, analysts say Zesa — focused on hydro and thermal energy — has no current capacity to invest in alternative power sources.

Christopher Mugaga, an independent economist, said: “While energy diversification is a noble move, Zesa has no capacity at the moment to venture into either coal gasification or solar harvesting.”

“Although Zesa is intending to restructure and privatise, the challenge is in finding an investor who is willing to shoulder the company’s debt.

 “We all know that a lot of people haven’t been paying their bills and this is likely to impact negatively on attracting investors,” he said.

UCG is a mining method of converting in-situ coal reserves into gas, which Eskom plans to use as a feedstock for power stations, the publication reported.

The technology, according to Eskom, could more than double the current recoverable coal reserves and has huge potential to produce economic, social and environmental returns.

Steve Lennon, Eskom group executive of sustainability said the parastatal had been looking at UCG for over a decade.

“What we’ve seen as we’ve undertaken this research is that UCG has great potential in South Africa in several areas,” he was quoted to have said.

“It will allow us to open up coal reserves that are not currently mineable,” Lennon said.

Sasol New Energy and Eskom have signed a research agreement to jointly explore the full value chain of UCG technology development, the State-run firm announced on Monday.

Eskom generates approximately 95 percent of the electricity used in South Africa and approximately 45 percent of the electricity used in Africa.

There is a growing role for gas in the country, given the deficit in access to electricity, Eskom CEO Brian Dames said in March.

“Gas infrastructure is also cost-effective and quick to construct, and so we see gas, both natural and unconventional gas, as a potential game-changer for South Africa and for the region, in terms of providing a cleaner energy mix going forward.” — Eric Chiriga with Fin24

Comments (1)

we ave enormous coal reserves. Hwange, guruve, Mwenesi, and other areas. We also have coal bed methane in huge reserves ....... buta poverty stricken government led by zanupf.....while the diamond diggers become billionaires and put their cash outside the country

wordwriter - 2 July 2013

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