Minister Brown flags job loss risk at Eskom

08 March 2017 - 17:57 By Bianca Capazorio
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Eskom was allowed to increase the price of electricity by 440% between 2008 and 2016-17.
Eskom was allowed to increase the price of electricity by 440% between 2008 and 2016-17.
Image: MARK WESSELS

About 6‚000 jobs could be lost if Eskom closes down its four aging coal power stations‚ says Public Enterprises Minister Lynne Brown.

Brown‚ briefing Parliament's portfolio committee on public enterprises on the performance of state-owned entities‚ said the power utility had posted a R4.6 billion profit‚ but faced some challenges‚ particularly as the country continues to generate excess electricity capacity and moves towards greener energy.

Brown said policy decisions such as the independent power producers programme - in which Eskom is obliged to buy power from small producers at a much bigger cost than coal generation - had the ability to "crash the Eskom balance sheet" within the next 20 years.

She said that Eskom currently spent around 35 cents to create one kilowatt of energy from its coal stations‚ and had committed to paying R2.05 per kilowatt in the first bid window for independent power producers.

In addition to costing more‚ IPP agreements would also contribute to excess capacity.

Brown said Eskom was already generating excess capacity of around 4000 MW on "any given day" and "take or pay agreements" with IPPs committed government to pay for energy even when it wasn't necessary‚ as is currently the case.

"As we have greener energy we are going to have to close down coal plants‚ which is high carbon fossil fuels. But at any one plant‚ there are about 1‚500 people working‚ so if you close down a plant‚ you must know we will lose jobs in the process."

She said the process needed to be properly managed to ensure that workers were re-skilled.

"We need to look at areas of re-skilling and know the time frames we are working in; 1‚500 workers times the ten mouths that they feed means that 15‚000 people will be affected."

The older plants "chug harder"‚ creating a bigger carbon footprint.

Brown said Eskom's environmental compliance obligations‚ which are estimated to cost R340 billion‚ would have an impact on the cost consumers pay for electricity.

Eskom's emission reduction plan is already budgeted to cost R8 billion in the current multi-year price determination despite most of the costs actually being deferred until the National Energy Regulator (Nersa) determines the next multi-year price increases in 2018.

Questioned why there was a need for nuclear energy if Eskom was concerned about excess generation of power‚ Brown said: "We will have an excess until 2025‚ and we believe that the economy will then pick up and beyond that‚ we will need more energy."

The Congress of South African Trade Unions on Tuesday said an Eskom board decision to shut down five power stations — which it named as Hendrina‚ Kriel‚ Komati‚ Grootvlei and Camden — was "not just an arrogant decision‚ but a hostile act of provocation directed at workers and their unions".

Sizwe Pamla‚ Cosatu’s national spokesperson‚ said the union federation would seek a meeting with Eskom and government to discuss the “unacceptable decision“.

He lashed out‚ saying: “It appears that Eskom makes decisions with no vision‚ no planning‚ and no care about consequences“.

“If we have surplus electricity then we must cancel nuclear‚ reduce prices‚ export more to Africa and invest in building electric cars.”

Cosatu said it agreed with the National Union of Mineworkers that South Africa’s climate change obligations to introduce renewable energy into the electricity grid should not result in back door privatisation and further commercialisation of the Eskom.

“Eskom and government should suspend their plan to shut down the power stations until a just transition-solution is arrived at by all affected stakeholders.”

Pamla said while Cosatu was not hostile to the introduction of independent power producers by Eskom‚ “we refuse to allow this decision to be distorted and used to retrench thousands of workers“.

“The process of implementing an energy mix should be gradual and should not result in immediate job losses.”

According to the Treasury‚ as of March 2017 exposure to IPPs amounted to R125.8 billion‚ which represents huge liability and transfer from the fiscus to the IPPs‚ Cosatu stated.

“IPPs are private companies and they should be required to create jobs‚ transfer technology and skills to workers that are employed in the fossil fuels sector in particular in the petroleum and coal sectors.”

On March 1‚ truckers caused peak-hour traffic mayhem in and around the capital Pretoria during a demonstration over an announcement by President Jacob Zuma during the State of the Nation address that power utility Eskom would sign power purchase agreements with Independent Power Producers who use renewable energy.

The Coal Transportation Forum‚ an organisation of truck owners‚ said this would effectively take them out of business‚ result in job losses‚ the closure of power stations and coal mines‚ which would turn Limpopo and Mpumalanga provinces — whose lifeline is coal — into ghost areas. Their key message in a memorandum handed over at the Union Buildings was that government should avert the imminent loss of up to 30‚000 jobs and that no mine or power station should be closed due to the contracting of IPPs.

- TMG Digital and TMG Parliamentary Bureau

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