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Eskom’s $4.7bn renewable energy deals blocked by court order

EBR Staff Writer Published 13 March 2018

A South African court has prevented Eskom from signing $4.7bn worth renewable energy deals with independent power producers.

After a recent announcement from South African Energy Minister Jeff Radebe, the state-owned power utility was scheduled to sign 27 contracts with private renewable energy producers on 13 March, 2018, reported Reuters.

Its efforts to bring in renewable energy supply into the scheme of things were opposed by the National Union of Metalworkers of South Africa (NUMSA) and Transform RSA, which took the legal route to prevent the contracts from being signed.

NUMSA claimed that the contracts will result in lowered demand for coal-based electricity. This, in turn will lead to job losses, particularly in the coal-rich province of Mpumalanga as per the union.

The union has also claimed that the deals would negatively impact the South African economy as it believes that renewable power costs are higher than coal-based electricity.

NUMSA was quoted by TimesLIVE as saying : "Numsa believes that the signing of these contracts would be detrimental for the working class of Mpumalanga and the country as a whole.

“The signing of the IPP means that Eskom will require less coal-fired electricity. This is likely to lead to the closure of the coal fired power plants and the impact will be that at least 30 thousand working class families will suffer because of job losses.”

The matter will be taken up by the North Gauteng High Court on 27 March, 2018, which will decide the fate of the renewable energy contracts.

Eskom covers most of the electricity requirements in the country, mainly through its coal-based power plants.

In December last year, Eskom announced that the Unit 4 of 794MW capacity at the 4.8GW coal-fired Medupi Power Station in South Africa, has entered into commercial operations and linked to the national grid.

Construction of the Medupi power station began in May 2007 and had been plagued by strikes, technical issues and cost overruns which had pushed the project completion date by seven years to 2019.

Image: Eskom had planned to sign $4.7bn worth renewable energy deals on 13 March, 2018. Photo: courtesy of 2nix/Freedigitalphotos.net.