SA to kickstart second state-owned energy company with plan to convert coal-fired plants

Gwede Mantashe, mines and energy minister, South Africa

THE South African government plans to convert three coal-fired power plants into gas-burning generators, a development that Bloomberg News said today was the first step in the creation of a new state-owned energy company.

Citing comments in an interview with mines and energy minister, Gwede Mantashe the newswire said the government intended to take over the ageing Hendrina, Grootvlei and Camden power plants which have 4,800MW in capacity.

“If we re-purpose them into gas power stations, we will save a lot of life in South Africa in terms of energy,” Mantashe told the newswire, adding that it was “urgent” to create the company. He told Bloomberg that the ministry planned to invite engineering firms to study the plants and offer advice.

The idea was slammed by South Africa’s shadow minister for public enterprises Ghaleb Cachalia who said the idea of setting up a new power utility “proves beyond any doubt that President Cyril Ramaphosa’s government is completely out of touch and clueless on what needs to be done to address the electricity crisis”.

Almost a third of Eskom’s plants will reach end-of-life as early as 2023. To replace the plants and add capacity needed to meet rising demand will take years and cost more than one trillion rand ($71bn), said Bloomberg News citing government estimates.

Procuring inexpensive gas for the converted plants may prove to be a challenge, it added. Russia’s war on Ukraine has countries across the world scrambling for the fuel, with Europe even considering rationing. US natural gas futures, which have more than doubled this year, said Bloomberg News.

“Money follows ideas,” Mantashe said. “If you come up with a sustainable proposal, and it makes sense, investors will come.”