Report that Eskom doesn't want Karpowership deal 'pure speculation' says govt
Eskom does not want to buy electricity from Turkey's Karpowership, according to a report by report by Bloomberg.
The company won the bulk of a government emergency power tender.
Bloomberg quotes two "insiders" as saying Eskom is concerned about the cost and the length of the 20-year deal.
The contract was negotiated by the Department of Mineral Resources and Energy.
"The reason why Eskom doesn't want to buy this electricity I would suggest, is because Eskom's not stupid" comments Bruce Whitfield.
The whole issue of the Karpowerships is a red herring, responds energy analyst Clyde Mallinson on The Money Show.
The quest for proposals to procure this power was done in a fashion that was not optimal and it didn't allow for full use of the grid system. This meant that the people bidding had a whole lot of restrictions... and the bids are all more expensive than they need be.Clyde Mallinson, Energy analyst
It's not just the ships, it's the whole process which is flawed and poorly designed.Clyde Mallinson, Energy analyst
Were the Karpowerships the best option then, in view of this flawed process?
They are competitive based on the rules that were made Mallinson says, "which makes one ponder why the rules were made as they were".
People participating in this programme weren't allowed to make use of the existing grid assets. It was like saying: I want you to drive from Joburg to Cape Town... but you're only allowed to go on dirt roads, you're not allowed to use the national network of tarred roads.Clyde Mallinson, Energy analyst
Another analogy from Mallinson points to the deal's shortcomings:
Eskom are being asked to buy ten units at R1.58 per unit. They actually need 30 units, in other words ten units isn't enough blood to get our system up and running again... They could buy 30 pints at 60c a pint or ten pints at R1.58 a pint. Which would you prefer?!Clyde Mallinson, Energy analyst
If you bought those 30 units instead of the ten at more or less a third of the price, ten of those 30 units would meet all of the stringent requirements of the plan that they set forth!Clyde Mallinson, Energy analyst
The system is desperate for an injection of new energy but the Karpowerships won't inject as much as is needed says Mallinson.
And that at three times the price South Africa could have got it for.
The numbers are staggering. With just the Karpowerships Eskom are essentially committing to paying abut R14 billion a year for 20 years!Clyde Mallinson, Energy analyst
[Signing up] is irresponsible and irrational.Clyde Mallinson, Energy analyst
Approached by CapeTalk for comment, the Department of Mineral Resources and Energy dismissed the Bloomberg report as "pure speculation".
Listen to Mallinson's argument on The Money Show:
This article first appeared on CapeTalk : Report that Eskom doesn't want Karpowership deal 'pure speculation' says govt
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