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BUSINESS NEWS
Private power on the grid?
Posted Wed, 06 Feb 2008
Eskom and government should consider all options to make it
economically viable for companies already producing their own power to
increase output and assist with electricity supply problems, Sappi said
on Tuesday.
In a statement, South African Pulp and Paper Industries (Sappi) said
the ongoing national energy crisis had "far-reaching" long term effects
on the economy and could have an impact on overseas investor
confidence.
Chief executive Ralph Boettger said: "Independent electricity
generation is already taking place at companies such as Sappi who are
then able to feed the grid.
"Incentives to make additional generation economically viable could
be given to them in order to stabilise the energy supply"
Boettger said Sappi was generating almost 50 percent of the
electricity it used as a company.
"In some cases we have mills that are able to produce over 100
percent of their own electricity requirement," he said.
He said
not all industries would be in a position to follow Sappi's
example, but those that did were able to lessen the load on the
national grid and continue production even if limited.
"The pulp and paper process produces significant amounts of energy
and for some years now at Sappi, we have been selling power back to
Eskom, albeit on a limited basis," he said.
Subsidies by government to companies to increase their power
production capabilities, though not completely resolving the current
crisis, would reduce the load on Eskom, said Boettger.
He said economically the power outages would affect production and
in turn lead to a reduction in profits and a reduction in taxes being
paid to the government.
"The R20-billion kitty currently held by the treasury will quickly
be depleted when massive reductions in tax revenues take effect," Sappi
said.
The company said subsidising or privatisation could contribute to
economic growth far more
substantially than Eskom and could alleviate a
situation that Eskom has admitted could not be rectified before 2015.
"Presently Eskom reports to the department of public enterprises,
while the electricity policy is determined by the department of
minerals and energy.
"This constellation is widely considered as ineffective and not
conducive to dealing with the present crisis," Sappi said.
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