Minister of Electricity Kgosientsho Ramokgopa says they are working with the National Transmission Company of South Africa on the funding options for the expansion of transmission lines, but there was appetite in the private sector to invest in the grid expansion project.
Ramokgopa said they will need R390 billion to finance grid expansion and the model of private sector funding was not new to South Africa and some countries in the world have gone the same route.
Eskom has done an analysis on grid expansion cost and indicated they will need to expand it by 14,000km in the next 10 years. In the last 10 years Eskom expanded transmission lines by 4,000km and this will not be sufficient to meet the demand.
Ramokgopa said they have agreed that they will need to prioritise the Eastern Cape, Western Cape and Northern Cape when they expand the grid because there was lack of grid capacity in these provinces.
Renewable energy projects in these coastal provinces could not be connected to the grid because of lack of grid capacity.
Ramokgopa, who was part of Ministers in the Economics Cluster answering questions in Parliament on Wednesday, said Eskom and the fiscus would not fund the expansion of the grid.
“On account of Eskom, having done an analysis of transmission requirements on the back of the transmission development plan they have arrived at the determination that we will need to modernise and expand transmission by 14,000km in the next 10 years,” Ramokgopa said. “To put that into context in the past 10 years we expanded it by 4,000km. We will require something in the order of magnitude of R390bn.
“What we are trying to do working with the National Transmission Company of South Africa is to resolve that conundrum. We want to address two things. First, there is access to private sector liquidity because we do accept that it’s going to be off-balance sheet financing, you don’t need corporate financing because the balance sheet of Eskom has deteriorated and the fiscal matrix has deteriorated. You are going to do that without relinquishing ownership of the grid. Those interventions should not result in elevated tariff levels,” said Ramokgopa.
He said when coal-fired power stations were constructed they were concentrated in the north and eastern part of South Africa.
That led to the concentration of the grid in that part of the country.
Ramokgopa said they have already had discussions with the private sector and the Johannesburg Stock Exchange on the expansion of the grid.
But the board of the National Transmission of Company of SA was discussing funding options for the project and once that was done that will be reported back to the nation.
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