South Africa to establish a new power generation company

South Africa’s Minister of Mineral Resources and Energy, H.E. Gwede Mantashe, announced on Monday that the government is looking to establish a new electricity generation company, which would reduce the country’s reliance on state-owned Eskom.

Eskom currently owns 95% of the electricity used in South Africa and also purchases power from independent producers of green energy. The proposed new electricity company, based on a model used in the Netherlands, could be state owned or a public-private partnership, and would utilize a range of energy sources, including gas, solar power and clean coal. The model was welcomed in principle by the government and will require the creation of a regulatory framework.

“That is what we are having in mind, the Dutch model, where you can buy electricity from Johannesburg from a generator in Cape Town. It is through the transmission, and you pay the price that you agree with the seller. We think that will push the price of electricity down,” said Minister Mantashe.

Additionally, the Minister said that government has made progress in creating a conducive environment for the mining industry, which would receive a major boost from the proposed generation company, as mining companies will be allowed to produce energy for their own use. The mining industry is working towards generating up to 1.5 gigawatts in the next three years.

“We have agreed to allow mining companies to generate energy for self-use. You will not need a license for that. You will be registered to run a head with the project,” he said.

Eskom could, at a later stage, venture into renewables and not be restricted to coal.