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Projects and Energy Weekly Snippets

28 November 2014

Fourth round in the REIPPPP delayed
The announcement of preferred bidders for the fourth round of the REIPPPP was scheduled for 24 November 2014. However, Engineering News has confirmed that the announcement has been delayed.

It is predicted that the delay is as a result of the 17 third round projects, which were also delayed due to grid connections difficulties.  The projects were initially scheduled to close on 30 July 2014, but the DoE has subsequently informed the preferred bidders that it would pursue a staggered financial-close protocol, which would possibly begin this year, but continue into 2015. The preferred bidders have been requested to extend the validity of their bids to March.

In light of the above, round four renewables bidders, who submitted project bids on 18 August 2014, were unsurprised to learn of a delay to the preferred-bidder announcement.

25 November 2014 - Engineering News

Massive profitability slump for Eskom
CEO of Eskom, Tshediso Matona, has indicated that Eskom's profit is likely to decrease to ZAR500 million for the 2014/2015 financial year compared to the ZAR7.1 billion in the 2013/2014 financial year.

Six months prior to 30 September 2014, Eskom recorded a 5.4% rise in revenue to ZAR82 billion period on period that was attributed to higher electricity tariffs, with electricity sales falling by 1.4% to 103 494 GWh. The decline was attributed to industrial action in the platinum sector, a contraction of the gold industry and the closure of the Bayside aluminium smelter.

The previous financial assistance, announced by Finance Minister Nhlanhla Nene in his Medium Term Budget Policy Statement, will help stabilise the utility short-term. Matona indicated that about ZAR23 billion in equity would flow into the utility in tranches during the 2015/16 financial year. He affirmed that although this package would assist Eskom’s cash flows in the short to medium term, the long term sustainability of Eskom would still be challenged and would require that the issue of cost reflectivity in the tariff be addressed decisively. Until it had a cost-reflective tariff Eskom would remain financially challenged.

26 November 2014 - Engineering News

"No" to electricity privatisation
On Monday 24 November 2014, ANC Secretary General Gwede Manatashe said that the ANC was not in favour of privatising the electricity sector and that doing so would cause problems.

Eskom resorted to rolling blackouts this past weekend and declared a power emergency with large industrial customers on Sunday. The utility's power supply is likely to remain "constrained for the foreseeable future". Mantashe said the ANC acknowledged there were problems at a number of state-owned companies (SOCs) and that they were trying to pay attention to that and to address the problems that were emerging within.

26 November 2014 - Engineering News

Possible delay at Medupi Unit 6
Medupi Unit 6 was schedule to begin synchronisation on 24 December 2014. However, there may be a delay due to several pre-synchronisation processes that are still required, which may postpone the milestone to the second week in January.

Eskom executive for group capital Dan Marokane says lessons being learnt on Unit 6 will change the way subsequent units at both Medupi and the 4 800 MW Kusile project are commissioned. He dismisses suggestions that there could be as much as a two-and-a-half-year interval between the commissioning of Units 6 and 5 at Medupi and indicates that it is working closely with the main contractors to assess whether Medupi Unit 5 could be synchronised 12 months after Unit 6.

26 November 2014- Engineering News

Second nuclear vendor workshop completed
On Wednesday 26 November 2014, the DoE confirmed that the second nuclear vendor parade workshop, which took place in the Drakensberg, had been concluded with representatives from China, France, South Korea and the US. In late October, the first workshop was also held in the Drakensberg with representatives from Russia and Rosatom.

The workshops involved presentations by the delegations of the four countries on their nuclear offerings and how, if selected, they would install the 9 600 MW of nuclear power envisaged in the current version of the Integrated Resource Plan. Furthermore, the vendors outlined their offerings for the full nuclear value chain, including areas such as uranium mining, conversion and enrichment, fuel fabrication, localisation and industrialisation, power generation, safety and licensing, job creation, research and development, skills transfer and development.

27 November 2014 - Engineering News

Retrenchment at Eskom
State-owned utility Eskom has requested staff to consider voluntary retrenchment packages amidst the decreased profits in the current financial year. Eskom's operational requirements will be considered in this process to ensure core critical and scarce skills were not lost.

Asked whether the company would resort to forced retrenchments if there were not enough voluntary separations, Eskom spokesperson Andrew Etzinger said at this stage that option was not under consideration. He further said that the power producer did not have a moratorium on hiring. In exceptional circumstances they would be hiring but, as far as possible, they were limiting the number of new employees. Eskom's long-term sustainability, however, relied on hiring skilled people in its core operations. Eskom employs around 43 000 people.

27 November 2014 - Engineering News

The above reflects a summary of certain news articles published during the preceding week. It is not an expression of opinion in respect of each matter, nor may it be considered as a disclosure of advice by any employee of Hogan Lovells.

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