Following a decade in which Chinese largesse has helped to transform Africa’s prospects – and challenged the supremacy that western companies once enjoyed over the continent’s natural resources – Beijing has sent word to Washington that the world’s two biggest economies might combine their efforts to generate some much-needed electricity in one of the poorest.
The Democratic Republic of Congo, an expanse the size of western Europe that perennially ranks among the worst countries in which to do business, has known little but conflict and penury for decades. World Bank-backed plans to build a third dam at Inga are part of a broader vision for a dam complex capable of generating 40,000MW – twice the size of the Three Gorges dam in China.
At first glance, it looks as if South Africa’s latest announcements on trade and manufacturing data suggest two different narratives – one of recovery and one of continued slowdown. In fact, however, a common thread between them points toward an overall slowing growth trend.
A surprise trade surplus of R1.7bn in February represented a swing from January’s deficit of R16.9bn, pushing the rand higher as investors grew more confident over South Africa’s export performance. However, the manufacturing Purchasing Managers Index, announced on Tuesday, slipped to 50.3 in February from 51.7 in January, suggesting a slowdown in manufacturing growth.
To date, South Africa has done little to explore its offshore oil. Geological data is old and out of date, existing oilfields are ageing, and few new ones are being discovered. Even the Orange Basin, near Namibia, is believed to hold substantial reserves, but there has been little drilling since Shell acquired rights in 2009.
But technological innovations in deepwater drilling and seismic imaging, and general optimism following the discovery of hydrocarbons in the Karoo and along the southern African coastline, are prompting a growing number energy players to look again, despite the odds. Cairn India, Anadarko, Sunbird, Total, Sasol, ExxonMobil and Chevron are among those signing deals, bidding for exploration licenses and planning drilling activity this year.
Brian Dames, chief executive of Eskom (pictured), has stepped down after three years at the helm of Africa’s leading power utility and a total of 26 years with the company. Local media quoted chairman Zola Tsotsi saying Dames was going for for ‘personal reasons’.
Dames – who says he uses a gas stove at home and does not own an electric kettle – has had a turbulent time in the hot seat. His departure comes four months after that of Paul O’Flaherty, Eskom’s finance director, shines a light once again on the troubles besetting the power giant.
What can Eskom do about it’s funding problems? The South African power utility is looking to spend a whopping $50bn revamping old plants and building new generators including Kusile and Medupi, set to be the world’s third- and fourth-largest coal-fired stations. But the company’s hopes of 16 per cent price increases over the next few years were dashed by the national regulator, which allowed it only 8 per cent.
So Eskom is looking at ‘equity-like debt’ instead. Will that work?
The South African winter is sending chills down the spine of its power utility Eskom, which seems bereft of an immediate solution to maintaining sufficient supplies of power to both businesses and consumers as consumption shoots up.
Eskom relies on coal fired power stations to produce approximately 90 per cent of its electricity. But with the threat of rolling blackouts, could gas be the answer?
When one of the biggest energy companies in the world says it will invest half a billion dollars, that’s nothing to sniff at. British oil giant BP announced on Wednesday it will invest R5bn ($550m) in South Africa.
It might not be the biggest deal, but it’s a thumbs up after the hard time the country has had attracting foreign investment. The funding will be ploughed into its refinery, terminal and retail network assets over five years.
It’s been a tricky few days for South Africa’s electricity public utility Eskom. Strikes, controversy over political breakfasts, allegations of spying on unions and others, anger over price hikes: it’s a lot to contend with.
At Eskom’s Medupi site in Limpopo, strike action has halted construction of the R91bn ($10bn) coal-fired power plant. It was hoped work could resume on Thursday (Jan 24), but talks have yet to produce an agreement.
Somebody has to get squeezed. In South Africa, the price of electricity is set to rise, as power generation costs go up. The question is by how much.
Eskom, the state-owned power company, says it needs put prices up by 16 per cent to avoid shortages. But the company chief executive, Brian Dames, has said they could climb even higher unless costs can be kept under control. And the spotlight is firmly on coal – and the mining companies that supply Eskom.