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S.Africa's Eskom needs $12 bln to comply with new emissions laws

Credit: REUTERS/Siphiwe Sibeko

South Africa's power utility Eskom needs around 187 billion rand ($12.60 billion) to comply fully with existing legislation curbing harmful emissions, a government presentation to parliament showed on Wednesday.

CAPE TOWN, Nov 20 (Reuters) - South Africa's power utility Eskom needs around 187 billion rand ($12.60 billion) to comply fully with existing legislation curbing harmful emissions, a government presentation to parliament showed on Wednesday.

Eskom, which uses mainly coal-fired power plants to generate electricity, was one of 37 top domestic polluters, including Sasol SOLJ.J, granted a five-year reprieve by government until 2020 to meet air emission standards.

The new minimum emissions standards for air quality laws in South Africa, which cover particulate, sulphur dioxide and nitrogen oxide emissions, came into effect on April 1, 2015.

"Complete compliance with the 2010 Minimum Emission Standard would require an estimated 187 billion rand," the presentation by the Department of Public Enterprises said.

Africa's biggest public utility supplies over 90% of South Africa's electricity, relying largely on ageing, heavily polluting coal-fired power stations but does not generate enough cash to meet its debt servicing costs.

Project delays and cost overruns at Medupi and Kusile, two mega-coal plants currently being built by Eskom, largely contributed to Eskom's debt ballooning to 440 billion rand.

"Given the current financial constraints, at this stage Medupi will be prioritised to be retrofitted with Flue-Gas Desulphurisation (FGD technology)," the department said.

South Africa has said any new coal plants would need to have emission-reducing technology, such as FGD.

In September, Eskom said it might have to shut some plants if it fails to reduce emissions, raising the prospect of further power cuts in the county and also putting more pressure on the government which has had to bail out the debt-ridden company to keep it afloat.

Eskom has applied to the Department of Environmental Affairs for rolling postponements of its obligations under the legislation to meet the emissions and air standards.

Ageing plants and poor maintenance has triggered several power cuts throughout the year, putting pressure on key economic industries, such as mining, as the country skirts a recession.

The latest bout of nationwide blackouts come after repeated power cuts in February and March, which hit the economy and pushed the government to grant Eskom a $4 billion bailout on top of a $16 billion bailout spread over the next 10 years.

($1 = 14.8354 rand)

(Reporting by Wendell Roelf. Editing by Jane Merriman)

((wendell.roelf@thomsonreuters.com; +27 21 461 3523;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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