The human face of recession.

[Dave A]

I was thinking of all the defaulting debtors of Eskom, but on second thoughts I'm going back to my position that it's a whole pile of issues, chief among them the coal supply contracts.

[desA]

Well, what is government doing? Right we all know that the power increase is coming and we all know that of small to medium businesses will be hit the hardest. Especially people using electrical equipment to earn their money.

Now with a power increase like this every aspect of your production will become more expensive and you will not be able to be competitive enough against “imports” So more to the point if “they” can “import” your product by end of 2010 they will do so because chances are it will be financially feasible.

These electrical increases present an 'opportunity' to folks like me. I have associates involved in Green Energy & Energy Auditing, in the Durban-Pinetown region, who would be happy to assist you to minimise the impact of these price rises.

In reality, SA is about to undergo a paradigm shift in energy usage & the technology used. This is a good thing, in the long term. Don't be afraid of them, there are solutions.

So clearly, the South Africans will be picking up the bill after 2010 and we will pay and continue to pay a yearly increase until we cannot pay anymore. This is the “big plan”

The point I am making is that the South Africans are paying for everything but, where is our national security, health care systems and long term job creation? Where are our benefits?

Consider this to be a tax on the rich class - no matter the background. There is a price to be paid for general stability - in every country.

[Marq]

Consider this to be a tax on the rich class - no matter the background.

I see it as paying for assets we cannot afford and should not have arranged for in the first place. The country is going to pay as a whole, not just the rich class.

There is a price to be paid for general stability

The poor are going to be that much poorer because the overall pot remains the same if not less than before as a result of slow to no growth. This same pot is now going to pay for the finance, admin and maintenance costs of these so called investments. When the dust settles and the country realises that FIFA has all the profits and money and the balance is actually out of the country. The rest of us will be paying off these projects. The labour has to move on to do the roads and other big government projects that are lined up, or it too goes back into the poor pot. The financing of these government projects that should have been the first priority, has no return besides stability in the labour and union sector. Eventually (I think sooner rather than later) this could create instability as funds are still not channeled to the poor and service delivery as requested, demanded and promised does not materialise.

[desA]

What lies beyond the 'edge' of the current 'pot'?

[Butch Hannan]

I was thinking of all the defaulting debtors of Eskom, but on second thoughts I'm going back to my position that it's a whole pile of issues, chief among them the coal supply contracts.

Hi Dave,
You mention the words coal supply contracts which interests me. Almost every single power station has mines captive to supplying them with their requirements on a contract basis. As part of the contracts some of the running costs of these mines are funded by Eskom. Most of these mines are huge and should be capable of supplying the total needs of a power station quite easily. They are all connected by conveyor belt systems to their respective power stations. I suspect that supply by road hauliers was a black empowerment effort by Eskom which went wrong. Just look at the thousands of heavy trucks messing up our roads.
Butch Hannan

[Dave A]

Almost every single power station has mines captive to supplying them with their requirements on a contract basis.

That should be in the past tense, Butch. And it wasn't "almost." You build coal power stations next to the coal which is going to feed them - period. It's far more cost efficient to run electricity down a power line than to move the equivalent energy in coal over the same distance. It's that convenient local coal supply that determines the life span of the station.

I suspect that supply by road hauliers was a black empowerment effort by Eskom which went wrong.

A new contender for understatement of the year.

It didn't go wrong - the consequences were entirely predictable (and was probably pointed out by some sage engineer and ignored before the decision was made). May I hasten to add that the failure was not because the contractors were "black" but because the method is so ridiculously suboptimal.

Final nail on the coal supply issue - what Eskom is paying is not based on cost-to-extract-and-deliver-plus-profit-margin (as it used to be), it's based on the international coal spot price plus delivery which is significantly higher.

The whole thing shows what happens when pie-in-the-sky political agendas are put ahead of economic realities. Government should be in the dock right alongside Eskom in this public consultation process they're going through at the moment.

Well, here comes the bill for all this folly...

There is no free lunch.

[desA]

Hi Dave,
You mention the words coal supply contracts which interests me. Almost every single power station has mines captive to supplying them with their requirements on a contract basis. As part of the contracts some of the running costs of these mines are funded by Eskom. Most of these mines are huge and should be capable of supplying the total needs of a power station quite easily. They are all connected by conveyor belt systems to their respective power stations. I suspect that supply by road hauliers was a black empowerment effort by Eskom which went wrong. Just look at the thousands of heavy trucks messing up our roads.
Butch Hannan

Very good point, Butch.

[desA]

What happened to the mini-nuclear power plants that Eskom was developing?

I will be prepared to bet that if a national power-consumption audit were to be conducted, properly, that you'd find out that SA has an excess of power to meet the needs of a modern, high-tech economy.

As I see it, if law were pased to ban electrical resistance heaters eg. geysers, that this would go a long way to re-balancing the power 'shortfall' - as per Australian lead. It makes no sense to keep adding bigger & bigger power stations - local stations should be erected close to consumer.

These local stations could run off bio-fuel, nuclear, hydro, solar, wind, wave - whatever was most cost-effective to serve the community requirements. Why on earth ship electricity over a huge, expensive grid, when a local power-station, close to user, can be installed?

[tonyflanigan]

What happened to the mini-nuclear power plants that Eskom was developing?

I will be prepared to bet that if a national power-consumption audit were to be conducted, properly, that you'd find out that SA has an excess of power to meet the needs of a modern, high-tech economy.

As I see it, if law were pased to ban electrical resistance heaters eg. geysers, that this would go a long way to re-balancing the power 'shortfall' - as per Australian lead. It makes no sense to keep adding bigger & bigger power stations - local stations should be erected close to consumer.

These local stations could run off bio-fuel, nuclear, hydro, solar, wind, wave - whatever was most cost-effective to serve the community requirements. Why on earth ship electricity over a huge, expensive grid, when a local power-station, close to user, can be installed?

Great point des.

I remember in the olden days Cape Town was served by Table Bay power station (I believe its a shopping mall now), and Athlone power station. There are numerous advantageous possibilities to your proposal.

Des for Prez!

[tec0]

Well, a lot of point... But, consider this, in coming months a few companies are now considering building their own power stations. Yes this is no longer just talk. A lot of scary rich investors are in town and I do mean “scary” these people don’t play games and to them it is about profit.

Fact is 4 big companies are now in negotiations to decide if they will keep the mining industry going or are they going to pull-out. Fact is they are pushing for privatisation of Eskom. It is to my understanding a solution because all the power-stations we know are not worth that much anymore. Half of them only have a few years left and then money will be needed to rebuild them.

Eskom do have a lot of money but these are real “power-players” and they are exploring a few options some of those options may even include educational development. Fact is Eskom is out of the count and someone “us” will have to pick up the bill.

Here are the alternatives:

>> Pulling out “not really an option if you look at the size of their investments”
>>Buying out “That may include investing in Eskom and or buying them out completely”
>>Building their own “This is actually financially preferable and will create job opportunities”

Still the never think that they will not simply “cut their losses”

[wynn]

Eskom was viable and in the last 10 years they f#?&@d up, they had their chance, now allow other players to also supply electricity.

Which reminds me, most coastal towns have there own grid, all we need is to insert a power supply at some point and we can snip the Eskom cables where they enter our area.