(Bloomberg) -- South African Electricity Minister Kgosientsho Ramokgopa will present a plan to the cabinet in October on how to fix and expand the country’s power-transmission grid, which will require assistance from private industry.
Power infrastructure has been neglected in South Africa and the government doesn’t have the money to fix and expand it, Ramokgopa said at a seminar at the JSE Ltd.’s head office in Johannesburg on Thursday. The amount of transmission equipment needs to be quadrupled over the next decade, at an estimated cost of about 250 billion rand ($13 billion) — financing that state power utility Eskom Holdings SOC Ltd. can’t afford, he said.
“That money is not sitting with Eskom,” Ramokgopa said. “It’s unlikely that we’re going to get that out of National Treasury so it’s important that we look to the private sector to help us resolve that question.”
South Africa has been subjected to record power cuts that are implemented to prevent a complete collapse of the grid as Eskom struggles to meet demand from its old and poorly maintained coal-fired plants. The government has vowed to end the outages, with President Cyril Ramaphosa appointing Ramokgopa in March to drive its response to the crisis.
The country must improve its governance structures to build private sector’s trust in partnering with the government and to invest in infrastructure, Ramokgopa said.
There have been “issues of a trust deficit over a period of time,” he said. “When I speak to the financing fraternity they say ‘but government can’t be entirely trusted so we need a governance structure that provides confidence to us when we invest our money’.”
Over the next four years between 16 gigawatts and 20 gigawatts of renewable energy generation capacity will need to be built, the Centre for Sustainability Transitions said in a study released at the JSE seminar. The country’s grid capacity can be increased by 17 gigawatts through investment in additional transformers, the group said.
It added that the pace of current investment in transmission will need to increase eightfold to 2,300 kilometers a year (1,429 miles) to connect the 53 gigawatts of renewable energy capacity that’s required to be built by the early 2030s. Over the next 10 to 12 years that could cost as much as 372 billion rand, it said.
The minister also said the next bid window for the provision of additional electricity for the national grid from new power plants will be held by the end of October. The last one partially failed because there was no power line capacity for many of the proposed sites.
(Updates with scale of investment needed in seventh and eighth paragraphs)
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