Eskom presses for Zesa debt resolution

South African utility Eskom has said that it will continue to supply power to the Zimbabwe Electricity Supply Authority (Zesa) in spite of mounting payment arrears which, it is feared, Zesa will be unable to repay. Recent reports indicate that Zesa now owes Eskom $25m for electricity supplied.

Eskom supplies 15 per cent of all electricity consumed in Zimbabwe, and has given Zesa three alternatives for addressing the debt problem, including a debt-equity swap. Eskom has also stated that it would be within its rights to cut off electricity supplies to its neighbour as Zesa is classed as an interruptible customer. However, Pretoria does not want Eskom to take this route due to the social implications.

The three options put forward by Eskom are a debt-equity swap, a continued debt to loan conversion process, and a Zimbabwe dollar denominated repayment account. The debt-equity swap option is least favourable, says Eskom.

Zimbabwe’s debt problems have been compounded by a foreign exchange crisis. It also owes $30m to the Cahora Bassa Hydroelectric Dam Company in Mozambique. Under an agreement in effect since August 1999, Zimbabwe receives 150 MW of electricity per month for R18m ($2.77m).

NECC complete

The Egyptian Electricity Authority (EEA) has announced the completion of the new National Energy Control Centre (NECC) which will control generation and transmission for the entire country. Installed by GE Harris Energy Control Systems, it is one of the largest electric utility control centres in the Middle East and Africa.

The project is one of the most complex energy management projects of its kind in the world, according to GE Harris, which installed its XA/21 system at the centre.

The equipment is completely redundant to protect against failures, and controls and monitors high voltage substations, system frequency and recommends operator actions to optimise the country’s unified power system.

Turkey annuls power contracts

The Turkish High Court has annulled $830m worth of contracts awarded for the management of one power plant and two power transmission lines. The decision is a blow to the government which is expecting to gain $1.1bn in revenues from energy sell-offs this year.

The court cited a law which prohibits firms that own more than ten per cent of media companies from bidding in state tenders. All three companies involved in the lease contracts own stakes in media companies.

The annulled contracts include the privatization of a transmission line in northwest Turkey won by media group Dogan holding. That tender was the largest of 21 power grid tenders for which bids were collected in 1996. Dogan won the operational rights to the line for 30 years with a $500m bid.

Nigeria crisis

The Nigerian power sector reached breaking point in March when major power outages affected the entire country, according to the ministry of power and steel. Power supply in the country has been erratic for two decades but the situation has never been so bad, say analysts.

President Olusegun Obasanjo fired the entire senior management of state owned power utility NEPA after the sixth day of widespread outages.

On March 11, a total collapse of the power generation system was reported by NEPA. Power was restored to 40 per cent of the country 24 hours later before another complete failure occurred. Two days later another outage affected most of Lagos.

The government recently threatened to cancel part of a power plant construction contract with US developer Enron.

SEC ready to operate

The board of directors of the newly created Saudi Electricity Company (SEC) has said that it has completed all procedures for obtaining a license from the commerce ministry – the last step before it can start operations.

SEC was formed by the merger of Saudi Arabia’s power companies and is a key part of the kingdom’s power sector privatization plans.

Further changes to the electricity industry will be implemented once SEC starts operating, according to industry and electricity minister Hashem Yamani. Saudi’s power companies agreed merger terms on February 16, 2000.

SEC’s capitalization is Riyals33.7bn ($8.9bn), drawn from the assets of the various power firms and the electricity surcharge fund. The value of government power projects has also been added.

The government wants to encourage private sector participation in the kingdom’s economy and particularly in the power sector, where electricity demand is rising at 16 per cent per year.

After SEC starts operation, generation, transmission and distribution functions will be separated, with the generation sector open to domestic and foreign investors.

News digest

Hungary: Fortum Engineering has awarded GE Power Systems a $19m contract to supply a gas turbine and additional services for a new, 110 MW combined heat and power combined cycle power plant being constructed at Ujpest on the outskirts of Budapest. GE will supply a 70 MW 6FA gas turbine which will run on natural gas with light distillate as a backup fuel.

Lithuania: The Danish government says that it will support Lithuania’s national energy strategy and arrange a conference to raise funds to finance the closure of the Ignalina nuclear power plant. Lithuania approved in March a draft law on the early shut down of unit 1 at the controversial plant by 2005.

Poland: Swedish state-owned utility Vattenfall has been shortlisted to bid in the privatization of Polish power distribution enterprise GZE. Vattenfall says that it expects GZE to sell off 25 per cent of its equity. Earlier the Swedish group acquired a stake in Polish energy company Electrocieplownie Warsawskie SA for $235m.

Romania: State-owned electricity utility Conel is to spend about $240m on a number of hydropower and thermal projects in 2000. A quarter of the funds would be covered by Conel and existing government and foreign credits. Romania’s energy sector requires an investment of $1.2bn over ten years to bring its system up to international standards, according to Conel. The utility will construct new projects and upgrade existing plants.

Slovakia: Siemens KWU is to convert a waste incineration plant in Bratislava into a combined heat and power plant in a contract worth $57.4m. The contract has been awarded by the municipal waste disposal company OLO. The new plant will be capable of combusting around 134 000 t of waste per annum. Process steam will be extracted for use in a refinery and for heat in a greenhouse.

Turkey: Controversy surrounding Turkey’s plan to build its first nuclear power plant has continued with accusations of irregularities by one of the bidders for the project. Franco-German bidder NPI is alleged to have submitted a late bid for the project. Greece also said recently that it opposes the project, citing the environmental impact of the project and a high risk of earthquakes in the region.

United Arab Emirates: The Abu Dhabi Water and Electricity Authority has appointed Mott MacDonald as the project manager for power supply upgrades to a number of water and electricity authority sites in the emirate. The project involves upgrading 11 kV systems, the installation of switchgear and the provision of standby diesel generators.