THE City should go into partnership with the private sector to build a gas-fired power station that could supply electricity at prices below those Eskom would be charging in a three years time.
The suggestion was made by Mr Michael Bagraim, President of the Cape Chamber of Commerce at “Business Meets the City of Cape Town” symposium last week.
He said the possibility became apparent to the Chamber when it calculated that approved tariff increases for Eskom power would produce an average selling price of over R1 a unit in 2014.
“As we saw it, there was an opportunity to produce a reliable supply of electricity that was cheaper than Eskom power. What’s more, a gas-fired power station can be built in under three years so it can be ready when Eskom brakes through the R1 a kWh barrier.”
He pointed out that there was a surplus of natural gas in the world and the costs had actually come down as fracking has made more gas available and delinked the gas price from oil. So gas could be imported on long-term contracts at prices that would make a gas power station viable.
The Chamber had taken the idea further and introduced City officials to an established gas company which offered to build a power station to supply electricity to Cape Town, Atlantis and Saldanha.
There were regulatory hurdles to overcome but the feeling was that it could be done if the NERSA granted the necessary approval.
“If this plan comes together there will be a number of advantages for the City and the Western Cape. There will be electricity to start the development of the IDZ at Saldanha as well as gas for industry. Using gas for process heat is cheaper and more efficient than using electricity so there is a saving and there is less reliance on Eskom. That will be important if we are to attract new industries.”
He pointed out that gas from Mozambique was piped down to Gauteng and it was available to industry there and at fair prices. “Industries like Consol glass will soon find that it is cheaper to make bottles in Gautengwith natural gas than in the Western Cape with electricity. Unless we have the gas to compete, the Western Cape could see factories closing down here and re-opening in Gauteng .”
“To our way of thinking, a partnership between the City and private power producers will provide a more satisfactory answer to our energy needs than continued reliance on Eskom,” Mr Bagraim said.