Eskom puts new contracts with power producers on ice

The board has decided it will not sign any more contracts with IPPs after the current round of deals is over.

Eskom's Megawatt Park in Johannesburg. Picture: Reinart Toerien/EWN

JOHANNESBURG - Eskom says it's only asked the energy ministry if it can stop considering new contracts with independent power producers (IPPs), because it currently has too much generating capacity.

The Business Day reported this morning that Eskom's board has decided it will not sign any more contracts after the current round of deals is over.

The programme was started after Eskom ran out of power, leading to planned power cuts.

Eskom's Group Executive, Matshela Koko, says they currently have too much power.

"In the future the IPPs will grow, but let the IPPs grow taking into account the capacity that the country has. It does not make sense to continue adding capacity when we have excess."

But electricity expert professor Anton Eberhard says Eskom isn't being fully transparent.

"Eskom says it's concerned around the cost of IPPs, but this is somewhat misleading. If we look at the latest prices that have been contracted, these prices are cheaper than Eskom's average costs."

The utility says it's simply being prudent with this decision.

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