Times Of Swaziland: EEC CANCELS E5BN POWER STATION DEAL

EEC CANCELS E5BN POWER STATION DEAL
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Mduduzi Magagula on 22/12/2024 17:28:00


MBABANE - As the Eswatini Electricity Company (EEC) seeks to raise at least E8.7
billion from the public, it has simultaneously terminated an agreement with a
international electricity-generating company.
The agreement was terminated under controversial circumstances after a deal,
crafted by EEC failed to materialise. According to investigations, EEC is
alleged to have cancelled the deal after the prospective power generation
company was fruitlessly asked to partner with a local company in the deal. Black
Renaissance Energy (BRE) refused to take this bait and EEC’s response was to
ultimately cancel the agreement to the dismay of the South African (SA) based
company. BRE had presented an unsolicited bid to construct and supply EEC with
electricity.
Commission
The SA Company had pitched and agreed to construct a liquefied natural gas-fired
power station at no cost to EEC. To set-up and commission the station, the
company would have spent at least E5 billion and the facility would have had
capacity to generate up to 275 Mega Watts for the grid. All the above remains a
pipeline dream because EEC unceremoniously cancelled the agreement. Ironically,
immediately after the cancellation, EEC executives applied, through the Eswatini
Energy Regulatory Authourity (ESERA), for tariff increases.
ESERA introduced public hearings before a final decision could be taken. 
Sources said EEC will probably spend the large chunk of the funds it seeks to
raise to purchase electricity from South Africa.Sources raised concern that
mobilised funds will not be channelled to the company’s stabilisation
processes, which would have been the power station in this regard. While BRE had
made some efforts to play a role in solving the country’s energy
sustainability challenges, it has since decided to close the chapter and move on
with other ambitions elsewhere.
Khaya Mavuso, the EEC Marketing and Corporate Communications Manager, said his
company had serious issues and reservations about the power generation model for
BRE.
Risks
“The specialty for BRE is in the natural gas supply, and the supply of the gas
came with a number of risks to EEC, as the company is not positioned to handle
natural gas,” he said.
He said there were many issues associated with the natural gas constant supply,
which were not limited to molecule costs linked to crude oil (Brent) which
fluctuates, but also handling and storage. “A continued reliance on external
sources of energy for power generation compromises energy security,” he said.
Responding further to the question of unsolicited partnerships that were
advanced to BRE, Mavuso said upon evaluating the company’s bid to supply
electricity, EEC realised that there was another firm that had initially
presented a similar proposal. “EEC facilitated connections between BRE and
another unsolicited bidder with resources to construct a gas- to-power plant.
Unfortunately, these efforts did not yield successful outcomes,” he said.
Proposal
According to information availed to this newspaper, BRE refused to be part of
the new proposal. Dr Khumoetsile Moetse, an executive responsible for business
development at BRE, said in an interview that her company rejected the EEC
proposal to partner with a local company because of various reasons. “We did
not need the partnership because we already had the experience, capacity and
partnerships we needed to deliver the project without the assistance of
anyone,” she said. Moetse said it would have been difficult to replace some of
the partnerships the company had established without fair negotiation. She said
her company preferred giving equity stake than the partnership that was being
promoted by EEC. “We have always been open to giving an equity stake and
sub-contracting to local companies in line with codes of good practice. As a
South African based company, localisation is central to the work we do on the
continent,” she said.
To indicate passion for the project and commitment to offer the service to the
country, she said they appointed people in Eswatini to lead the project.
Commenting further on the issue, EEC in turn punched holes in the agreement it
signed with the South African company. “The MoU between EEC and BRE was
established to facilitate the exchange of information and explore the
feasibility of the project,” Mavuso continued to say.  BRE, in turn, has
expressed fears that EEC, while cancelling the agreement, might steal the
company power generation concept.
“We are categorically aware of EEC’s intentions to replicate our
intellectual property (IP) and the strategy we designed for Eswatini with
another group that claims to have access to a similar technology,” she said.
She decried the grounds for termination of the agreement with EEC, adding that
it was not sound and due process was not followed. “They simply sent us a
short email with an unrelated excuse. It is common because that regulator cannot
procure what they are supposed to provide oversight upon,” Dr Moetse said.