EEC CANCELS E5BN POWER STATION DEAL

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.

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