Agriculture, Economic Development and Tourism:

[1]   To what extent will future industrial development in the Western Cape harm the downgrading of Eskom’s credit grading by the Credit Grading Agency, Standard and Poor’s [STP];

Due to having low energy intensity, it is unlikely that future Western Cape developments will have an impact on Eskom’s credit rating.

Eskom’s credit rating is currently at risk due to poor management of the entity and huge funding gaps, which may require the need for another bail out from the National Treasury. If Eskom is further downgraded, this may have a knock on effect on South Africa’s rating. This is highly problematic, as poor ratings make our debt more expensive and deter further investment. That is why is it necessary for the management practices and business plan of Eskom to be interrogated and if necessary, overhauled.

[2]   whether the Minister is aware of companies on a waiting list; if so, what are the relevant details;

The Minister is aware that there are around 20 companies both domestic and international who are in the negotiating phase about potential investment in the IDZ. These companies have signed non-disclosure agreements [NDAs] and rights of first refusal [RFR’s] with the Saldanha Bay IDZ Licencing Company. 

The firms include major international oil field service companies, rig repair and maintenance companies, riser pipe and drill string servicing companies. This does not quite constitute a “waiting list” per se, but does form the first line of potential deals in the investment pipeline of the IDZ.

The identities of the companies and the detail of their potential projects are subject to non-disclosure.

[3]   whether complaints regarding Eskom’s inability to supply power were submitted; if so, what business types;

The companies which are most at risk are the existing metal engineering firms, which incur substantial losses should unplanned outages occur. 

A number of these firms have expressed their concerns.  This is particularly the case with manufacturing operations involved in smelting, including foundries and steel mills such as Saldanha Steel.  Should an unplanned outage take place in mid-production, equipment can be damaged or destroyed. Solidifying metals can destroy the smelting pots and rolling lines of the mills and foundries. In this sector, there are two large firms in the Western Cape and ten smaller companies.

[4]   [a] what alternative power supply methods are envisaged and [b] how will this contribute to economic growth?

 [a] Renewable energy sources in Wind and Photo-Voltaic [PV] are currently being rolled out across the province as part of the Department of Energy Renewable Energy procurement programme. 

Already, around 1000MW of capacity is under construction in the Western Cape. This is set to provide intermittent power at a factor of between 20% and 30% depending on the wind, sun and time of day. Nuclear and coal-fired power stations provide base load capacity of above 90%.  The Department of Economic Development and Tourism is also working on an LNG importation project, which will provide more energy security for the Western Cape. This kind of project is seen internationally as the “handmaiden” of renewable energy, in that it can provide peaking power to counter the intermittency of the renewable energy resource. 

[b] These projects will be potential game changers for the economy in terms of energy security, and unleashing a range of new industrial opportunities. This is linked to the availability of gas both as an energy supply, as well as a feedstock. The sorts of industries that will be attracted will include manufacturing firms, smelters, kilns, drying processes in the food industry, ceramic manufacture, textile mills, brickworks and any product requiring heat-treatment. 

In time it is anticipated that reticulation systems will spread from the main industrial nodes, to commercial nodes. Eventually a full residential roll-out is expected.  Potentially tens of thousands of employment opportunities will be created both in the industries that will be attracted, as well the development of the infrastructure and reticulation networks.