Eswatini’s electricity industry is in the SP identified by:
• Over-reliance on imported electricity. The supply of electricity to local consumers by Eswatini Electricity Company (EEC) is predominantly sourced from South Africa’s Electricity Supply Commission (ESKOM) and Electridade de Mozambique (EDM), thus the security of supply is at risk: ESKOM has in recent years increasingly struggled to meet its domestic obligations, and as a result resorts to power-rationing which extends to Eswatini. Furthermore, the supply-agreement between South Africa and Eswatini is expected to run out in 2022. EDM provides the kingdom with relatively small quantities of electricity.
• Cross-subsidisation between customers. Electricity tariffs are not cost-reflective in most Southern African Development Community countries, Eswatini included.
• Emergence of Distributed Generated technologies. The cost of small-size generation plants in both conventional and renewable energy technologies has significantly declined and is now comparable to the conventional, centralised model. If the supply-cost of electricity from the grid continues to increase steeply, energy-intensive users may begin to prefer to generate their own electricity. This deflection from the grid would lead to fewer customers paying for the electricity system, thus increasing tariffs for remaining customers.
Based on the three key issues facing the Eswatini Electricity Supply Industry, ESERA identified the following strategic objectives and key performance indicators:
• To effectively and efficiently regulate the Electricity Supply Industry
– Approve tariff-review and finance-licence applications
– Review audit and monitoring reports (quality of supply/service)
– Review, monitor and enforce grid-code compliance
– Resolve customer-complaints against licences
• To increase stakeholder/public engagements and consumer awareness
– Conduct a stakeholder-perception survey
– Carry out a corporate-image index
– Develop a corporate communication strategy for internal/external stakeholders
• To introduce efficient, cost-reflective tariffs while facilitating electricity access for indigent
households and off-grid supply
– Develop a cost-reflective tariff-migration strategy
– Develop a tariff-support mechanism for electricity access for poor and indigent
households as cost-reflective tariffs are implemented
– Develop a regulatory framework for mini-grids and off-grid solutions
• To create and support a conducive regulatory framework to liberalise the Electricity Supply Industry
– Conduct a market study on the economic impact of the proposed non-exclusive central buyer model defining small, medium and large Independent Power Producers as well as contestable customers
– Review tariff-methodology to include Gx Tx Dx tariff calculations
– Develop guidelines for ring-fencing
– Develop metered framework for embedded generation
– Establish procurement units
– Report on the protected end-user electricity path based on the Integrated Resource Plan or the Procurement Plan
• To create a High-Performance Organizational (HPO) culture, the achievement of which shall see ESERA boast highly-engaged staff who are results-oriented
– HPO Human Resources Framework
– Revised individual-performance contracts
– Engagements with Public Enterprise Unit on reclassification of ESERA
Conclusion: “In view of the set-out priorities and plans, ESERA is determined to implement its Strategic Plan successfully, this in line with its mission to promote a viable and sustainable energy industry in Eswatini through effective regulation. An organization’s ability to learn and translate that learning into action rapidly, is the ultimate competitive advantage.”
RENEWABLES OUTLOOK
His Majesty King Mswati III told the United Nations Climate Action Summit that Eswatini will need more than US$150-million to roll out its Renewable Energy Long-Term Strategic Plan. The kingdom was one of a few countries selected to deliver a presentation on their climate-based action programmes, under the theme: ‘A race we can win, a race we must win’. With regard to the topic, ‘Cutting greenhouse-gas emissions now with cooling and energy-efficiency’, His Majesty was reported as stating that Eswatini had developed national energy strategic plans for proper and adequate development of its renewable capacity, and that “by 2030, we envisage more than 90 percent of our population having access to electricity through vigorous renewable-energy generation systems”.
He told the gathering that Eswatini had increased electricity-access for the rural population to beyond the 70 percent mark, and that the kingdom plans to elevate its renewable-energy production to “acceptable levels of its mix” within the coming decade. The monarch declared that this development trajectory would be coupled with an increase in efficient systems to ensure total access for all citizens. He detailed how almost 25 percent of Eswatini’s energy requirements are met by domestic hydropower-generation, which is highly impacted by climate change, and how the country therefore wishes to strengthen its ability “to harness energy from the sun, with appropriate support for capacity-building and technology”. His Majesty added that the private sector was playing its part in emission-reduction by adopting a new approach through solely using natural components that have zero global warming and no ozone-depleting potential.
Export-oriented
A new foreign direct investor is the Australia-based, independent power producer (IPP) and renewable energy storage operator, Frazium Energy (Pty) Ltd, whose Robert Frazer was introduced to dignitaries, stakeholders and the media at an event hosted by the Eswatini Investment Promotion Authority (EIPA). To paraphrase Frazium Energy’s official profile:
• Large-scale Solar PV and Battery Energy Storage System IPP focused on developing, owning and operating renewable energy projects globally: investment appetite includes developing countries
• Primary interest lies in projects that are able to combine Solar PV and battery energy storage
• Primary target is to focus on utility-scale Solar PV projects that are able to be combined with large-scale battery energy storage systems, so is constantly on the lookout for combined solar with storage opportunities worldwide
• Preference for flow batteries due to their longevity, positive environmental attributes and overall competitive levelized cost of energy, which is a measure of a power source that allows comparison of different methods of electricity generation on a consistent basis, and can also be regarded as the minimum constant price at which electricity must be sold in order to break even over the lifetime of a project
• Active throughout the entire process, from opportunity identification and validation, solution design, obtaining approvals and licences, building and operating
• Seeks to add value to renewables by the incorporation of storage, thereby enabling them to become a viable alternative to fossil fuel baseload or peaker generation
• Projects are designed to maximise the use of renewable energy for baseload reliability, energy utilisation, smoothing and peak shaving
It was said at the launch that Frazium Energy’s presence in Eswatini – on 50 ha of Swati Nation Land at Edwaleni – will create over 100 new employment opportunities and, during phase one alone, inject an estimated E1.5-billion into the local economy. The primary site will reportedly comprise a 25 Megawatts (MW) Solar Farm, a 25-50MW/100MWh Vanadium Redox Flow Battery Farm, and a plant capable of manufacturing 10 million litres of electrolyte per annum. Robert Frazer disclosed that South Africa’s ESKOM and the Southern African Power Pool are intended purchasers of the output: no mention was made of what part it will play in the kingdom’s electricity scenario.
The Minister of Commerce, Industry and Trade, Manqoba Khumalo, disclosed at the launch that landing Frazium Energy was the culmination of a year-long series of engagements involving his departments, EIPA and the German Chamber of Commerce. He described said engagements as “part of government’s aggressive approach to luring investors who fall within the targeted sectors as outlined in the Strategic Roadmap to 2022…I’m excited that EIPA has been able to migrate an investment interest into a concrete project”. Minister Khumalo concluded by requesting the necessary support from all government entities and regulatory bodies to afford the project the means it requires to succeed. EIPA CEO, Sibani Mngomezulu, in a brief address celebrated the partnerships that gave birth to the project.
Robert Frazer highlighted that Eswatini’s strategic geographical location will make it easy to access the large and growing Southern African electricity market, and the kingdom is therefore the ideal destination for his company’s project. He singled out the close proximity of Mpumalanga’s raw materials, as well as the harbours in Mozambique and KwaZulu-Natal. Also of great importance, he said, is that the country’s political environment remains stable, as evidenced by “the Australian government giving Eswatini the same safety rating as Germany”. Frazer concluded his remarks by suggesting that when phase two of the investment is implemented, the project’s total value to Eswatini could escalate to as much as E7-billion.
THE SPECTRUM
Short, medium and long-term initiatives name-checked by government:
• ESERA has launched a competitive-bidding procurement process for a 40MW Solar PV power plant, and identified qualified bidders
• Civil works for the construction of EEC’s 10MW Lavumisa Solar PV plant have commenced, and the plant is due to be commissioned
• Construction of the 13MW Lower Maguduza Hydropower plant is expected to be complete by 2022
• At the Lower Edwaleni Power Station, an additional +/- 13MW Hydropower plant is under consideration
• Similarly, an unspecified downstream addition to the Maguga Dam Hydropower plant is being considered
• 40MW from biomass. No details of the variant or source/s were given, but commentators pointed out that bagasse and wood-fibre are in the most plentiful supply: Royal Eswatini Sugar Corporation and Ubombo Sugar Ltd both power their factories with bagasse-fired turbines, while Montigny Investments Ltd – which annually processes about a million tonnes of timber – said in 2014 when purchasing Usuthu Forest Products from SAPPI that it might convert part of the latter’s redundant pulp-mill site into an electricity-generating plant
• Wind-power: even less information was forthcoming, but ESERA has mapped out the kingdom’s wind-corridors
• 300MW through fossil-fuels. Eswatini’s long held vision of a power station substantial enough to meet present-day and future domestic demand, and fired by coal from its own deposits, was during the recent crippling drought once again brought to the fore, especially when all domestic hydropower plants ceased operating and the demand for imported electricity spiked well above the customary 70 percent: the projected cost of such a massive undertaking has thus far proved to be prohibitive
Fact-finding
When the Ministry of Natural Resources and Energy Parliamentary Portfolio Committee toured energy projects in the southern part of the country, the party of legislators, which was led by Senator Princess Ntfombiyenkhosi who is also Chairperson, was hosted by the Minister of Natural Resources and Energy, Senator Peter Bhembe, alongside senior ministerial officials including Principal Secretary Winnie Stewart, as well as EEC executive managers. The Portfolio Committee began its fact-finding mission by visiting the Phuzumoya Strategic Fuel Reserve Facility Site. Here, Minister Bhembe stated that plans for securing funding were at an advanced stage and if all went well, the project might commence “in the not-too-distant future”. (This undertaking is detailed in the paragraphs that follow.)
The Portfolio Committee then proceeded to tour the vast Ncandweni Substation, where project Managing Director Meshack Kunene explained that the under-construction facility, once completed, will improve and strengthen the electricity output for Ncandweni and surrounding areas and see sugarcane farmers under Lusip II benefit enormously. Kunene told the group that he was hopeful of showing off the finished product “soon”. The next stop was a visit to the recently completed rural electrification project at Lunkuntfu: it now benefits 81 homesteads and the local community hall, at a total cost to government of E950 000.
The tour ended at Qomintaba, near Lavumisa, where a 10MW Solar PV installation worth E24-million is being built by CONCO Energy Solutions. Project Manager Byron Sancho told the Portfolio Committee that construction work was proceeding well and that the scheduled completion target date was on track to be met. Sancho reaffirmed that the company prioritised the hiring of locals, and on this project had thus far employed about 40 from the area, with more to come. Making her remarks, Chairperson Princess Ntfombiyenkhosi said that as an appointed body responsible for the Ministry, the Portfolio Committee appreciated seeing projects of this magnitude which will take the country to a better level in terms of sustainable energy with access for all. She said that not only will the economy of the country be improved, but also the lives of Emaswati, and EEC also deserves praise for furthering the cause of gender equality, as evidenced by the hiring of female engineers in most of its projects.
Keeping Stock
In pursuit of energy security in the petroleum sector, government has for almost a decade been making preparations for the construction of a Strategic Fuel Reserve (SFR) facility at Phuzumoya in central Eswatini. His Majesty King Mswati III officially launched the SFR initiative on 18 October 2013 by means of a sod-cutting ceremony: a litany of challenges has subsequently prevented the E900-million undertaking from getting off the ground, and it was most recently said to be “at the resource-mobilisation stage”. The 90-million-litres facility was planned to include:
• Gasoline storage tanks
• Diesel storage tanks
• Piping systems
• Storage-dyke systems
• Oil/water separator systems
• Backup electricity-generation systems
• Railway-wagons loading/offloading system
• Loading-arms for loading trucks
• Limited truck-offloading systems
The government of the day had said that through the facility it aimed to ensure the supply of fuel for up to 90 days in the event that the country experiences shortages brought about by interrupted deliveries: the latter occur, albeit infrequently, when coastal storms affect harbour operations in South Africa and/or Mozambique, refineries/depots in those countries conduct emergency maintenance/repairs, or industrial action impacts upon cross-border transport.
A strategic fuel-reserve facility would support a corollary to the National Energy Policy, namely an all-embracing and comprehensive Petroleum Act, and for the finalisation of which government has for some time been engaged in the process of updating, amending and consolidating existing pieces of legislation. The final outcome is intended to address the following issues:
• Regulation and deregulation of the oil industry
• Ensuring adequate product availability in rural areas
• Ensuring stable and reliable product availability for the country’s economy
• Achieving regional competitiveness and fair pricing of petroleum fuels
• Encouraging meaningful and sustainable participation of locals in the industry
• Imposition of levies and taxes on petroleum products
• Administration of the Strategic Oil Reserve Fund
• Provision of information concerning motor vehicles
Galp is an integrated energy player, focused on finding and extracting oil and natural gas from sites around the world. Galp’s success in the energy sector is evident through its increased global presence on important indexes measuring financial performance as well as best practices and sustainability. Galp aspires to be among the fastest growing companies in the oil and gas sector and is expanding its operations worldwide, maintaining a specific focus on selected African markets: in the downstream segment, Galp is currently present in Angola, Mozambique, Cape Verde, Guinea-Bissau and Eswatini.
Galp entered Eswatini after acquiring Royal Dutch Shell’s operations in 2008: its activities in the kingdom include selling and distributing fuels, lubricants and LPG in the retail segment through a network of 22 service stations, six of which have Tangerina branded stores. In the business-to-business segment, Galp supplies over 150 customers. Galp Eswatini’s fuel imports are Gasoil (diesel in 500 and 50 ppm grades), Unleaded Petrol (ULP 95), Paraffin and HFO, as well as aviation fuels. Galp Eswatini imports lubricants directly from its refinery in Portugal.
Galp Eswatini has a number of CSI programmes in communities in which it operates: these are centred around Education/Training, Health and Wellness.
Galp also supports the Esicojeni Foundation, engaging in initiatives such as ‘Walk for Hunger’ that strives to help eradicate child-hunger.
Puma Energy is a midstream and downstream petroleum company that operates across five continents in 47 countries, including Eswatini. One of the largest independent storage and downstream companies in Sub-Saharan Africa, it operates more than 662 retail sites and 29 airports in the region, and provides deliveries to industrial and commercial customers in some of the most remote areas. Puma Energy is a well-resourced and managed business with global know-how of the fuel industry, and understands the challenge of delivering sustainable growth in both emerging and mature markets. The company’s success factors are:
• Wise and decisive investments
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• Responsive and flexible
