South Africa needs to upgrade its coal-fired power plants rather than focus on renewable energy, according to a sanctioned Russian billionaire who made his fortune in part generating electricity using the fuel.
“The priority for the country should first be to fix and modernize the existing fleet of power plants because that is fast, cheap and allows at the same time to have a reasonable price for electricity,” Andrey Melnichenko said in an interview last week at a hostel in Irene, north of Johannesburg.
South Africa’s grid is concentrated in the north-east of the country, where coal-fired power plants are located, which regularly fail. Meanwhile, there is little capacity in provinces where solar and wind resources are readily available. The country uses the dirtiest fuel to generate 80% of its electricity.
Melnichenko, the founder of Suek JSC, said modernizing or repairing the state power company’s 14 coal plants would be cheaper and more effective, adding to a debate raging in Africa’s most developed nation. While President Cyril Ramaphosa has backed the push for more solar and wind power, other members of his government, including Energy Minister Gwede Mantashe, a former coal mines union leader, have criticized the push to transition to green energy.
“There is no electricity for six hours a day,” said Melnichenko, who is worth about $13 billion. “What century do you live in?” he added in the interview, which was briefly interrupted by a power outage before the hostel’s generators came on.
Melnichenko is one of several wealthy Russian business leaders who have been sanctioned by the European Union and the US in the aftermath of Russia’s invasion of Ukraine. During his visit to South Africa, the magnate, who also founded fertilizer company EuroChem Group, met with government officials to discuss impediments to Russian exports of crop nutrients.
Read: Russian tycoon urges Africa to pressure EU over fertilizer grunt
Russia’s fleet of coal plants is similar in age to South Africa’s, but maintains a more constant flow of power, according to Melnichenko. Coal plants in South Africa and Russia are, on average, decades old.
South Africa has had more than 200 days of power cuts this year, hampering economic growth and stoking criticism of the government.
Read: SA passes 200 days of power outages as 2022 draws to a close
Eskom said it needs 72 billion rand ($4.2 billion) over the next five years to expand the network. Additional funding will be required to connect 53 gigawatts of clean power capacity by 2032 as coal plants close.
© 2022 Bloomberg L.P.
