logo
Will SA bear the cost of Eskom's R257bn air quality compliance?

Will SA bear the cost of Eskom's R257bn air quality compliance?

IOL News21-06-2025
Cooling towers at an Eskom coal-based power station in Duhva.
Image: Mike Hutchings/Reuters
SOUTH Africa's electricity crisis is about to get worse, not just because of load shedding, but because of the staggering cost of cleaning up Eskom's toxic air pollution.
In a tense engagement with the National Council of Provinces (NCOP) Select Committee on Agriculture, Land Reform and Mineral Resources, Eskom executives dropped a bombshell: full compliance with stricter air quality laws would cost R257 billion in capital expenditure and R6.3bn per year in operational costs — potentially hiking electricity tariffs by 10%.
Even more alarming? Without compliance, 22 gigawatts of Eskom's coal fleet — nearly half its capacity — could be forcibly shut down after 2030 due to sulphur dioxide violations.
The revelations came as Eskom's chief executive, Dan Marokane, and Deputy Minister of Electricity and Energy, Samantha Graham-Mare, faced tough questions from MPs over the utility's financial constraints, its slow transition to cleaner energy, and the devastating health impacts of coal pollution on communities.
Eskom has already spent R3bn on emission reduction projects, with another R15.6bn allocated over the next five years. But this is a drop in the ocean compared to what is needed.
Video Player is loading.
Play Video
Play
Unmute
Current Time
0:00
/
Duration
-:-
Loaded :
0%
Stream Type LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text Color White Black Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Transparent Semi-Transparent Opaque
Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps
Reset
restore all settings to the default values Done
Close Modal Dialog
End of dialog window.
Advertisement
Next
Stay
Close ✕
Ad Loading
Marokane admitted that while Eskom currently met SO² and nitrogen oxide limits, post-2030 regulations present an existential threat. The utility's proposed 'compromise' solution — focusing on SO² reductions at Kusile and Medupi, along with particulate matter upgrades at six other stations — would still require R77bn in capital and R2.1bn per year in operational costs.
But even this plan is in jeopardy. Only R15.6bn has been budgeted for emissions projects over the next five years — far short of what's needed.
Perhaps the most damning admission came from Deidre Herbst, Eskom's Senior Manager for Environment, who revealed that retrofitting the aging coal fleet for full compliance could take up to 14 years and more than R257bn — only for many of these plants to be decommissioned shortly afterward.
'Given the time frames, refitting most plants would be imprudent, constituting fruitless and wasteful expenditure,' Herbst said.
Several power stations — Matla, Duvha, and Kriel — will shut down before flue-gas desulfurisation (FGD) plants can even be installed. Others, such as Lethabo, Tutuka, Matimba, and Kendal, will close shortly after FGD completion. 'Majuba and Matimba are in sparsely populated areas, limiting the health impact and cost benefit,' Herbst said — an utterance that drew sharp criticism from MPs who accused Eskom of downplaying the health risks to rural communities.
MPs did not hold back in their criticism. DA MP Nico Pienaar demanded answers on why R40bn was being spent on diesel generation — money that could instead fund FGD plants. 'What happens if the new FGD plant isn't built and diesel turbines aren't closed, as per the World Bank agreement?' he asked.
The DA's Sune Boshoff was even more scathing: 'Gauteng looks terrible when the wind blows. Is Eskom not wasting money on upgrading structures that won't exist much longer?' She slammed the projected 10% tariff hike to fund compliance, asking why alternative technologies and international funding were not being aggressively pursued.
The EFF's Moses Kennedy pressed Eskom on whether independent health impact assessments had been conducted near Kendal, Matla, and Duvha stations, where residents suffer from chronic respiratory illnesses. Herbst admitted that while health benefits from cleaner stoves had been studied, power station health assessments were still lacking.
Eskom's much-touted Just Energy Transition (JET) also came under fire. The state-owned utility's air quality offset programme — meant to provide cleaner energy alternatives to 96 000 households in Mpumalanga — has reached only 5 500 homes so far. Herbst claimed the rollout would accelerate, but MPs remained sceptical.
Meanwhile, Northern Cape representatives Henri van den Berg (FF+) and Patricia Mabilo (ANC) pushed for green hydrogen and ammonia projects, arguing that they could create jobs. Deputy Minister Graham-Mare revealed that the EU had pledged €7bn for energy transition projects, including aviation sector decarbonisation.
But with coal-dependent regions such as Mpumalanga facing massive job losses, MPs questioned whether the transition was truly 'just'.
Marokane hinted at a controversial solution: nuclear energy. 'Most countries are building nuclear,' he said, suggesting that South Africa's Integrated Resource Plan (IRP) should reconsider its stance. 'Nuclear stimulates economies and industrialisation.'
Yet, with Eskom's finances in shambles and R50bn earmarked for new technologies — including a Medupi FGD plant — the feasibility of nuclear expansion remained doubtful.
Eskom's dilemma is clear: Spend R257 billion to comply with air quality laws, raising tariffs by 10%.
Risk 22 GW of shutdowns if they don't comply, plunging SA into darkness.
Face public outrage over health impacts and job losses in coal regions.
As Deputy Minister Graham-Mare admitted, 'This is about balancing interests with limited resources.'
But for millions of South Africans choking on coal pollution and struggling with soaring electricity costs, that balance feels dangerously skewed. The question remains: Will Eskom clean up its act—or will South Africans pay the price for its failure? Get the real story on the go: Follow the Sunday Independent on WhatsApp.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

July car sales hit six-year peak
July car sales hit six-year peak

TimesLIVE

time42 minutes ago

  • TimesLIVE

July car sales hit six-year peak

Despite the looming threat of tariffs, South Africa's domestic new-vehicle market continued full throttle in July, delivering the highest monthly sales since October 2019. In the tenth straight month of increased volumes, 51,383 units were delivered last month, up 15.6% from July 2024, which industry body Naamsa attributed to improving consumer confidence, favourable credit conditions and a steady recovery in disposable incomes. It firmly re-established pre-Covid-19 levels and momentum in the market's recovery. Passenger cars were the best performing segment last month at 36,248 units, the highest since January 2017 and a gain of 20.1% compared to July 2024. Car rental sales accounted for 14% of last month's figure. Sales of new light commercial vehicles, bakkies and minibuses at 12,356 units were 6.9% higher than July 2024. Medium trucks sold 703 units (+13.9%) while heavy trucks and buses dropped 1.3% to 2,076 units. The much-welcomed decision by the Reserve Bank in July to further reduce the repo rate by 25 basis points to 7% — its third cut this year — will further inject much-needed stimulus into the economy, said Naamsa CEO Mikel Mabasa. 'Encouragingly, household credit extension has continued to improve, while consumer sentiment is rebounding — especially among middle- and upper-income groups. The implementation of pension reforms has also unlocked additional liquidity for big-ticket purchases such as vehicles. This positive trend is further reinforced by improved logistics performance, a more stable electricity supply and a sustained demand for high-spec, cost-effective vehicles across market segments,' he said. Year-to-date sales of 330,274 new vehicles this year were 13.9% up on the first seven months of 2024. 'There remains a direct correlation between the rate-cutting cycle and the upturn in new vehicle sales,' said Lebo Gaoaketse, head of marketing and communication at WesBank. 'The market should continue to expect growth if interest rates remain lower.' 'The cumulative interest rate cut of 1.25% since the cycle started is saving a typical new car buyer about R257 per month. The sweet spot of the new vehicle market is a price point of R370,000 according to WesBank's book. More critically, the interest saving over the loan period could be over R18,500, which shows the impact lower rates have on stimulating the market and aiding affordability.' Vehicle exports have shown resilience in the face of the 25% automotive tariffs imposed by the US in April. Export volumes last month decreased 1.9% to 35,379 units compared to July 2024, but year-to-date exports were still 2.5% ahead of the same period in 2024. However, the 30% tariffs imposed on South Africa from this month are expected to cause economic headwinds for some local motor manufacturers. 'Despite global uncertainty and the looming threat of tariffs, South Africa's vehicle market continues to show remarkable resilience,' said Brandon Cohen, chair of the National Automobile Dealers' Association (NADA). A key contributor to the robust passenger market is the growing influence of Chinese and Asian vehicle brands, he said. Four Chinese importers are now among the top 15 best-sellers, including newer entrants such as Omoda/Jaecoo and Jetour. 'Financial institutions have also shown confidence in these brands by offering white-labelled finance packages, further supporting their market penetration. Meanwhile, manufacturers like Kia and Mahindra continue to feature prominently in the top 10, reflecting strong demand for affordable, value-driven options, a trend that has also underpinned Suzuki's consistent success. 'The rapid rise of Chinese and Asian brands reflects a shift in buyer preferences towards affordability and value. It's a trend we expect to intensify as more brands enter the market,' said Cohen. Toyota retained its lead as South Africa's most popular brand in July. The top 15 selling brands were: 1. Toyota — 12,694 2. Suzuki — 6,257 3. Volkswagen group — 5,738 4. Hyundai — 3,161 5. Ford — 2,877 6. GWM — 2,436 7. Isuzu — 2,427 8. Chery — 2,160 9. Kia — 1,891 10. Mahindra — 1,441 11. Renault — 1,320 12. BMW group — 1,249 13. Nissan — 1,190 14. Omoda and Jaecoo- 1,069 15. Jetour — 717

AngloGold Ashanti reports record profits and strong share price growth
AngloGold Ashanti reports record profits and strong share price growth

IOL News

time2 hours ago

  • IOL News

AngloGold Ashanti reports record profits and strong share price growth

A worker pours gold at the AngloGold Ashanti mine at Obuasi, Ghana. The group paid a 80 US cents a share dividend for the second quarter to June 30, well up from 22 US cents a year before. Image: Reuters AngloGold Ashanti's share price continued a 12-month rally on Friday, gaining a strong 6.39% after it reported a 151% increase in second-quarter profit on record gold prices and higher production. The share price rise to R877.96 added to a more than 74% rally in the price over 12 months. A second quarter dividend of 80 US cents per share was declared, substantially up from 22 cents at the same time last year. The group has since 2021 returned about $1.2bn to shareholders, and the total dividend for the second quarter amounted to $406 million. The gold miner's headline earnings increased to $639m in the three months to June 30, from $255m in the same period a year before. "This is another strong result that demonstrates our focus on cost control and the positive momentum we're building across the business. We're reaping the benefit of consistent production and cash flow growth, supported by disciplined capital allocation," said CEO Alberto Calderon. Gold production increased by 21% to 804 000 ounces, with growth driven by strong output at Obuasi mine in Ghana, Geita Gold Mine in Tanzania, and Egypt's Sukari Gold Mine, in which the group had acquired a 50% stake in 2024. All-in-sustaining costs (AISC) remained flat in real terms for managed operations. Free cash flow increased 149% to $535m. Net debt fell a massive 92% to $92m. The group directors said the performance was due to the higher average gold price received per ounce, continued cost discipline, and the increase in gold production. The average gold price received increased to $3 287/oz in the second quarter, from $2 330/oz in the same quarter in 2024. On Friday evening, the spot gold price was trading at $3348.75, up 2.18% on the day. The disposal of the Archean-Birimian Contact (ABC) and Doropo projects in Côte d'Ivoire was completed in May, and the proposed sale of Serra Grande mine in Brazil was announced in June. The consolidation of the Beatty District in Nevada was continuing, including the proposed acquisition of Augusta Gold, which will strengthen its position in "the most significant emerging gold district in the US" and enhance an ability to develop the region under a unified regional plan. The interim dividend of 80 US cents included the minimum quarterly dividend of 12.5 US cents, with the balance reflecting a decision to pay half of free cash flow generated for the six months through to June 30. 'While our dividend policy commits to this 'true up' payment to 50% of free cash flow annually at year-end, the company's board used its discretion to make the payment at the half-year, given the strength of cash flows and its confidence in the outlook,' said Calderon. The group ended the quarter with liquidity of $3.4bn, including $2bn in cash and cash equivalents. Headline earnings rose to $639m, or $1.25 per share, compared to $255m, or $0.60 per share, in the second quarter of 2024 — an increase of 151% and 108% year-on-year, respectively. The production improvements were led by Geita, which continued to deliver strong operating results, and Obuasi, where the ramp-up of underhand drift-and-fill mining progressed on schedule, supporting the 21% year-on-year increase in grade. Siguiri, Cerro Vanguardia, and Cuiabá also posted modest gains. These were partly offset by declines at Iduapriem, Serra Grande, and Tropicana, while Sunrise Dam held steady. Total cash costs for the group increased 8% year-on-year to $1 226/oz from $1 137/oz. For managed operations, cash costs rose 6% year-on-year to $1 241/oz, while AISC rose 4% to $1 694/oz. These increases were driven mainly by a 28% increase in capital expenditure, inflationary cost pressures of about 5%, and a $60/oz average increase in the overall royalty charge linked to the higher gold price. These factors were partly offset by higher gold sales volumes. Visit:

Strategies for South African SMEs to cope with Trump's tariff challenges
Strategies for South African SMEs to cope with Trump's tariff challenges

IOL News

time8 hours ago

  • IOL News

Strategies for South African SMEs to cope with Trump's tariff challenges

With the implementation of Trump's 30% tariffs, South African SMEs face significant challenges that threaten their margins. Experts urge local businesses to act swiftly and strategically to adapt to an uncertain economic landscape. Image: File With US President Donald Trump's 30% tariffs having come into effect, South African small and medium-sized enterprises (SMEs) have been bracing for the knock-on impact across supply chains, input costs, and consumer spending. While global headlines focused on Washington, the EU, Canada, and Beijing, experts said local businesses needed to act quickly to protect margins and plan for uncertainty. Thomas McKinnon, chief growth officer at SME services provider Lula, said businesses had to be proactive. "If your product offered exceptional quality, niche appeal, or a distinct competitive advantage, demand might have persisted even with higher tariffs," said McKinnon. From a cash flow perspective, every cent counts. 'Now is the time to look for any big or small ways in which you can streamline your operations, reduce waste, and negotiate better terms with suppliers. The tariffs will have a knock-on effect that we will more than likely see across the board and SMEs need to be ready and prepared,' said McKinnon. Consumers were already feeling the pinch, especially after Eskom's latest electricity tariff hike. McKinnon said businesses might have had to absorb some of the costs to stay competitive, making internal cost-cutting vital. He also urged SMEs to review their forecasts and cash flow closely. "Consider short-term funding options to bridge any potential cash flow gaps during this transition period,' McKinnon said. "Having agile financial solutions in place can provide a crucial buffer as SMEs adapt to the new economic landscape,' he added. Cornelius Coetzee, South Africa country director at cross-border payments company Verto, agreed that a longer-term view was essential. 'This moment necessitated a strategic, long-term vision rather than short-sighted, defensive measures,' said Coetzee. 'The potential implementation of broad tariffs would represent a significant misstep, carrying the considerable risk of triggering a detrimental chain reaction,' he said. Coetzee added that among the spillover effects were increased costs for consumers, severe disruptions to manufacturing supply chains, and a substantial blow to the country's vital export industries. 'Such a policy would, in effect, penalize the very innovation and efficiency that are essential for South Africa's economic prosperity,' he said. Goitseona Raseroka, supply chain lead for Accenture Africa, warned that global trade shifts were already reaching South Africa. 'Tariffs are climbing again, fast, and hard. Our research shows that the average US tariff rate has risen from around 2.4% at the end of 2024 to 29% today. That is the highest level in over a century," she said. While most of the attention was on the US and China, the impact is widespread. 'When tariffs rise in the United States or Europe, the cost of goods increases across supply chains. Components become more expensive. Shipping becomes unpredictable. And somewhere down the line, the cost shows up on South African shelves,' said Raseroka. Accenture estimated that for American households, this tariff shock could add the equivalent of R40 000 per year in extra costs. 'Now imagine what that kind of inflationary pressure could mean for South African consumers,' Raseroka said. Raseroka added the unpredictability was more troubling than the costs. 'These tariffs are not being introduced in a slow and considered manner. They arrive fast, they shift quickly, and they often come with little warning. One month a sector is stable, the next it is caught in a trade dispute,' she said. 'The smart move is not to panic, but to prepare,' said Raseroka. 'Resilience has become the new currency in global trade. It is not about reacting to the next tariff hike, it is about building the kind of systems and strategies that can adapt to multiple futures. We need to move from hoping things will settle to actively preparing for the fact that they might not,' she added. Raseroka said SMEs needed to know their margins, diversify suppliers, consider local sourcing where possible, invest in digital tools for real-time visibility, and train teams in scenario modelling. 'South African businesses have navigated through currency shocks, power cuts, policy uncertainty and commodity price swings. We are used to volatility. What we need now is to take that resilience and turn it into a forward-looking strength,' Raseroka said. IOL

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store