London South East Oil & Gas Investor Briefing with guests from Coro Energy & Eco Atlantic Oil & Gas - Book Now
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East and have access to Premium Chat. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
and make no mistake its not BE holding this up
... get it sorted and get cracking ....
Have to agree Faramog this is snails pace for something that needs urgent attention. Free money so JFDI.
Hamil - BBN has been over this earlier today. The money is already found and Eskom don't need to even go looking for it.
interesting final para :
"A source close to the process told Rapport that the World Bank realised that Eskom’s recovery was in everyone’s best interest and that it would not yank the rug from under Eskom’s feet."
Since the environmental studies in the locations and elements that go with that are not in Eskom's control, I suspect they will give as much leeway as needed ... but can't help getting the feeling the WB is putting a bit of pressure on Ramaphosa ... get it sorted and get cracking .... it is essentially free money that Eskom and SA desperately need to stabilise and turn Eskom round...
Interesting BMN has just put that city news link on their tweet. Is it just to advertise MN's name being mentioned on there.
Top banana BBN, your kid should get sick more often (only joshing, speedy recovery for the wee mite!)
If any of you twitterati would like to put the journo right: https://twitter.com/antoinetteslab?lang=en
Although she only seems to retweet!
A huge thank you BBN for such a detailed analysis of the article I posted...worth reiterating we should always try and fact check press articles where one can.
And here's to a speedy recovery for your little one... And a good night's sleep for you tonight.
Apologies formatting issues this morning after what felt like a very long night with a sick young child.
The key points can all be found in the EISP Paper for those that don't wish to go too far into the detail.
Item 1 : " The project was approved on March 19, 2010 in the amount of US$3,750 million (IBRD loan), and became effective on May 31, 2010."
So the project loan is signed off.
Item 2 : "To achieve the PDO, the project supports the financing of: . . . a 100 MW concentrating solar power plant (Kiwano CSP)"
Item 3 : "The IBRD loan is 81 percent disbursed (as of November 28, 2018). A significant part of the remaining amount (about 6 percent) is currently allocated for Kiwano CSP (now proposed to be a battery storage program) and the main element
of the proposed restructuring."
So the money is there it is simply waiting on Eskom.
In the Eskom Renewables Support Project, which is the restructuring of that Kiwano CSP Project we find that ,
"The estimated allocation from all financing sources for the original scope of Component 2 (Kiwano CSP) amounted to US$1.197 billion to deliver 100 MW generation capacity"
"The estimated joint financing (CTF, IBRD, AfDB) for BSP is US$655 million for delivery of at least 525 GWh (1,440 MWh
storage per day) of energy through at least 360 MW of storage capacity"
So not only is the money there already but the BSP Project as it stands will cost $545m less than the original proposal.
Therefore, there is a strong argument to be had that Eskom's known debt pile will actually reduce by close to R8.2 billion.
Now isn't that a news worthy story? No because there is nothing truly sensational about it in the current Eskom climate.
Excellent summary BBN
(3 of 3)
In the World Bank CSP Restructuring paper (see post 1) we see the following ;
(Page 13 Item 28) "All the sites selected in the proposal would require a basic Environmental Impact Assessment (EIA) that takes about 197 days."
(Page 14 Item 30) "NERSA has decided that generation licenses will be required for Battery Storage systems. It will be a four-month license process. Eskom has engaged with NERSA and will submit a license application for each site in December 2018."
For the basic EIAs "Eskom teams requested for proposals in July 2018 from independent EIA consultants as per Department of Environmental Affairs (DEA) requirements."
The reality is these regulatory processes could just be taking more time than anticipated. Cue the electrolyte plant in East London as a prime example.
The World Bank highly likely would not turn down an extension of time request based on regulatory approvals outstanding, if indeed one was required (still in agreed project timeframes).
Yes there could well be other issues that we do not know about but the sensationalist approach by City Press is just that. Phase 1 of the project, which is the only element of the project being developed at this time, is fully financed along with the battery element of phase 2, and it is on terms better than Eskom bonds rates (I have seen as high as 13.25% in some circumstances). So it has nothing to do with Eskoms ability to raise debt nor can it be said that it was not included in the total debt pile declared by Eskom in its last set of results. How can it be when the loan has been around as far back as 2010 when it was a CSP element of the EISP project that funded the now notorious Medupi power plant.
What we appear to be staring at is the usual procrastinations that we see in SA SOEs and the regulatory organisations that are supposed to be supporting them.
That may change but we would be all wise to thoroughly check what the press of S.A. Is trying to tell us because if nothing else it is biased and at times a tad bit lazy with its research.
Sorry 3 not 2
(2 of 3)
Nowhere is this better demonstrated than in the EISP Restructuring Paper from Dec 2018. The document is a World Bank led paper but the funding for the EISP is a $3.75 billion loan from the IBRD.
Item 3 on page 6 of that document states the following ;
"The IBRD loan is 81 percent disbursed (as of November 28, 2018). A significant part of the remaining amount (about 6 percent) is currently allocated for Kiwano CSP (now proposed to be a battery storage program) and the main element of the proposed restructuring."
So both the CTF and IBRD elements of the battery storage project loan are agreed such that the $468m battery storage project can proceed once Eskom concludes its documentation.
Then we are down to simply the 60MW of localised solar that will be positioned at each site and will be Eskom /ADFB financed.
However, that has absolutely nothing to do with phase 1 or indeed the 300MW of battery storage that will be required over the 2 phases and is fully financed already.
So the R10 billion claim is false as far as I understand.
Then the article moves on to the World Bank May update and the insinuation that the project has been further delayed whilst environmental approvals are sort.
To be clear the article is referring to World Bank statements that were made as far back in July 2018 and which led to the above restructuring paper.
The City Press article states ;
"In 2017, the World Bank accepted Eskom’s proposal to convert the project to battery storage. Eskom was expected to go out on tender in April this year and complete the project by October next year."
"According to the World Bank documents, environmental approvals must be obtained for the various premises and the National Energy Regulator of SA must also give the green light."
"Eskom said it would be difficult to say exactly when the approvals would be in place. In the meantime, the World Bank has granted an extension."
"Eskom has not said how long the extension is, but Rapport has established that it will only be for a year."
The October next year statement refers to Phase 1 completion only. The actual overall project deadline is now set at
The restructuring paper from December 2018 clearly states that the project deadline was extended to 31st December 2021. So whilst phase 1 is running late it is still well within the overall project timelines, so cannot be designated as requiring an extension.
What this all boils down to is Eskom's ability to go out to tender. In order to do that they require the environmental approvals, which are essentially outside their control and noted as such above in the quote employed by City Press.
(1 of 2)
Good morning all,
I note the article from City Press that was posted last night.
In my view, and I press this strongly, the article is opportunistic in its nature, cobbling together selective details on the BESS Project in order to create a doubt that isn't substantiated. Nor does it clearly demonstrate any changes have occurred to the process other than the rather predictable "Eskom sources."
The BESS Project (formerly the CSP project element of the Eskom Renewables Support Project) has a total estimated cost of $661m (thus the City Press 24 R10 billion eye catching figure).
On page 5 of the World Bank restructuring paper, which is effectively the latest key document relating to the BESS Project itself (more on that later), item 14 is very clear when it states ;
"There would be no change to the financing instrument, which would remain a CTF concessional loan."
Item 2 page 3 also states ;
"The estimated joint financing mobilized for BSP is US$661 million – of which US$195 million from IBRD and US$273 million from CTF - for delivery of at least 525 GWh (1440 MWh storage per day) of energy through at least 360 MW of storage capacity -- 60 MW of cumulative new solar PV capacity (Eskom-owned) and enabling optimal use of 300 MW of
Variable Renewable Energy (VRE) from the Renewable Energy Independent Power Producers (REIPP) program."
"Of this amount, at least US$468 million will be for battery storage and the balance for Eskom-owned solar PV plants
and technical assistance, financed by Eskom and the African Development Bank (AfDB)."
Firstly, the battery storage element of the project of which 800MWh forms phase 1 is being funded by "US$195 million from IBRD and US$273 million from CTF " = $468m of concessional loans, which have already been approved by the banks that are providing it.
For those that do not appreciate what concessional financing means there is this from the World Bank IDA ;
"IDA lends money on concessional terms. This means that IDA credits have a zero or very low interest charge and repayments are stretched over 30 to 38 years, including a 5- to 10-year grace period. IDA also provides grants to countries at risk of debt distress."
To be clear the World Bank document only refers to the CTF element being concessional funding but what must be understood is that the group of banks involved is made up of what is called multilateral development banks (MDBs), who are directly linked to the CTF and are taking part in this and the EISP project (Eskom Investment Support Project) as part of a World Bank led initiative.
"The battery project was meant to make use of renewable energy more effectively and integrate it in the power network."
Perhaps the National Grid could use this idea. Right now they are mixing windfarms with gas generators and paying windfarms constraint payments when they over produce. Plus the occasional blackouts when there are frequency issues :lol:
Windfarm turbines generate AC. Becasue the AC generated varies in frequency despite having pitch control on some turbines, it is rectified to DC. Ideally it should pass through a battery to smoothen out the fluctuations in wind power generation. Batteries of course are charged by DC. Eventually when it is connected to the grid it must be converted back to AC and stepped up to high voltages for transmission at a substation
This is different from peaking power managment which is about spikes in demand, not generation . This simply smooths the output of the wind turbine
If the project does end up being delayed a little more I am sure it wont be of enormous concern to BMN given electrolyte production won't be in place until next year anyway.
In reality, looking at the real timelines involved it would suit us and lower our risk to get the factory up and running and deliver a few smaller projects that will get the operation of our manufacturing process perfected. We would then be ready with a robust, well-tested operation for delivery of whatever portion of the Eskom project we win.
Mikhail has been explicit about there exisiting a pipeline of projects that can provide projects for us to ramp up with and it strengthens our submission to be able to demonstrate progress with other clients. It also looks like a bit of politicking; the World Bank are making clear to Eskom they want to see progress - although it's important to also note that they clearly state they won't be leaving Eskom hung out to dry because of delays and will be very much aware of its current situation.
With production at Vametco growing to record levels, Vanchem / Mokopane looming to spur us on to new production heights and diversifying our product base and geography, we have plenty to get in place whilst the project progresses, including finalising some of the broader supply agreements for our electrolyte, expected this year, as mentioned by Mikhail.
They have been discussed yes. The world bank is turning the screws on Eskom however and are not letting them off the hook, this is a good thing. If the tender process is delayed until next year then that works even better for BE. There were some who were concerned that their production may not be up to the task of supplying to the tenders, if they are only to be released later on, the they have much more opportunity to ramp up and prove themselves before hand.
Is this news, I recall the delays around the tender process having been documented and discussed here?
Looks significantly delayed?