City Power set to save Kelvin power station

the city of johannesburg was prepared to buy back sa’s first privately owned power project, kelvin power station, in a move to prevent the struggling electricity plant from closing down, silas zimu, acting ce of city power, said yesterday.

this would mean that the country’s first serious attempt to privatise a power station and introduce competition into the power generation sector had flopped.

government had hoped to entice the private sector into the market to help build new power stations to ward off a national power crisis, predicted by experts about five years ago. however, kelvin has been a problem from the start. it has changed hands three times since the city sold it.

“we would never let kelvin close down, the city would buy it first,” said zimu.


he said he was confident that a new buyer would be found.

“we believe that there are already companies looking at it with interest. i cannot imagine that any company would buy the power station to kill it,” he said.

us shareholder globeleq, with a 95% share in the station, confirmed last friday that it was pulling out of kelvin, saying that technical problems prevented the company from restoring the struggling plant to its original 600mw output. this meant that the station was not viable for the company, it said.

the station has been operating at only a quarter of its capacity for some years.

globeleq has handed control of the power station to nedbank and investec, which had refinanced the power station to the tune of r370m.

the remaining shares in kelvin are owned by empowerment company global african power.

zimu said should the power station close, city power’s supply to residents would not be compromised. the station meets less than 20% of city requirements. eskom, which supplies the bulk of the city’s power, has picked up the slack for a number of years.

“once the refurbishments were completed, it was expected it would supply about 20%, but it is presently supplying a lot less,” he said.

zimu is scheduled to meet representatives from the banks and globeleq in two weeks time to discuss kelvin’s future.

he said he expected that the company that replaced globeleq would be required to continue the refurbishment of the station.


globeleq took over the station just two years ago from aes corporation, another us company, which ran into financial trouble.

johannesburg city put kelvin up for sale after it found it was unable to compete with eskom’s tariffs.

the station has not been properly maintained for several years, and requires massive capital input to bring it up to capacity, something which the city has not been prepared to do.

zimu said the companies which bought the power station had effectively been “rebuilding it” because it required so much refurbishment.

democratic alliance spokesman for municipal entities in johannesburg dennis hunt said yesterday that the opposition party had always been sceptical that an overseas company would be able to make a success of an ageing power station that should have been “scuppered” a long time ago.

“power stations of that age were closed down by eskom long ago,” hunt said.