Chris Gibbons:
Well, everybody who is listening, apart from those of you in Bedfordview who cannot listen because there is no electricity, we will focus on electricity. I hope they have got battery radios in Bedfordview. National Energy Regulators today, giving the green light to several Eskom projects, but also warning about the impact of the skills shortage on smaller suppliers of electricity, mainly small municipalities, also pouring cold water at this stage on this talk of an immediate 18 percent price hike to fund the Eskom Capex Program.

The Kumati Power Station to come out of moth balls, approval for a big new R66-billion plant in Limpopo, two smaller gas turbine plants for the Western Cape, one at Atlantis, one for Mossel Bay and also the results for this audit into the 11 big electricity suppliers, which by and large, their plans look pretty reasonable, but again, skills shortages and maintenance seem to be the main points of concern. Joining us now from Cape Town, consulting electrical engineer, Terry McKenzie-Hoy. Terry good evening to you and welcome to the World at Six.

Terry McKenzie-Hoy:
Hello Chris.

Chris Gibbons:
Is the regulator on the right track here, is he sending the right signal to Eskom?

Terry McKenzie-Hoy:
I think the regulator is been very professional. Basically they are really announcing the adjustment of Eskom?s generating licenses to allow the new plant to come on stream. I think the regulator has certainly hit the nail on the head when they say the loss of skilled staff in the larger municipalities is the next big problem to overcome.

And also the lack of investment that has been in these networks over the last couple of years. But I think the regulator is showing Eskom not only now, but in the past that they do have teeth and they are making sure that Eskom performs to their mandate.

Chris Gibbons:
That issue of maintenance is it fair to accept Eskom?s, I am paraphrasing the words here, Eskom?s position, they simply did not foresee the growth in demand and they were caught flatfooted and now they are moving to upgrade. Is that fair enough?

Terry McKenzie-Hoy:
I don?t believe so, I mean, one should not try and kick them down as it were, but they were reminded by many people in the industry almost seven years ago that they had to do something about the fact that they were not building anymore power stations and that the power system was running out of capacity.

I certainly think that to say they were caught flatfooted might be true, but only very partially true. I think that had they seven years ago done what they should have done, and as many, many people in the industry encouraged them to do, they would not be in the position they are in now. Having said all of that, they are recovering I think in a responsible way.

Chris Gibbons:
It is also I think, fair to comment that yes, you were caught flatfooted, but you have a team of highly paid executives who are supposed to be there to make sure you are not caught flatfooted on these things. This question of the 18 percent price hike, which we know Eskom wants, and which the regulator today said well, no hang on a second, you are going to have to justify this if we are going down this road. Is that fair, does that solve the problem?

Terry McKenzie-Hoy:
Eskom can only effectively finance power stations by the issuing of bonds and the raising of its income by the raising of tariffs. I think that 18 percent is probably a bit much, but I would have thought that an increase of about 15 percent would be reasonable. We are still pretty cheap with electricity in this country and I just would like to see, I would like to see more capital raised on the bond market rather than from consumers.

Chris Gibbons:
Focussing specifically on the Western Cape for a moment to the new open cycle gas turbine plant for Atlantis, diesel run. Where is that diesel coming from? Can we afford this amount of diesel?

Terry McKenzie-Hoy:
I don?t know if we can afford that amount of diesel or not. The diesel obviously gets either imported or manufactured at the local refinery. The point to remember is that you don?t have to run the gas turbines for very, very long. We are talking peak lock for about two or three hours a day, if that.

You don?t have to run it 24 hours a day and the gas turbine, even apart from the fact that it is really a gasification fuel turbine, but apart from the fact that they do gulp fuel, they have a great advantage. You can start very quickly, you can get them going in less than 20 minutes. I don?t know about these specific ones, but generally that is the figure. So you might have to use a lot of fuel, but you don?t have to put it on stream for a very long time, unlike a coal station, which once it is on, it has to stay on for quite a long time. Can we afford it? I don?t know.

Chris Gibbons:
I just have this awful vision of solving one problem and creating another. There is your extra electricity, but sorry, there is no diesel at the petrol pump, it has all gone somewhere else. And that brings us Terry, to one of the biggest challenges facing the country as a whole, not just electricity, the skills shortage. Where are the skills going to come from?

Terry McKenzie-Hoy:
I don?t know, I have an idea, I went to Germany a year ago and Germany has a whole lot of engineers who really are struggling to find employment and not only German engineers per se, but immigrants from other countries who have settled in Germany.

And I think if we are not going to get South Africans back from overseas that easily, I mean why should they come back if they have gone, and I think we cannot in the short term meet our skills shortage from our local education system, we can in time, but not in the short term. So I think we will have to do what was done in the 1970?s, is to get a lot of people from other countries to help.

Chris Gibbons:
Terry I am going to have to cut you off there, we are running out of time. Terry McKenzie-Hoy, consulting electrical engineer talking to us from Cape Town. Terry, appreciate your time on the World at Six.