Dan Marokane, Managing Director of primary energy at Eskom calls for a National debate on the security of our electricity supply.

He states that, "it is concerning that local mines are exporting the majority of their high quality coal whilst local power producers are left with coal which is at the lower end of being acceptable. This not only causes power generation efficiency losses from the poor quality coal but also cause maintenance issues now and in the long term. If we had the same high grade coal that was being exported as a reliable fuel supply, we would be able to make up enough generation capacity to recover significant amount of our reserve margin without additional infrastructure."

Quality coal supplied for electricity generation is under increasing pressure as exporting becomes more attractive for local coal producers. South Africa currently exports approximately 25% of its coal production making it the fourth largest exporter of coal worldwide. "This has essentially created international competition between local and international power generators over South African coal, especially India who represents South Africa's largest export market for thermal coal," he says.

Dan Marokane was a keynote speaker at the quarterly roundtable dinner hosted by Merchantec Capital and addressed the room of business leaders to debate the topic which directly affects the country's ability to generate power: "Energy Security going forward - the impact of coal mining".

The main topic of discussion was around energy security and Eskom's ability to supply consistent, adequate power to South Africa with the limited supply of high quality coal that has been made available in the South African market for electricity generation.

"India and China's economic growth, both of which are over 8% per annum, have caused export prices for coal to increase to levels that are above those that South Africa would pay for electricity generation, making it more attractive to sell to the export market," says Peter Oldacre, Head of Climate Change at Merchantec Capital.

"One of the reasons coal exports are not higher, is due to restricted capacity on the RBCT coal line operated by TFR," Dan Marokane adds. The coal lines can only transport 70-million tons per year, whilst the Richard Bay Coal Terminals' throughput capacity officially reached the 91-million tons per year level at the start of May, when the R1.2billion Phase V expansion project was commissioned.

Dan further notes that substantial growth in the economy would lead to increasing strain on South Africa's electricity network from 2011-2013, and again from 2018-2024 until new generation capacity comes on line. In light of this he stressed the importance of the Integrated Resource Plan [IRP2] and the role of the National Planning Committee.

The NPC, which is headed by former finance minister Trevor Manuel, has recently stated that it could be another 18 months before his Brains Trust delivers its first proposal to accelerate South Africa's social and economic development. Given the timelines of these types of projects, this is not good news for the South African consumer.

"The key is for both government and corporates to engage in productive conversations" says Dan. He adds, "There should be no corporate agenda versus national interests. This is a matter of national importance and priority that affects all of us and if the correct decisions are not taken immediately, it may prove to be very costly in the future."