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Eskom Generation Fleet Renewal Project: Socio-Economic Study

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Eskom Generation Fleet Renewal Project: Socio-Economic Study Eskom Generation Fleet Renewal Project: Socio-Economic Study Report Prepared for Eskom Report Number 506503/F1 Report Prepared by February 2017 SRK Consulting: Project No: 506503 Socio-Economic Study Page i Eskom Generation Fleet Renewal Project: Socio-Economic Study Eskom SRK Consulting (South Africa) (Pty) Ltd 265 Oxford Rd Illovo 2196 Johannesburg South Africa e-mail: [email protected] website: www.srk.co.za Tel: +27 (0) 11 441 1111 Fax: +27 (0) 11 880 8086 SRK Project Number 506503 February 2017 Compiled by: Peer Reviewed by: Victoria Braham Anita Bron Social Scientist Principal Social Scientist Adel Malebana Vassie Maharaj Senior Social Scientist Partner Email: [email protected] Authors (in alphabetical order): Victoria Braham, Anita Bron, Andrew Hart, Adel Malebana, SSueue Reuther BRAV/MALA/HARA/BRAN/MAVA FINAL SIA Report_Eskom_srk_506503_03022017 February 2017 SRK Consulting: Project No: 506503 Socio-Economic Study Page ii Executive Summary Eskom owns and operates fourteen coal-fired power stations in South Africa, and is responsible for generation, transmission and distribution of electricity to South Africa. The majority of Eskom power stations are nearing their end of life, and Eskom has commenced with studies to assess fleet renewal options for dealing with these power stations. The power stations under discussion in this study are Hendrina, Arnot and Komati in the Steve Tshwete Local Municipality, as well as Camden power station in the Msukaligwa Local Municipality. These power stations are situated in the Mpumalanga Province. All these power stations use coal, sourced from local mines, for the generation of electricity. The result is that electricity generation has been widely associated with the emissions of carbon dioxide (CO 2), sulphur dioxide (SO 2) and nitrogen dioxide (NO 2), which contribute to health related issues at local level, and climate change impacts on a broader scale. Eskom has identified four fleet renewal options that could be implemented at these four power stations. The options are classified as follows: x Option 1A/1B, referred to as Option 1 in this report (506503/F1): Lifex and Modernisation (Refurbishment); x Option 2, which according to technical studies, was not considered technically feasible and was therefore not assessed as part of this study: Repower with Biomass or Gas; x Option 3A/3B, referred to as Option 3 in this report (506503/F1): Rebuild as Pulverized Fuel or Circulating Fluidised Bed Combustion (Demolish and rebuild); and, x Option 4: Do not renew (Decommission). Overall, Eskom seeks to ensure that the chosen fleet renewal option cost effectively contributes to meeting the electricity demand in South Africa, thereby generating further revenue from electricity sales. In order to assist Eskom in selecting the option that will best meet their objective, the key objectives that the socio-economic study aim to fulfil were: x Undertake a baseline study/overview of the project’s zones of influence to understand the socio- economic landscape locally, regionally and nationally; x Assess the socio-economic implications of the proposed project options and associated infrastructure per power station; x Identify stakeholder issues, opportunities, potential socio-economic impacts and risks, and areas that would require mitigation for the options; x Assess the resilience/vulnerability of the communities in the context of the options and how they would respond to these options; x Place the socio-economic considerations of the local communities into the broader context of national priorities and sustainable development goals (social, economic and environment); x Rate and rank the three options in light of the above information; and, x Assess the socio-economic risks of the project. To meet the socio-economic study objectives, five components to the socio-economic study were identified: 1. Macro-economic and socio-economic baseline analysis; 2. Identification of applicable national priorities and sustainable development goals; BRAV/MALA/HARA/BRAN/MAVA FINAL SIA Report_Eskom_srk_506503_03022017 February 2017 SRK Consulting: Project No: 506503 Socio-Economic Study Page iii 3. Stakeholder analysis; 4. Assessment of impacts of the options by way of an options analysis; and, 5. Risk assessment. The study components were informed by the application of the following methods: x Desktop review: the review of current and available secondary data sources. x Interviews with internal and external stakeholders: key informants included internal corporate stakeholders, internal power station stakeholders, and selected external stakeholders. Regarding component 1 (Macro-economic and socio-economic baseline analysis), key social and economic characteristics at play in the municipalities within which the power stations are situated included: There are high levels of poverty and high unemployment rates, which are associated with low incomes for those employed; x The local and regional economy is mostly based on manufacturing, energy, mining and trade; x Across the regional zone of influence, the majority of the population is of working age and below the ages of 35, with a high dependency rate associated with a significant youthful population below 18 years old; x The region experiences population increases due to in-migration from within the province and the rest of the country. Linked to this is the growth of informal settlements and the demand for services; x Levels of education in the local zone of influence are high, however the number of those having attained tertiary education is low and can be attributed to (amongst other reasons) lack of tertiary education campuses in the municipalities as well as financial constraints presented by attending tertiary institutes; x Access to health care facilities is low, with Camden power station being the only one with a hospital within a 20km radius. The rest of the hospitals are between 40km and 53km radius of the power stations; and, x Apart from Camden power station, all the power stations, (through the local municipality), provide potable water, sanitation and electricity to their zones of influence. In terms of component 2 (Identification of applicable national priorities and sustainable development goals), as a state-owned enterprise Eskom needs to align its activities with those of government in order to contribute towards government reaching its development targets. With the adoption of the National Development Priorities and the associated Sustainable Development Goals, Eskom is required to limit the emissions from their operations in an attempt to respond to national priorities. As such, options were assessed against national priorities to determine the extent to which they were synergistic or conflicting with the identified priorities and goals. The National Development Plan priorities identified as most relevant to this study were therefore: social, economic, and environmental, linking to the following Sustainable Development Goals: Goal 1 “End poverty”, Goal 4 “Inclusive and equitable quality education”, Goal 3 “Ensure healthy lives and promote well-being for all”, and Goal 9 “Build resilient infrastructure”. BRAV/MALA/HARA/BRAN/MAVA FINAL SIA Report_Eskom_srk_506503_03022017 February 2017 SRK Consulting: Project No: 506503 Socio-Economic Study Page iv Regarding component 3 (Stakeholder analysis), key stakeholders identified included: x Government, (national, provincial, district and local); x Host communities; x Competent and commenting authorities; x Neighbouring mines; x Non-Governmental Organisations, x Business forums; x Transportation forums; x Internal stakeholders; and, x Neighbouring farmers. The high-level stakeholder analysis indicated similar stakeholder relationships and patterns amongst the four power stations. Stakeholder forums were identified across all four power stations, with forums representative of adjacent farmers, municipalities and receiving communities. All the power stations indicated having continuous engagement with their stakeholders through these forums. However, in terms of engagement with non-government organisations, Camden power station was not strong when compared to other power stations. In terms of component 4 (Assessment of impacts of the options by way of an options analysis) an option analysis was used to identify and assess the potential changes and impacts of each of the three options for each power station, in order to identify a preferred option. Seven impact categories were identified, These were further broken down into nineteen impact sub-categories. A basic decision matrix was developed, consisting of a set of weighted criteria to rate the options against. The seven impact categories were: x Employment and procurement; x Environmental; x Corporate social investment and training; x Service delivery; x Coal sourcing; x Land take; and, x Regional and national economic contribution impacts. The findings of this option analysis for all the four power stations were: x Options 1 and 3 were the preferred options in that their implementation would lead to continued maintenance of current employment, as well as creating new employment opportunities into the future. Both options would allow for the continuation of the Corporate Social Investment spend through the Eskom Foundation, thus providing the beneficiaries with skills to increase their employability, as well as access to other livelihoods opportunities such as small businesses. x However, from an environmental point of view, these two options differed
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