Water, energy and food are interlinked: impacts in one area affect the other two. This relationship is particularly evident in Lephalale, the impoverished, water-stressed area where Eskom is building its Medupi power station. Business can learn from how Eskom is collaborating with government and other businesses to manage water, a constraint to social and economic development in Lephalale.
“Nestled at the spur of the Waterberg Mountains, Lephalale is a place of peace and breathtaking beauty,” declares the marketing copy on the municipality’s website. More breathtaking is the pace of development earmarked for this frontier town in the Limpopo province.
Identified as a coal mining and petrochemical cluster by government, the area’s 2035 local economic development plan includes growing the number of power stations from one to five and the amount of coal mined from 16 million tons to 100 million tons, establishing a coal-to-liquids plant, boosting existing agricultural production, and doubling the population to 240 000 people. The area boasts 40% of the country’s coal reserves and the town is booming, based largely on the construction of Eskom’s new Medupi plant.
One thing stands in the way: despite the Waterberg being one of South Africa’s great basins, there just isn’t enough water.
Coal-fired energy stakes its claim
“Yes, there is a water deficit in the Lephalale area,” says Nandha Govender, General Manager: Water and Environmental Operations at Eskom. As a strategic water user (identified in the National Water Resource Strategy), Eskom has a secure supply and a close relationship with the Department of Water Affairs (DWA); other water users are acutely aware of this hierarchy.
It is not easy to get a licence to extract water from the Mokolo Dam or surrounding rivers. Even Eskom has not secured all the water it needs for Medupi and is dependent on the completion of water infrastructure projects in the area. In addition, until these come online, no licences will be granted for further coal mining development, exposing the utility to operational and reputational risk. Considering the national grid relies on Medupi to plug shortfalls in energy supply, the availability of water has become an issue of national as well as local importance.
Even without new mines, existing mining practices are a risk to the water supply. “We are currently calling for proposals on incorporating green mining principles into our contracts,” says Mr Govender. “If poor enforcement of existing regulations allows old practices to continue, we may end up with another Mpumalanga,” he says, referring to the acid mine drainage that will harm communities, agriculture and the environment in that area for many years to come.
In Financial Year 2012, Eskom used 1.35 litres of water to produce one kilowatt-hour of energy. Through the introduction of dry-cooled technology, like that used in Medupi, Eskom aims to reduce this to less than one litre per kWh by 2030, while increasing energy supply.
Our thirsty economy
“In discussion forums there is pressure on us when it comes to the use of water for energy production purposes versus water for communities and for growing food,” admits Mr Govender. Local stakeholders are not the only ones up in arms: In 2012, a World Bank inspection panel, assessing compliance with its loan of $3.75 billion to Eskom, found that management “did not fully consider the impacts and risks of water supply to other local water users”.
Lephalale’s situation highlights the tension between three uses of water that sustain society and business: water for drinking, for food and/or for energy production. Doing business where one or more use is constrained involves trade-offs between different groups and requires that shared risks be carefully managed.
Take for example farming, an important aspect of the Lephalale’s economic landscape. Agricultural products include water-intensive cotton and soft fruit (including melons). Energy and industrial development is putting constraints on the water supply to this industry, raising concerns in the agricultural community.
The poorest pay
Local government was forced to deliver water in tankers to Marapong township last year, after the reticulated water ran dry. The situation is so bad that traditional leaders in rural areas have had to implement a system where poor residents pay R15 a household in order to maintain boreholes sunk by international aid agencies. Now the municipality is talking to Eskom about tapping into its infrastructure and expertise.
When the required infrastructure is built to supply Medupi and the area’s expanded water requirements, the cost of water will more than double for users in Limpopo. Eskom argues that this is unfair. Increased tariffs should be spread across all South Africa’s users rather than have the poorest province subsidise this cost.
Partnering in resource management
When water is a limiting factor, contested by so many stakeholders, it is essential that all players work together to realise everyone’s right to the resource. This means creating opportunities, improving efficiencies and honouring responsibilities. The private sector has begun acknowledging this.
The South African Strategic Water Partners Network (SWPN-SA) was launched at COP17 in 2011. It is a collaboration between, among others, DWA, the Water Resources Group, the World Economic Forum, and private partners including SAB, Nestle SA, BHP Billiton, Anglo American, Sasol, Coca-Cola and Eskom to address the immediate and long term water resource gap challenge in South Africa. Two years after the launch of this partnership, valuable experience, additional funding, and innovative, practical projects are emerging. Momentum is building for such partnerships across the African continent:
The SWPN-SA has established three working groups, tasked with identifying a pipeline of potential projects and detailing contributions by each stakeholder to enable adoption, upscaling and replication. Eskom heads the Effluent and Wastewater Working Group, investigating solutions to the problem of municipal and industrial effluent and acid mine drainage. The network also includes a water efficiency and leakage reduction working group and one dealing with water use in the agricultural supply chain. Working groups will present their strategies and plans to overcome challenges and constraints in these areas at the World Economic Forum on Africa in Cape Town in May 2013.
Eskom, by necessity, has been looking for solutions for some time. In 2008, it established a collaboration between some of its key coal suppliers – including BHP Billiton, Exxaro, GlencoreXstrata and Anglo American Thermal Coal– called the Joint Initiative Agreement (JIA), to collectively address water and waste management problems in the coal mining sector. The JIA has undertaken studies in determining the potential re-use of treated mine water in the Olifants catchment, minimising waste such as brine and coverting waste such as gypsum into saleable products and re-using treated excess mine water in municipalities and industrial and power generation operations, among other initiatives. A number of mine water treatment projects have been identified and under development to treat water from more than one mine within specific locations.
While different stakeholders will seek to protect their own interests, the allocation of water is a zero-sum game. To avoid conflict and disruption, community, ecological, agricultural and business interests need to be balanced. Each major user will need to find innovative ways to minimise their water-footprint. Ultimately, considering the importance of water for energy generation, agriculture, industry, the environment and society and the end consumer, these users need to collaborate with each other and create sustainable solutions for utilising and sharing this vital resource.
Published on the Trialogue Website: May 11th, 2013