Domestic coal suppliers asked to lower price asked of Eskom
Energy and Electricity Minister Kgosientsho Ramokgopa’s special adviser, Silas Zimu, has implored South African coal producers to temporarily sell coal to State-owned utility Eskom at a reduced price for the next three years to offset the proposed 36.15% electricity price increase for direct Eskom customers.
In return, coal suppliers would receive extended contracts with the utility.
Speaking to coal industry leaders at nonprofit organisation FFF Carbon’s 2024 Middelburg Coal Conference, in Mpumalanga, on October 17, Zimu revealed that as much as 65% of the proposed Eskom tariff increase was a direct result of coal prices. As such, he believed that coal suppliers to Eskom were in a position to assist.
“When I look at the 36% tariff [increase] and the operational costs of . . . 65% coming from the coal price . . . can't you reduce it, just for three years? Just give us a special price for three years. If you do, we'll extend your contracts so that you can recover your money later. But you can't allow that 36% now. You are part of the 36% increase, and it’s hitting us in our pockets,” he said.
Eskom’s current tariff increase application, which has been submitted to the National Energy Regulator of South Africa for implementation in April next year, will be subjected to public hearings in the coming months before a final determination is arrived at.
Ramakgopa has described the proposed tariff hike as “untenable”.
Zimu praised the coal industry for the steady supply of quality coal as being instrumental in achieving more than 200 days without loadshedding but warned that charging Eskom with excessively high coal prices would undermine the already shaky reputation of the coal industry in the eyes of the public.
“If people . . . know that more than half of [the tariff increase] comes from you guys, I’m telling you, you'll be answering [for it] every day,” he said.
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