Nersa delivers a body blow to Eskom

Eskom could lose its single biggest client after the National Energy Regulator of SA rejected an application for a special pricing agreement with mining and metals company South32 on Thursday.

Electricity comprises about 40% of the ferralloy industry’s input costs, and it spends more than R15 billion on electricity annually. The industry employs about 17 500 people. Hillside was then paying an average of 22.65c per kilowatt hour to Eskom, while it cost Eskom 41c/kWh to generate it. At that stage, households paid about R1.40/kWh for electricity.BHP Billiton refused to renegotiate. After an investigation, Nersa told Parliament in 2016 that the contract was solid and Eskom was bound to it.

In February last year, South32 CEO Graham Kerr said the outcome of the negotiations about the price that Hillside would pay for electricity in the future would determine the future of the plant. Nersa members agreed that it was unclear when the mineral resources and energy department would finalise the policy framework.

On January 14, representatives of Eskom, National Treasury and the departments of mineral resources and energy, public enterprises, and trade and industry had a meeting about the matter. According to Chabisi Motloung, chairperson of Fapa, the short-term policy framework failed. Only two companies – Silicon Smelters and Sublime Technologies –succeeded in having pricing agreements with Eskom approved after a lengthy process.

Eskom SHOULD lose its single biggest client...

Maybe they had agreement before 1994, like Evergreen Contracts, Eskom will charge flat rate till today no annual increase whatsoever

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