CAPE TOWN (miningweekly.com) – Eskom fuel sourcing acting GM Ayanda Nteta has rebuffed claims that the power utility’s procurement policies are centred on short-term contracts, or spot market deals.
Speaking at the IHS Markit 2017 South African Coal Export Conference, in Cape Town, on Thursday, she stated that Eskom took a balanced approach to its coal buying practices, incorporating both short- and long-term contracts into its supply strategy.
“When I refer to short-term contracts, these are contracts that are a minimum of three years in length and not just a few months of supply at a time,” Nteta emphasised.
Other “misconceptions” that she sought to dispel were that Eskom’s coal procurement policies were inconsistent, confusing and lacked transparency, as well as claims that Eskom’s policies of giving priority to black-owned coal mining companies was driving up the parastatal’s coal procurement bill.
Nteta said that, over the past two years, Eskom had sought to ensure it had more open tender processes in place for coal procurement. “Concerns [have been] raised by some in the industry that this more transparent process is discouraging the establishment of new coal mines. However, we believe the process offers equal opportunities for existing and new coal suppliers.”
She commented that Eskom, towards the end of 2016, undertook stakeholder engagements to provide parties with a better understanding of its procurement policies. Nteta said these discussions had been robust and would continue into the future to ensure that stakeholders were fully informed of Eskom’s procurement policies.
Further, she noted that, over the past year, the utility had issued a number of requests for proposals to the market and had awarded various contracts during this period as well.
“The cost of coal from black-owned companies was less than from other suppliers, which debunks the myth that our black economic empowerment coal procurement processes are driving up coal prices,” Nteta stressed.
She said Eskom, in partnership with the South African coal mining industry, was committed to providing affordable electricity to the country, while still maintaining economic growth. However, these values need to take place within the parameters of the National Energy Regulator of South Africa’s coal price determination.
“Eskom is also committed to supporting black emerging miners, as we believe this will contribute towards creating jobs and ensuring job security in the mining sector,” Nteta concluded.