Eskom’s $4bn coal bill headache largely of its own making
South Africa wants coal producers to help debt-stricken state power utility Eskom Holdings tackle its skyrocketing costs of the fuel – a problem that’s largely of its own making.
Eskom traditionally signed so-called “cost-plus” contracts for coal with mining companies that managed and operated shafts the utility helped finance. In 2015 then-CEO Brian Molefe criticised the model, saying the utility wanted to buy “the bread, not the entire bakery” and it increasingly began to enter into short-term supply agreements.
Eskom’s coal costs have risen almost 22% since 2016 as a result of the shift and rising international prices driven by increasing demand from India and China. The utility now concedes that it erred and says it has approved a long-term coal strategy “including the investment in cost-plus mines where required.”
Meanwhile the government wants coal producers to consider offering Eskom discounts on the more than 110-million tons a year of the fuel it burns. With supplies constrained and continued demand for exports, they have little incentive to make concessions.
Article Enquiry
Email Article
Save Article
Feedback
To advertise email advertising@creamermedia.co.za or click here
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation















