South African Energy and Electricity Minister Kgosientso Ramokgopa’s special adviser, Silas Zimu, has urged South African coal producers to temporarily lower their coal prices for Eskom, a state-owned electricity producer company over the next three years in order to mitigate the proposed 36.15% electricity price hike for Eskom’s direct customers.
In exchange, the coal suppliers would be offered extended contracts with the state-owned utility.
Speaking to coal industry leaders at the FFF Carbon 2024 Middelburg Coal Conference in Mpumalanga on October 17, Zimu pointed out that 65% of the proposed tariff increase is directly linked to coal prices, suggesting coal producers could help alleviate the situation.
“When I see the 36% tariff increase and realize that 65% of the operational costs are driven by coal prices… can’t you lower the price for just three years? Give us a special price, and we’ll extend your contracts so you can recover the costs later. But allowing this 36% increase now, when you’re part of it, is hurting us all,” Zimu said.
Eskom’s tariff increase request, submitted to the National Energy Regulator of South Africa for approval in April next year, will undergo public hearings in the coming months before a final decision is made.
Ramakgopa has called the proposed tariff hike “untenable.”
Zimu commended the coal industry for ensuring a stable supply that has contributed to over 200 days without loadshedding but warned that charging Eskom excessively for coal could damage the coal industry’s already fragile reputation.
“If the public learns that more than half of the tariff increase is due to you, you’ll have to answer for it every day,” he cautioned.
