Public Enterprises Minister Barbara Hogan on
Friday refused to reveal details of Eskom’s long-running contracts
Public Enterprises Minister Barbara Hogan
today refused to reveal details of Eskom’s long-running contracts
with foreign companies like BHP Billiton that
contributed to the entity’s R9.5bn loss last year.
Hogan told Parliament’s portfolio committee on public enterprises
she could not bow to pressure to do so, because some of the
companies were in competition with each other and indiscretion would
make Eskom look “silly”.
“There are mines that are in that world that are in competition with
each other. There are Eskom customers that are competitors.
Now we can say let’s make this all open to everybody, which will
make us look pretty silly,” she told MPs.
She added, however, that she had insight into the terms of the
contracts and that efforts were underway to renegotiate deals like
those with BHP Billiton, which is reported to have paid 11 and 14
cents per kilowatt for its local aluminium smelters in 2008 and 2009
respectively.
“The matter is being pursued actively at the moment. In the days of
free electricity we could afford such expenditure. Nowadays that is
problematic,” she said.
“We need to pursue what kind of flexibility there is in those
contracts.” Eskom is under intense media pressure to reveal details
of its 25-year contract with the mining giant. Sake24 this week
asked for a court order forcing Eskom to reveal the price at which
it supplies electricity to BHP Billiton’s two aluminium smelters in
South Africa. They reportedly consume more than 5.6% of Eskom’s
electricity output at discounted prices because of a clause in the
contract linking the tariff to the aluminium price, which nosedived
during the global economic crisis.
Sake24 claims that if Eskom were to break the contract, South
Africa’s energy crisis would be at an end. However, if it continued
the existing arrangement, it would run into more trouble as its
exposure to demand-linked to aluminium prices was set to increase
dramatically during this decade.
The troubled national electricity supplier has refused to make
public the details of the deal on the grounds that it would be
detrimental to BHP Billiton’s commercial and financial interests.
The contracts were concluded by Eskom during the apartheid-era to
attract investment into South Africa, but have since become
burdensome to the company and hugely controversial because of the
preferential pricing clauses.
Hogan said recent reports that Eskom was stuck with 138 such deals
were baseless.
“Let me make very clear that there is not a notion here that Eskom
is engaged in a myriad of confidential secretive agreements that are
not regulated. “ There were a “small number” of such deals and their
terms were not being hidden from the government, Hogan said, adding
that she had been briefed on them by acting Eskom chief executive
officer Paul Makwana.
“I have received a confidential briefing from him on those matters,
so I do have sight of what these matters are about. We too are
equally concerned.” She was responding to a question from MPs on
whether the state had any say in major contracts concluded by Eskom.
The preferential pricing contracts are seen as part of the reason
not only for Eskom’s losses, but for annual 25 percent tariff
increases that will be imposed on South Africans to make up the
shortfall in funding for its infrastructure expansion programme.
Acting director general of public enterprises Sandra Coetzee
confirmed that before concluding significant contracts, state-owned
enterprises had to seek the approval of the department.
With acknowledgements to
Sapa and Business Day.
So the taxpayer bails out
Eskom with R10 billion a year on top of their own electricity
payments in order that Alusaf can make a few billion Rand profit per
year refining Australian aluminium with our electrical power.
On top of that, Alusaf's consumption of some 6% of the nation's
total power output leads to shortfalls which lead to loadshedding.
It's outrageous.
It's time this ANC government went out to pasture.