20 MARCH 2013Bdlive.co.za
Public hearing over a contract for cheap power for BHP
Edited by : AL CIRCLE
2 min read
BHP Billiton’s preferential arrangement with Eskom through which the company pays a fraction of the standard electricity tariff for its Richards Bay aluminium smelters will soon be a matter of public debate and discussion, when the National Energy Regulator of SA conducts public hearings over the contract.
The smelters are among Eskom’s biggest single users and consume nearly 6% of its total capacity — or enough power to supply a small city. A deal made in the 1990s to supply them with cheap electricity has raised public ire in the face of rising prices for consumers and has become a drain on Eskom’s financial resources.
BHP Billiton last week lost its court appeal to keep the agreement confidential.
This followed an application in terms of the Promotion of Access to Information to reveal the formula by which BHP Billiton’s special energy price is calculated.
Eskom spokeswoman Hilary Joffe said on Tuesday that the company was compiling the information and would soon provide it to Mr De Lange, after which it would become public.
However, Eskom had also referred the contract to Nersa for consideration as BHP Billiton is now the only user in South Africa that does not pay a regulated price for electricity.
Nersa spokesman Charles Hlebela said that the regulator had decided to hold public hearings towards the end of next month.
Apart from the public anger over BHP Billiton’s preferential price, the hearing is likely to become a slanging match between Eskom and BHP Billiton.
Eskom now wants out of the contracts, which have become a liability of billions of rand. But this may not be possible, as the contracts are in force until 2028.
The effect of the agreements and the rapidly rising electricity tariffs is that Eskom sells electricity to BHP Billiton at below cost.
Democratic Alliance MP Pieter van Dalen claimed last month the company was paying 8.8c/kWh-10c/kWh based on a formula that also takes account of aluminium prices, which are low. The Eskom tariff now stands at 61c/kWh, not taking into account this year’s 8% increase.
The smelters are among Eskom’s biggest single users and consume nearly 6% of its total capacity — or enough power to supply a small city. A deal made in the 1990s to supply them with cheap electricity has raised public ire in the face of rising prices for consumers and has become a drain on Eskom’s financial resources.
BHP Billiton last week lost its court appeal to keep the agreement confidential.
This followed an application in terms of the Promotion of Access to Information to reveal the formula by which BHP Billiton’s special energy price is calculated.
Eskom spokeswoman Hilary Joffe said on Tuesday that the company was compiling the information and would soon provide it to Mr De Lange, after which it would become public.
However, Eskom had also referred the contract to Nersa for consideration as BHP Billiton is now the only user in South Africa that does not pay a regulated price for electricity.
Nersa spokesman Charles Hlebela said that the regulator had decided to hold public hearings towards the end of next month.
Apart from the public anger over BHP Billiton’s preferential price, the hearing is likely to become a slanging match between Eskom and BHP Billiton.
Eskom now wants out of the contracts, which have become a liability of billions of rand. But this may not be possible, as the contracts are in force until 2028.
The effect of the agreements and the rapidly rising electricity tariffs is that Eskom sells electricity to BHP Billiton at below cost.
Democratic Alliance MP Pieter van Dalen claimed last month the company was paying 8.8c/kWh-10c/kWh based on a formula that also takes account of aluminium prices, which are low. The Eskom tariff now stands at 61c/kWh, not taking into account this year’s 8% increase.
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