Energy and Electricity Minister Kgosientsho Ramokgopa’s special adviser, Silas Zimu, has called on South African coal producers to temporarily sell coal to the state-owned utility Eskom at reduced prices for the next three years. This measure aims to offset the proposed 36.15% increase in electricity prices for direct Eskom customers.
In exchange, coal suppliers would receive extended contracts with Eskom. Zimu spoke to coal industry leaders during the 2024 Middelburg Coal Conference, organized by the nonprofit FFF Carbon, in Mpumalanga on October 17. He highlighted that 65% of the proposed Eskom tariff increase is directly tied to coal prices. He believes coal suppliers have the ability to help ease the financial burden.
“When I consider the 36% tariff increase and that 65% of it comes from coal prices, I ask, can’t you reduce your prices just for three years? If you offer us a special price, we will extend your contracts, allowing you to recover your costs later. We cannot accept this 36% increase now; it impacts our finances,” Zimu stated.
Eskom has submitted its current tariff increase application to the National Energy Regulator of South Africa, aiming for implementation in April next year. Public hearings will take place in the coming months before a final decision is made.
Ramakgopa has called the proposed tariff hike “untenable.”
Zimu commended the coal industry for providing a steady supply of quality coal, which has contributed to over 200 days without load shedding. However, he cautioned that excessively high coal prices could damage the coal industry’s already fragile public image.
“If people realize that more than half of the tariff increase comes from you, I assure you, you’ll have to answer for it every day,” he warned.
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