Finweek English Edition - - INSIGHT - Garth The­unis­sen

hon­our its deal, which only ter­mi­nates in 2028. How­ever, from a po­lit­i­cal stand­point, it would be wise for both Eskom and BHP Bil­li­ton to at least con­sider an early ter­mi­na­tion of the con­tract.

No one can deny the mas­sive chal­lenges that Eskom faces. The State-run power util­ity re­quires an es­ti­mated R1tr to meet its goal of al­most dou­bling SA’s pow­er­gen­er­at­ing ca­pac­ity to 80 000MW by 2026. How­ever, to ex­pect con­sumers to bear the brunt of that bur­den is both un­sus­tain­able and un­jus­ti­fi­able.

Eskom’s out­go­ing f inan­cial di­rec­tor Paul O’Fla­herty told Fin­week in May last year t hat t he av­er­age over­all t ariff charged to all its cus­tomers would have to in­crease by 48% (be­fore fac­tor­ing in inf la­tion) just to com­plete its cur­rent build pro­gramme, which ter­mi­nates when the Kusile power sta­tion comes on stream in 2017. Ex­pan­sions planned be­yond Kusile un­til 2030 will re­quire ad­di­tional tar­iff in­creases roughly 81% higher than those that pre­vail to­day (again, be­fore tak­ing i nf l ation i nto ac­count).

SA al­ready has a some­what pre­car­i­ous cul­ture of pay­ment for pub­lic ser­vices and this is likely to come un­der fur­ther stress thanks to ris­ing mu­nic­i­pal tar­iffs and ac­cel­er­at­ing inf la­tion. If Eskom wants to pre­serve what lim­ited cul­ture ex­ists for the pay­ment of pub­lic ser­vices, it is go­ing to have to give se­ri­ous thought as to how it goes about per­suad­ing BHP Bil­li­ton to re­lin­quish its le­gal right to pref­er­en­tial tar­iffs.

Spokes­peo­ple for Eskom and BHP Bil­li­ton did not an­swer their of­fice or mo­bile phones when Fin­week tried to reach them for com­ment on this story.

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