Distressed firms can apply for lower power tariffs

The door is once again open for distressed industries to negotiate lower electricity tariffs with their respective suppliers, be it Eskom or their local municipalities.

This follows the department of energy’s finalisation of the framework for short-term negotiated pricing agreements to save jobs and maintain Eskom’s sales volumes.

The department has also issued an interim framework for long-term negotiated pricing agreements to assist existing industries.

According to the document, the final framework will further provide for incentives to encourage new investments in South Africa’s industrial sector.

Moneyweb reported in March that energy regulator Nersa had approved two-year incentive pricing agreements for Silicon Smelters and Sublime Technologies.

This enabled Silicon Smelters to reopen its furnaces in Polokwane and eMalahleni, but it eventually closed a few months before the agreement came to an end.

The Sublime agreement ended in September.

Eskom’s decades-old negotiated pricing agreement with South32 for its aluminium smelter in Richards Bay has been the target of much criticism.

The tariff Eskom charged the company was linked to the aluminium price and at times it was heavily subsidised by consumers.

This agreement ended recently, but South32 chief operating officer Mike Fraser told Engineering News that it has reached a new agreement with Eskom on the same basis as its agreement with Mozal Aluminium and not linked to the commodity price.

It still requires Nersa approval. Eskom has confirmed that it will now adjust the agreement in line with the new framework before submitting it to Nersa.

The interim framework for long-term agreements provides that companies will be disqualified if they or their main shareholder have been found guilty of corruption in the previous three years.

Even an investigation in this regard can result in disqualification and the company will have to refund any benefits it has enjoyed to date. –