'Coal firms choke Eskom'

Pretoria - Coal companies are exploiting Eskom and ordinary consumers are having to foot the bill, the National Energy Regulator (Nersa) heard at its hearings on Eskom's proposed 34% tariff hike.

A request for an investigation into collusion and price manipulation in the industry was advanced, as these companies were achieving achieved record profits while Eskom was struggling financially to keep its head above water.

The coal companies directly involved include Exxaro, Anglo Coal and Xstrata.

Exxaro's after-tax profit last year was 134% higher than that of the previous year, and net profit from its coal operations rose 200%.

This company is one of Eskom's largest suppliers and sold Eskom 99% of the 36.7m tons of power-station coal it mined last year.

Anglo Coal and Xtrata's gross profits in respect of their respective coal operations for 2008 were 89% and 251% up.

Eskom uses about 125m tons of coal a year.

"The South African consumer is clearly subsidising coal companies," Solidarity deputy general secretary Dirk Hermann claimed at the hearing.

Ethèl Teljeur, a Nersa member on the panel considering Eskom's application, asked Chamber of Mines representative Dick Kruger during his presentation whether South Africa's coal industry was holding Eskom to ransom.

Kruger responded that his organisation could not become involved in pricing issues. "Such involvement could very quickly lead to an investigation by the Competition Commission. We restrict our activities to facilitation and policy matters.?"

Eskom chief executive Jacob Maroga said that the 34% interim increase was necessary mainly because of rising coal and labour costs.

"Eskom needs a huge amount of money and, should the increase not be approved, electricity problems could again become the order of the day," he warned.

According to Maroga, in the current financial year (2008/09) coal would cost Eskom about R19.6bn.

- Sake24.com

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