MPs want details on Eskom deals

Cape Town - Government is "concerned" about Eskom's confidential electricity tariff agreements with large industrial groups, Public Enterprises Minister Barbara Hogan said on Friday.

However, this does not imply the power utility is engaged in a myriad of secret and preferential price agreements, she said in Eskom's defence during a meeting with parliament's public enterprises committee.

DA MP Pieter van Dalen said: "I want to know from the department: do you know about these secret contracts and do you have scrutiny over them, or are they secret for you too?"

This follows numerous reports that Eskom is effectively subsidising some of its industrial customers by selling them electricity below costs.

The Mozal aluminium smelter in Mozambique, for example, paid about 14.8c/kWh for power last year when Eskom calculated its "average total cost" of producing electricity at 27.3c a unit.

BHP Billiton's southern African aluminum smelters have also been fingered in this controversy for receiving electricity at discounted prices.

Earlier this week, Fin24.com's sister publication Sake24 announced it is suing Eskom to disclose the exact details of these contracts.

MPs also demanded details of deals the power supplier struck with a further 138 companies. Hogan responded that these contracts had been negotiated and monitored by energy regulator Nersa, and that the information is publicly available.

Hogan, however, said government was "equally concerned" about the preferential pricing agreements struck during the apartheid era to attract foreign investment to the country.

"It is a matter we are actively pursuing at the moment. I have had a detailed briefing from Nersa so I do know all the details," said Hogan. She stressed that the main priority was to find out what level of flexibility these contracts offered, as the country could no longer afford them.

Hogan agreed to another meeting with the committee in which these tariffs would be fully explained.

Committee chairperson Vytjie Mentor said it was critical for someone to "[keep] an eye over cross-subsidisation" so that no company gets electricity cheaply while consumers cough up for ever-increasing tariffs.

- Fin24.com