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Court orders release of Eskom-BHP prices

Johannesburg - A  judge on Friday ordered state power utility Eskom to release details of an undisclosed pricing deal with mining giant BHP Billiton [JSE:BIL], which could prove embarrassing to both parties.

A local publishing group had requested the information, saying it showed a cosy relationship kept secret from the public in which Eskom provided electricity at cut-rate prices.

Judge Frans Kgomo said the release was in the public interest, radio broadcaster Eyewitness News reported.

Eskom spokesperson Hilary Joffe said the company would not appeal the ruling.

BHP could not immediately comment.

The case was brought by Sake24, a division of Naspers [JSE:NPN].

BHP said it would carefully consider the ruling and whether it would appeal.

Contracts to supply electricity to the mining firm's Mozal smelter in Mozambique and its Hillside and Bayside smelters in South Africa accounted for nearly all of Eskom's embedded derivative liabilities, which led to a book value loss of R9.7bn in the year to end of March 2009.

The contracts, two of which are still valid, have been a thorn in the side for cash-strapped Eskom, already struggling to find the money it needs to build new power stations in Africa's biggest economy to supply fast rising demand.

The deals were agreed to several decades ago when there was abundant supply in the country as a part of a government policy of underpricing power to attract industry.

Eskom has since sought to bring power tariffs on par with their production costs.

The utility was granted an annual increase in tariffs of around 25% for three years starting in 2010 and it is likely it may be granted two additional increases along the same lines after that. 

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