• Three cheers for Thuli

    Where are South Africa’s men and women of honour, asks Mandi Smallhorne.

  • Structure your pension

    An expert explains the ins and outs of different types of retirement annuities.

  • Inside Labour

    Without radical policy change SA's social fabric will continue to fray, says Terry Bell.

Data provided by iNet BFA
Loading...
See More

Eskom hike will cripple mines

Feb 01 2013 07:57

The Chamber of Mines said that Eskom is sacrificing the interests of the country for commercial gains.

Related Articles

Eskom hike will choke factories

Eskom hikes will cost households R10bn

Eskom hike could spark violent protests

Protester: Eskom hikes killing us

Eskom hike to hit municipalities hard

Exempt vulnerable from electricity hike

 
Cape Town - Eskom's 16% tariff increase will push the mining industry over the tipping point, the Chamber of Mines said.

The body told the the National Energy Regulator of SA (Nersa) on Thursday that Eskom was more interested in its credit rating than the interests of South Africa, reported Business Day.

It warned that the electricity increase will force mines to lay off staff.

More than half of the country's platinum mines are loss-making or marginal and 37% of gold mines are in a similar position, however, electricity added R7bn to their costs over the past five years.

Roger Baxter, senior executive at the chamber, told the hearing that Eskom was too focused on profit making and claimed that it was evident in the fact that two thirds of the proposed increase in electricity prices was attributable to return on capital and depreciation charges.

"This clearly shows Eskom is primarily focused on achieving a standalone investment grade rating at the expense of the competitiveness of South Africa’s electricity intensive tradable sectors," he said.

Chamber of Mines president Mark Cutifani said it appeared that the 16% increase was needed in order for Eskom to secure its investment-grade status.

"The economic impact of Eskom’s proposals is substantially negative. The South African economy cannot absorb the proposed further doubling of the price on the back of a price that has already trebled," Baxter said.

The current Multi-Year Price Determination, MYPD2, ends on March 31 2013. New tariffs will be implemented from April 2013.

Nersa will announce its final decision in February, following an extended period of consultation and public hearings.

In January, Fitch credit ratings lowered its outlook on Eskom's long-term local currency IDR to 'BBB+' from 'A' with a stable outlook. It also dropped its senior unsecured local currency to 'BBB+' from 'A'.

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
6 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're talking about:

Small Business

“Hippie sense makes business sense,” an entrepreneur said, adding that "purpose" was core to success.
 

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...