• Conflict over water, coal

    SA's leaders have upped their support of the water-intensive coal industry, says Keith Schneider.

  • Cost of doing business

    The world can't afford the $4.7trn a year in environmental costs of business, says Mandi Smallhorne.

  • Voter paralysis

    With so much tilting voters against change, democratic reason is the loser, says Solly Moeng.

All data is delayed
Loading...
See More

Eskom hike will cripple mines

Feb 01 2013 07:57
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
Comments have been closed for this article.
 

Company Snapshot

We're talking about:

THE DEBT ISSUE

Debt is one of the biggest financial issues facing South Africans today. Find out how you can avoid and manage your debt with Fin24 and Debt Rescue.
 

Money Clinic

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

Voting Booth

The upcoming petrol price hike is:

Previous results · Suggest a vote

Loading...