Lynne Brown throws weight behind Eskom’s coal procurement policy

JOHANNESBURG – Eskom will continue to “radically but fairly” transform coal procurement because this is a non-negotiable national imperative, Public Enterprises Minister Lynne Brown said on Tuesday.

Eskom is currently embroiled in a bitter disagreement with one of its suppliers, Exxaro, over the diversified resources group’s black economic empowerment (BEE) policy.

Last month, Exxaro announced a decision to reduce its black shareholding to about 30% following the expiry of an agreement with its BEE partners.

However, Eskom’s coal procurement policy requires that all its suppliers have a “black ownership target” of more than 50% throughout the life of the mine.

In a briefing in Johannesburg on Tuesday, Brown said Eskom had painstakingly outlined its concerns relating to the high cost of coal and coal quality from coal suppliers.

She said this dated back from 2010 during Eskom’s tariff submissions to the National Energy Regulator of South Africa (Nersa) while coal costs were rising at rates well above inflation and escalating the electricity tariff.

“Unlike in the past, when Eskom’s playing hand was tied due to the constrained power system and there were limited options to pay prices as set by the industry, today Eskom is in a stronger position to negotiate, as the playing field has changed,” Brown said.

“Eskom will continue to source coal, as with renewable energy, at the right quality and the right price. I like to believe that these are good business principles that benefit the South African consumer.”

Brown was speaking during Eskom’s quarterly system status briefing at the power utility’s headquarters in Megawatt Park, Johannesburg.

Brown also praised Eskom for keeping the lights on and not implementing load shedding for 17 months.