No solution to tariff hike: calls for Eskom restructuring

The miners are supporting a restructuring of struggling state power firm Eskom
The towers of Eskom Power plant are seen in Hendrina on February 22, 2018. – The name of Eskom, Africa’s largest electricity company, has become synonymous with the worst corruption scandals in South Africa and the utility could well become the final nail in the political coffin of President Jacob Zuma (Photo by MARCO LONGARI / AFP)

South African miners warn that tariff hikes alone will not solve Eskom’s problems.

The miners are supporting a restructuring of struggling state power firm Eskom to boost competition in the electricity supply industry.

Top government officials are to determine whether to split Eskom into generation, transmission and distribution units at a cabinet meeting starting on Wednesday as part of efforts to rescue the company from financial crisis.

The mining and smelting industry is one of Eskom’s top customers, accounting for around 30 percent of electricity demand in South Africa.

“Most countries we compete against have electricity supply industries where generation is competitive, there is a state transmission company and some competition in distribution,” Roger Baxter, chief executive of South Africa’s Minerals Council, said.

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“We need Eskom to be made into a much more efficient, cost-effective organisation.” He added

The Minerals Council, which represents firms including Sibanye-Stillwater and Exxaro, says average annual power price increases of 15.5 percent between 2006 and 2017 reduced investment in the mining sector by a cumulative 103 billion rand ($8 billion).

It says Eskom’s request for a further 15 percent increase in electricity tariffs in each of the next three years – if granted by the country’s energy regulator Nersa – would cripple an industry already in decline.

There are also fears that thousands of mining jobs could be lost.

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