While it bleats about runaway coal prices, Eskom only has itself to blame
With its disastrous move to short-term contracts, and in a current seller’s market, the utility is in a very tight spot
Eskom buys about 60% of SA’s coal to feed its 15 insatiable coal-fired power stations that consume 120 million tons of it a year.
Now, as Eskom buckles under the weight of escalating costs, the government has called on coal suppliers to cut their ever-increasing prices. The embattled utility would do well to recognise that its hefty coal bill is largely its own doing.
Eskom’s move away from long-term coal supply contracts is at the heart of its coal price problems. In the past, cost-plus was the preferred model, in which Eskom would typically invest in coal mines to procure coal at cost, plus an agreed margin...