While it bleats about runaway coal prices, Eskom only has itself ...

Business

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

Lisa Steyn

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...

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