[miningmx.com] – SOUTH Africa’s Chamber of Mines (CoM) warned a further 8% hike in Eskom’s electricity tariffs could cost up to 40,000 jobs in the gold and precious metals industries and would merely reward Eskom for operational and budgetary failures.
Eskom is hoping to recover R22bn in lost revenue and cost overruns which, if granted by the National Energy Regulator of South Africa, would be redeemed through an 8% tariff hike – a development that would take the annual tariff increase to 16.6%.
“Given that many operations are currently operating at a loss or at a very marginal profit, the chamber estimates that Eskom’s proposed electricity tariff increase of 16.6% would jeopardise an additional 20,000 of the 119,000 jobs remaining in the gold sector, and another 20,000 of the 189,000 jobs in the platinum sector,” said Roger Baxter, CEO of the CoM in a statement.
The projects may ring a bell with mines minister, Mosebenzi Zwane, who said last week he feared 32,000 jobs were at risk in the South African mining sector owing to the decline in commodity prices.
The R22bn claim, which Eskom is able to make in terms of a mechanism called the Regulatory Clearing Account (RCA), consists of a R11.7bn under-delivery in revenue and R8bn due to unbudgeted spending on diesel power. The diesel was used to generate emergency reserve electricity from the operation of open cycle gas turbines.
The CoM said Eskom under-shot its revenue budget owing to its failure to manage its projects and operations efficiently whilst the cost of diesel was a function of the poor performance of Eskom’s generating fleet and delays in commissioning new power.
“The Chamber does not support the recovery of costs and lost revenues that could have been avoided by the utility’s better management,” said Baxter.
“The RCA would also penalise these customers for Eskom’s own failure to supply sufficient electricity and at the same time reward Eskom for its operational failures.
“On the whole it appears that Eskom’s customers are expected to bear an excessive share of the revenue risk,” he said.
“Since 2008 there has been a 300% increase in the electricity tariff. As a result of intensive energy management and efficiency projects, some Chamber members have managed to contain their overall costs of electricity to 200%,” said Baxter.
“However, there is little remaining scope for further effective energy efficiency exercises,” he added.
