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By Sally Evans and Brendan Boyle | May 26, 2010 | COMMENTS [ 0 ]

ENERGY Minister Dipuo Peters has overturned months of stonewalling by Eskom to confirm that South Africa sells power to mining giant BHP Billiton in Mozambique at half the cost of production.

Peters confirmed for the first time in a written response to a Parliamentary question that the company paid an average of 12,3 cents per kilowatt hour for Eskom power supplied to its Mozal aluminium smelter in the year to March.

She said Anglo American also paid well below the production cost of 24,3 cents per kilowatt hour.

This contract, which was signed in 1997 with an end-date of 2025, is being renegotiated, but officials have declined to indicate what the new pricing levels might be.

Ina Wilken from the National Consumer Forum said: "This is outrageous. Consumers in South Africa don't even have enough money to put food on the table but they still have to pay 41 cents per kilowatt hour. It is totally irrational and I am outraged."

Cosatu spokesperson Patrick Craven said: "This confirms everything we have feared. It is unfairness, where the poorest pay the most," while Pieter van Dalen, the DA's spokesperson on public enterprises - who exposed the low rates in a document in April - said: "I am disgusted, to say the least."

Renegotiations of the contracts were meant to be finalised by tomorrow, however, Eskom could not be reached for a comment.

In another Parliamentary question posed earlier this month, Public Enterprises Minister Barbara Hogan said: "The final pricing agreements have been signed with the referred-to companies and negotiations are ongoing to clarify certain details. The aluminium sector has been prioritised."

IFP MP Peter Smith, who put the question to Peters, said: "At the very least, the new prices must cover the full cost to Eskom of producing the power."

Van Dalen said he believes the negotiations will involve only two out of BHP Billiton's three aluminium smelters, and that the contract with Motraco - the Mozambique company that carries the power supply to BHP's Mozal smelter - "will not be re-negotiated. We are stuck with it, it is a fixed contract."


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