ESKOM expects to reach its target of a 15percent reserve margin or spare capacity in five years, the chief executive said yesterday.

ESKOM expects to reach its target of a 15percent reserve margin or spare capacity in five years, the chief executive said yesterday.

Eskom has been battling to meet fast-rising demand in Africa's biggest economy, and insufficient spare capacity brought industry to a standstill early last year.

The utility has since built up its coal stockpiles, but it will take a few more years before planned power stations come on stream.

"We want to be above 15percent, currently we estimate to be about 10percent ... We believe we will (reach) the reserve margin in five years," chief executive Jacob Maroga said after briefing Parliament's public enterprises committee.

Maroga told the committee Eskom was in talks with global miner BHP Billiton to renegotiate long-term aluminium contracts.

Last month Public Enterprises Minister Barbara Hogan said Eskom needed a new deal with BHP after the multi-decade commodity-linked contracts were largely blamed for the utility's record annual loss.

BHP has said the commodity-linked contracts it had agreed with Eskom were "internationally competitive".

"Going forward we are engaging with them to start saying: We want to remove this linkage of commodity to the price so that they can now also pay standard tariffs," Maroga said.

He did not want to provide details of the interactions with BHP, but added it was important to learn from long-term contracts so that they reflected present-day realities, without creating an impression Eskom did not honour its commitments.

BHP Billiton's spokesperson Bronwyn Wilkinson declined to confirm whether the talks were ongoing.

"We won't comment on our interactions with governments or suppliers," she said. - Reuters