It is reported that Eskom have to ‘pay through the nose‘ to secure an additional 45 million more tonnes of coal over the next two years to meet the demands for coal at the power stations. Without this coal there could be even more power problems in South Africa and thus Eskom really do not have much of a choice but to buy this coal. The additional coal required will cost Eskom about R11bn.

Under contract, Eskom pays on average R100 a ton for coal. But the 45 million additional tons would have to be bought at export prices of R150-R250 a ton.

Now chances are high that electricity prices in South Africa could be increased due to this transaction. If Eskom is procuring the coal at a much higher price than before (almost 50% more) then surely this cost is going to be passed down to the consumer? Eskom executive, Brian Dames, said “The coal is going to cost much more than we are paying contractors, so it will definitely have an effect on generating costs. We still need to inform the regulator (the National Energy Regulator of SA),” (Source: Business Day) So we could easily be seeing an electricity price increase soon in South Africa.

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