Billiton deal will cost Eskom a lot more than R6bn

Business Report 25 September 2012.

After a long time, Eskom has responded to public pleading for information on its sweetheart deal with BHP Billiton to supply cheap power to the Hillside and Mozal aluminium smelters.

A few days ago, Eskom chief financial officer Paul O’Flaherty treated the nation to a lesson in modern arithmetic when he announced that the residual seven to eight years of the BHP Billiton “contract” would result in an accumulated loss to Eskom of R5.5 billion. Based on an ex-generator delivery of 2 000 megawatts (MW), that represents a loss of about 4c a kilowatt-hour (kWh) while Eskom’s present unit cost of production is declared at some 50c/kWh…