Eskom concerned that domestic coal prices may migrate to export levels

Engineering News 24 April 2013.

State-owed electricity utility Eskom has again appealed for a domestic coal-pricing regime that is premised on an “efficient and transparent cost, with a fair return” rather than one that migrates towards export parity-price (EPP) levels.

Should such a migration occur, upward pressure would be placed on Eskom’s costs and on South Africa’s already fast-rising power tariffs.

It calculates that an increase in the price from current levels to an EPP of R600/t delivered for the 30-million tons it currently purchases yearly through short-term contracts, will result in a 5% increase in its total operating cost, which stands at 56.4 c/kWh…

(Contributor’s note: The DOE and Eskom were both warned that coal prices were volatile at the time of the IRP2010 consultations – the warnings were brushed aside. With China building coal power stations at an unbelievable rate, the coal price has to go up. With our GDP stagnating, South Africa has to get as much for its coal as it can and not subsidise the DOE’s energy policy mistakes.)

More…

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