Power problems compounded by BEE requirements

Eskom depends on coal fired power stations to produce approximately 90% of its electricity and uses over 90 million tons of coal annually. The utility has attributed coal shortages among the causes of their on-going energy supply issues.

It has been reported that one of the reasons behind Eskom’s coal shortage, is that traders are struggling to get coal to Eskom due to the Black Economic Empowerment (BEE) requirements restricting companies from supplying the utility. The Mining charter and Eskom are held to different standards.

Mining companies in South Africa reportedly need to be 26% black-empowered in order to be compliant with the Mining Charter. Additionally, companies that seek to supply Eskom are expected to be 50% black owned.

The concern, however, is that businesses are bringing in ‘middle people’ or black trading companies who are then said to be buyers of the coal from the companies, later selling to Eskom at a premium. This is done as a means of circumventing the policy. The use of fronting and middle-people means that other companies would benefit without delivering true industry transformation.

Speaking on 702's John Robbie Show, Senior Coal Analyst at XMP Consulting Xavier Prevost suggests that this issue is certainly related to Eskom’s continuous load shedding problem. Prevost commends Eskom’s efforts in wanting to empower black people within the coal mining sector, but feels they need to consider alternative ways of achieving this because, currently, 'the means are not the best':

I think this whole issue is compounded by this other [load shedding] problem that Eskom has.

Prevost says that Eskom should prioritize creating more mines before the energy crisis becomes irreparable.

I think that Eskom needs to rethink their policy…they just have to put their money where it is really needed - which is to implement a new mine. That is the area where Eskom can make a big difference.

In the meantime South African’s can anticipate rolling power cuts scheduled for an indeterminate period of time to come.

Listen to John Robbie’s full interview below.

Listen to CEO of Business Unity South Africa (BUSA), Khanyisile Kweyama, unpack the 5-point plan set up by Deputy President Cyril Ramaphosa to address South Africa's energy crisis:

Visit EWN’s portal for the electricity status in your area and tips on how to survive load shedding.

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