Question NW3347 to the Minister of Public Enterprises

Reply:

According to information received from Eskom:

1. Eskom cannot disclose the electricity pricing arrangements, as these are customer confidential and commercially sensitive information. The electricity pricing arrangements for the South32 aluminium smelter were approved by the National Energy Regulator of South Africa (NERSA). A new tariff structure was approved by NERSA in 2021 and complies with all the provisions of the Interim Long-Term Negotiated Pricing Arrangement Framework issued by the Department of Mineral Resources and Energy (DMRE).

A globally competitive tariff that considered the sustainability of the smelter and Eskom’s cost of supply was structured, as it was recognised that closure would have a negative impact on the South African economy and continue the trend of deindustrialisation and unemployment with which the country continues to grapple with. The tariff approximates the higher end of energy prices that aluminium smelters are paying and covers all applicable variable costs, with an additional contribution made to fixed costs.

In the absence of the smelter, contributions made by it to fixed costs would have to be borne by other consumers, resulting in an increase in other consumer prices. Several of the technical and financial benefits result from the large smelter baseload consumption and the interruptibility made available to the national System Operator that reduces the severity of load shedding.

 

Remarks: Approved / Not Approved/Comments

Adv. Melanchton Makobe PJ Gordhan, MP

Acting Director-General Minister

Date: Date: