Eskom to lose R92 billion from discounted contract

Daniel Puchert

Daniel Puchert

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Eskom's R92-billion gift to South Africa's biggest electricity user

Calculations by Meridian Economics have revealed that Eskom's 50% discount awarded to South32's Hillside aluminium smelter will cost the power utility R92 billion in forgone revenue over the contract's duration.

Speaking to 702, Michael Marchant, Open Secrets' Head of Investigations, noted that the discount was awarded to help create manufacturing jobs and enable South Africa to be competitive in the sector.
 
What absolute bullshit. The general public that faithfully pay their electricity every month also contributes to the economy. Here they are putting one entity on a pedestal. But we will see electricity unjustifiably increases over the next 10 years. This government really seems to lack any intelligence.
 
Mekon said:
What absolute bullshit. The general public that faithfully pay their electricity every month also contributes to the economy. Here they are putting one entity on a pedestal. But we will see electricity unjustifiably increases over the next 10 years. This government really lack any intelligence.
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Fixed.
 
That's just nice give them 50% discount, and good paying customers electricity has increased over 300% the last 3 decades.

ANC cadres keep screwing us.
 
Australian company thats siphoning off money from South Africans. Barely a few thousand jobs created. A lot are contract workers and not permanent. And the comments on recruiting websites is that its all about enriching the CEO and board and very little about the staff.
 
Long winded way of donating taxpayer money to Australia.

We should just shut it down and give them R50b outright, and leave out all the middle man cadres that want to eat.
 
elf_lord_ZC5 said:
We the tax payers do not benefit from it, and it is us that are filling the "hole" worth 92 Billion Rands, deep.
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Do we indeed not benefit from it overall as taxpayers? I don't know.

What's the loss in tax revenue over that period should the smelter shutter and all those jobs be lost?

Do you know? If not I'm not sure on what basis you make that claim.
 
notayoba said:
Long winded way of donating taxpayer money to Australia.

We should just shut it down and give them R50b outright, and leave out all the middle man cadres that want to eat.
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Rather use that R50b to create jobs, but yeah, that is just a fairy tale in this country.
 
porchrat said:
Do we indeed not benefit from it overall as taxpayers? I don't know.

What's the loss in tax revenue over that period should the smelter shutter and all those jobs be lost?

Do you know? If not I'm not sure on what basis you make that claim.
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The loss of the possibility of creating work for 200 000 persons, vs keeping 2000 persons employed. Not to mention the net capital outflow. Nice way to get money out of the country.
 
elf_lord_ZC5 said:
The loss of the possibility of creating work for 200 000 persons, vs keeping 2000 persons employed.
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Where are these numbers coming from?

elf_lord_ZC5 said:
Not to mention the net capital outflow. Nice way to get money out of the country.
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What capital is flowing out from where? Are you saying some local company is going to take this smelter operation's place should it shutter?

Could I see the calculations?

Note I'm not saying you're wrong. I just don't know what benefit SA gets from this thing operating over that contract's period vs. this R100billion or so Eskom loses.

Is it possible SA loses out on even more than that figure should the smelter shut? I dunno.
 
porchrat said:
Where are these numbers coming from?


What capital is flowing out from where? Are you saying some local company is going to take this smelter operation's place should it shutter?

Could I see the calculations?

Note I'm not saying you're wrong. I just don't know what benefit SA gets from this thing operating over that contract's period vs. this R100billion or so Eskom loses.

Is it possible SA loses out on even more than that figure should the smelter shut? I dunno.
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What is the value of the aluminum they produce?

What is their preferential tax rate, that goes with their prefential electricity price, vs the few thousand workers, they employ. Then work out how many Billion Rands Profit they make, which leaves the country as capital outflow.

A small handful of people benefit and the loss is indirectly recovered from the Tax Payer.

Also the Aussies are not running that operation for love and charity.

The cost to the economy of the country that must pay exorbitant electricity prices, to keep Eskom going. How much better would Eskoms balance sheet look, if they could reduce their debt by 92 Billion?

Don't forget that the what the facilitators are paid, is a net tax loss.
 
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elf_lord_ZC5 said:
What is the value of the aluminum they produce?

What is their preferential tax rate, that goes with their prefential electricity price, vs the few thousand workers, they employ. Then work out how many Billion Rands Profit they make, which leaves the country as capital outflow.

A small handful of people benefit and the loss is indirectly recovered from the Tax Payer.

Also the Aussies are not running that operation for love and charity.

The cost to the economy of the country that must pay exorbitant electricity prices, to keep Eskom going. How much better would Eskoms balance sheet look, if they could reduce their debt by 92 Billion?

Don't forget that the what the facilitators are paid, is a net tax loss.
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Eskom's balance sheet would look a lot better if they just loadshedded instead of burning diesel. They don't do that because the impact on the country is larger than the impact on Eskom.

In this situation, which is potentially something similar, I know what the impact on Eskom is. I don't know what the impact on the country is should Eskom not offer the deal. I don't know how much tax revenue is generated from this smelter for example. It could be more than R98 billion. I can't therefore definitively say it's a net negative.

Remember that if the tax loss is greater than the R98 billion loss in electricity sales, we're paying even more for it as taxpayers.
 
porchrat said:
Eskom's balance sheet would look a lot better if they just loadshedded instead of burning diesel. They don't do that because the impact on the country is larger than the impact on Eskom.

In this situation, which is potentially something similar, I know what the impact on Eskom is. I don't know what the impact on the country is should Eskom not offer the deal. I don't know how much tax revenue is generated from this smelter for example. It could be more than R98 billion. I can't therefore definitively say it's a net negative.

Remember that if the tax loss is greater than the R98 billion loss in electricity sales, we're paying even more for it as taxpayers.
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And that which you do not know, is your problem
 
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