Eskom to lose R92 billion from discounted contract

Anyway the reality here is, whatever is the smaller impact on government revenue is the option that should be taken. If the smelter not operating leads to a loss of revenue in excess of R98 billion throughout the period of their contract with Eskom then this is a good deal for SA. Considering the scale of the money these operations make that doesn't seem outside of the realm of possiblity.

If it doesn't then we're being shafted.

Either way the loss is coming out of the taxpayers' pocket. I'd prefer whichever is the smaller amount please.

In reality I doubt we'll ever know the truth. I'd like to know though and if anyone has any info I'd be keen to see it.
 
elf_lord_ZC5 said:
And us tax paying electricity using fekkers must pay for this "gift"

Guess, we now know why we are ripped a new one every time we buy electricity.
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There are a couple of ways to look at this. Normally you would have a couple of competitors and the one with the best deal gets the contract. We don't have that so have to look at other factors. Would this smelter be operational without the discount? If not then it means Eskom gets a loss in sales.

There's an assumption here that the discount means a loss but that is incorrect. I doubt Eskom is not making a profit on the deal and if they do then it's a plus for them, the economy, the shareholders and workers. Eskom's problem is an overall operational one and not generation that's expensive as I've said in the past we're overpaying.

This is shoddy media reporting not giving all the facts and history.
 
porchrat said:
Anyway the reality here is, whatever is the smaller impact on government revenue is the option that should be taken. If the smelter not operating leads to a loss of revenue in excess of R98 billion throughout the period of their contract with Eskom then this is a good deal for SA. Considering the scale of the money these operations make that doesn't seem outside of the realm of possiblity.

If it doesn't then we're being shafted.

Either way the loss is coming out of the taxpayers' pocket. I'd prefer whichever is the smaller amount please.

In reality I doubt we'll ever know the truth. I'd like to know though and if anyone has any info I'd be keen to see it.
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I think these aluminium projects (Alusaf) were conceived when Eskom had an excess of what they thought was cheap electricity (they didn't factor in replacement costs) at around R0.12/kWh. I doubt the project is viable at all without the cheap electricity subsidy as SA doesn't mine bauxite.

Problem is that it continues and there is always a naughty hand in there. One before this was the NERSA head who signed the sweetheart deal then joined the company he'd just signed for (RBM maybe?).
 
Oldfut said:
I think these aluminium projects (Alusaf) were conceived when Eskom had an excess of what they thought was cheap electricity (they didn't factor in replacement costs) at around R0.12/kWh. I doubt the project is viable at all without the cheap electricity subsidy as SA doesn't mine bauxite.

Problem is that it continues and there is always a naughty hand in there. One before this was the NERSA head who signed the sweetheart deal then joined the company he'd just signed for (RBM maybe?).
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Agreed. It made perfect sense when the country had massive extra generation capacity.

I tend to think this cheap electricity being made available costs the country more than it makes back from the smelter's operations. Who knows for real though.
 
Swa said:
There are a couple of ways to look at this. Normally you would have a couple of competitors and the one with the best deal gets the contract. We don't have that so have to look at other factors. Would this smelter be operational without the discount? If not then it means Eskom gets a loss in sales.

There's an assumption here that the discount means a loss but that is incorrect. I doubt Eskom is not making a profit on the deal and if they do then it's a plus for them, the economy, the shareholders and workers. Eskom's problem is an overall operational one and not generation that's expensive as I've said in the past we're overpaying.

This is shoddy media reporting not giving all the facts and history.
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I honestly wouldn't put it past someone at Eskom to sign a deal where they supply electricity at below cost for a straight loss. Just for some sort of backhander.
 
Its not just the loss in money. (which is massive, just for a site that hires 3000 people).

Its the demand in electricity when we have none. This smelter should have been shut down a decade ago. Think of all the time when we could have reduced loadshedding and its impacts on the whole economy
 
porchrat said:
I honestly wouldn't put it past someone at Eskom to sign a deal where they supply electricity at below cost for a straight loss. Just for some sort of backhander.
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Agreed but there's shared operational costs and generation costs which is coal, transport etc. The two should be separated and determined if Eskom's balance sheet would look better or worse without the deal. This is also 18 years after load shedding so it can't be said this was a bad decision when we had excess electricity.

Point is it's shoddy reporting to call it a loss without all the facts.

xcaliber said:
Its not just the loss in money. (which is massive, just for a site that hires 3000 people).

Its the demand in electricity when we have none. This smelter should have been shut down a decade ago. Think of all the time when we could have reduced loadshedding and its impacts on the whole economy
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That is my biggest concern and Eskom having to burn diesel every time. But large factories are the first to have to reduce usage when there's load shedding.
 
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