Transnet wants to supply cheaper coal to Eskom

South Africa’s port and freight-rail operator is working with Eskom Holdings SOC Ltd. to reduce the ailing power utility’s costs by increasing the supply of coal delivered by rail and improving the quality and reliability of the primary feedstock for its thermal plants.

“The objective is to increase the quality of coal, reliability of deliveries and reduce the cost of delivery,” Mike Fanucchi, Transnet SOC Ltd.’s group executive for commercial sales and marketing, said in an interview in Cape Town Wednesday. “Coal delivered by rail is a lot cheaper than by road.”

Eskom generates about 95% of the the country’s electricity, but is crippled with debts of 454 billion rand ($31 billion) and relies on government bailouts to keep operating. The company has been cited as the biggest threat to the economy because of its precarious financial position and an inability to provide a regular supply of power.

Transnet has held talks with Andre de Ruyter, Eskom’s new chief executive offer, on setting up a joint team to handle the logistics. The companies are working “very closely together to optimize plans to get coal to the plants. We are also working with miners to get the stockpiles to the power stations,” Fanucchi said.

“Our objective is to reduce the cost of electricity, the cost of doing business and the cost to ourselves since we are a big Eskom customer.”

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Transnet wants to supply cheaper coal to Eskom