The Eskom Smelter Task Team has submitted an application to the National Energy Regulator of South Africa (NERSA) for approval of a 62 c/kWh electricity tariff for ferrochrome smelters operated by Samancor Chrome and Glencore-Merafe Chrome.
Eskom said the proposed tariff is part of amendments to existing negotiated price agreements (NPAs) with a medium-term structure of up to five years. The agreements remain subject to NERSA approval with an anticipated public consultation process.
According to Eskom, the tariff intervention is intended to improve the utility’s liquidity without requiring higher standard tariffs, additional borrowing or further government support.
The utility said the revised NPA framework will allow for a case-by-case approach, enabling pricing and contractual structures to be tailored to the commercial circumstances of individual smelters.
Eskom stated that pricing under the framework will be determined through a bottom-up assessment, taking into account cost of production, electricity intensity and exposure to global commodity prices.
The approach, Eskom said, is intended to avoid under-support, which could result in plant closures, and over-subsidisation that may distort competition. The methodology is designed to apply a consistent economic framework across the smelting sector, the utility added.
“Eskom will continue to work tirelessly with intergovernmental teams, labour, producers and other stakeholders to balance our financial sustainability and regulatory responsibilities so that we can play our part in delivering electricity to drive economic growth,” said Dan Marokane, Eskom’s Group Chief Executive.
