Eskom mulls options after coal supply contract suspended

Optimum Coal Mine administrators say they're suspending coal supply to Eskom.

FILE: Eskom spokesperson Khulu Phasiwe explains why load shedding occurs when it does and how you can lessen the burden. Picture: Louise McAuliffe/EWN

JOHANNESBURG - Eskom says it's looking at its options after the Optimum Coal Mine business rescue administrators said they were going to suspend a contract to supply coal to the utility's Hendrina Power Station in Mpumalanga.

The plant supplies around 2,000 megawatts to the national grid.

The administrators say they are allowed to suspend contracts that make a loss for the mine and Eskom is paying less than the production cost for the coal it receives.

Mining giant Glencore put the mine into administration two weeks ago, saying that Eskom was paying less than the production price of the coal it was buying.

The parastatal's Khulu Phasiwe said this decision won't lead to load-shedding in the short term though.

"We've about 40 days' worth of coal supply at the power station and in the interim we'll continue to run almost business as usual, although obviously is not necessarily business as usual since we will not be first supply of coal."

Eskom says load-shedding is not expected this weekend as the power system has been stable for some time.

It has managed to keep the lights on for the past eleven days.

The utility has also been doing much needed maintenance work on its generating units.

Earlier this month, Eskom said it was seeking a R2 billion penalty from the mine, due to poor quality coal.

The ailing power utility released its annual results in Johannesburg, saying it managed to raise R49,5 billion through external funding.

But the parastatal wanted its power stations to perform better and was seeking a penalty payment from Glencore.

Eskom's acting CEO Brian Molefe said it wanted Glencore to pay R2 billion in penalties for supplying poor quality coal which has resulted in shoddy performance.