Mining slowdown shows in lower Eskom sales

Eskom reports a decline

Mining slowdown shows in lower Eskom sales
Eskom reports a decline

Eskom has reported  sales of only 110 766 GWh in the six months to September 30, 2012, a decline of 2.9% when compared with the 114 043 GWh recorded during the same period in 2011.

CEO Brian Dames attributed 1 000 GWh of the lower sales during the period to buy-backs from ferrochrome producers, 1 200 GWh to production issues at BHP Billiton's Hillside smelter, in KwaZulu-Natal, and around 550 GWh to lower mining-sector sales.

The full effect of the industrial relations disputes at the country's mines, which led to production stoppages in the platinum and gold sectors between August and November, would only be reflected in the second-half results.

As a result, Eskom has lowered its full-year sales forecast to 219 342 GWh from 222 083 GWh, owing to the prevailing low-growth environment in South Africa. In the year to March 31, 2012, Eskom sold 224 785 GWh, which itself was only 0.2% higher than that recorded in the previous year.

The anticipated decline in sales for 2012/13 would be the first since South Africa descended into the 2008 recession and came at a time when the National Treasury was expecting the economy to expand by 2.5%.

Outgoing FD Paul O'Flaherty described the decline in sales as a concern for the South African economy as a whole.

Eskom recently submitted its third multiyear price determination application in which it is seeking five yearly tariff increases of 16%, which it argued would be necessary to raise its prices to a cost-reflective level. The application was premised on yearly electricity demand expanding by 1.9%.

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