Eskom CEO
Brian Dames
Johannesburg, South Africa — ESI-AFRICA.COM — 15 July 2011 – A South African government levy which is meant to discourage carbon emissions has added to Eskom’s cost burden, prompting a 23% rise in primary energy costs in its 2011 financial year compared to the previous period

Included in this calculation is a 19.8% hike in coal costs alone. Coal is costing Eskom 16 cents per kWh generated in the 2011 financial year.

The utility paid R35.8 billion for primary energy (which includes coal, diesel and gas) in its last financial year compared to R29.1 billion in the previous 12 months.

Speaking at Eskom’s results presentation, Eskom CEO Brian Dames told Fin24 that the cost of coal was rising much faster than the inflation rate.“The double inflation-sized increases we’re seeing are reflective on the degree for capital returns that suppliers need from their mines,” Dames said. “It is also reflective of the fact that 30% of our coal is transported by road.”

Transporting coal by road is more costly for Eskom than receiving coal from mines linked directly to power stations, usually through a conveyor belt system.

Dames said that the increases had been affected by a 2c/kWh environmental tax introduced by the government in July 2009.

This year Eskom had to pay over R5 billion (2010 – R3.5 billion) to the government because of this levy. And it was increased to 2.5c/kWh on April 1.