The human face of recession.

[Dave A]

I was thinking of all the defaulting debtors of Eskom, but on second thoughts I'm going back to my position that it's a whole pile of issues, chief among them the coal supply contracts.

[Butch Hannan]

I was thinking of all the defaulting debtors of Eskom, but on second thoughts I'm going back to my position that it's a whole pile of issues, chief among them the coal supply contracts.

Hi Dave,
You mention the words coal supply contracts which interests me. Almost every single power station has mines captive to supplying them with their requirements on a contract basis. As part of the contracts some of the running costs of these mines are funded by Eskom. Most of these mines are huge and should be capable of supplying the total needs of a power station quite easily. They are all connected by conveyor belt systems to their respective power stations. I suspect that supply by road hauliers was a black empowerment effort by Eskom which went wrong. Just look at the thousands of heavy trucks messing up our roads.
Butch Hannan

[Dave A]

Almost every single power station has mines captive to supplying them with their requirements on a contract basis.

That should be in the past tense, Butch. And it wasn't "almost." You build coal power stations next to the coal which is going to feed them - period. It's far more cost efficient to run electricity down a power line than to move the equivalent energy in coal over the same distance. It's that convenient local coal supply that determines the life span of the station.

I suspect that supply by road hauliers was a black empowerment effort by Eskom which went wrong.

A new contender for understatement of the year.

It didn't go wrong - the consequences were entirely predictable (and was probably pointed out by some sage engineer and ignored before the decision was made). May I hasten to add that the failure was not because the contractors were "black" but because the method is so ridiculously suboptimal.

Final nail on the coal supply issue - what Eskom is paying is not based on cost-to-extract-and-deliver-plus-profit-margin (as it used to be), it's based on the international coal spot price plus delivery which is significantly higher.

The whole thing shows what happens when pie-in-the-sky political agendas are put ahead of economic realities. Government should be in the dock right alongside Eskom in this public consultation process they're going through at the moment.

Well, here comes the bill for all this folly...

There is no free lunch.

[desA]

Hi Dave,
You mention the words coal supply contracts which interests me. Almost every single power station has mines captive to supplying them with their requirements on a contract basis. As part of the contracts some of the running costs of these mines are funded by Eskom. Most of these mines are huge and should be capable of supplying the total needs of a power station quite easily. They are all connected by conveyor belt systems to their respective power stations. I suspect that supply by road hauliers was a black empowerment effort by Eskom which went wrong. Just look at the thousands of heavy trucks messing up our roads.
Butch Hannan

Very good point, Butch.