Question No. 1513
Dr PJ Rabie (Democratic Alliance) to ask the Minister of Public Enterprises:
(1) Whether Eskom has finalised its long-term contracts with coal mines or companies; if not, (a) why not and (b) when will this be completed; if so, what are the relevant details;
(2) (a) What were the norms used to determine the quality and quantity guarantees and (b) how many new coal sources have been identified;
(3) Whether any new contracts are being planned for the 2009/10 financial year in order to satisfy the demand for electricity; if not, why not; if so, what are the relevant details?
Reply:
1. (a to b) Yes. All long term contracts negotiated have been signed with the exception of one. The latter has not been signed in its current format as the parties have agreed to negotiate a more optimum mining solution to maximise supply from the mine. In addition, two future long-term contracts have been finalised and production will commence to meet the demand of the new power stations once the commissioning process commences.
2. (a) The quantity of coal required is determined by the energy forecast and the coal burn derived from the energy production requirements for the coal fired power stations. The medium and short term coal requirements are an outcome of the current long term contracts for the tied in collieries and all other existing short and medium term contracts.
Quality is determined by the power stations, based on the design parameters and requirements of the power plant as per the current plant status. The important coal qualities that are required are relevant to parameters that determine how the coal can be handled, combustibility, thermal efficiency and emissions. It is expected that the long term contracts for the current fleet of coal fired power stations including Kusile and Medupe will be finalised by the end of 2010. Medium term contracts (five to 10 years) are used to fill in the gaps while the long term mines are developed.
(b) There are about 200 sources of coal ranging in various sizes in South Africa. Out of the 200, there are less than ten sources that can offer more than a billion tons of coal, as per a request for proposal issued by Eskom.
3. (a) Yes. There have been contracts concluded for the coal requirements of specific stations. With the decrease on demand due to the changing economic environment, the total coal burn requirements decreased. This resulted in some of the initial planned supply not being sourced given that it is not required. However, the resulting oversupply on existing contracts at some stations then created the opportunity for coal to be diverted to stations where they were required and where the qualities could be matched. Two long term contracts and various medium term contracts are expected to be finalised in the financial year, for a total of 300Mt with delivery timelines ranging from five to 20 years.
Issued by: Department of Public Enterprise
9 October 2009
Source: Department of Public Enterprise (http://www.dpe.gov.za/)
