Why SA pays more for power

The reason why theSouth African consumer has to pay more for electricity, lies with the corrupt dealings between the Chamber of Mines and BHP Billiton.

About BHP Biliton’s power contracts with Eskom, Xolani Mkhwanazi warnes that BHP Biliton “expects  contracts to be honoured”. Mkhwanazi also happens to be chairman of BHP Biliton SA.

The same Mkhwanazi was CEO of the National Energy Regulator.

Mr Chris Yelland has pointed out that some of the BHP power contracts had to be approved by this National Energy Regulator as required by law. The NER was established in 1995. The NER was the legal predecessor of the 2004 NERSA.

Xolani Mkhwanazi was the CEO of NER from 1999 till 2004. During this time period the NER would have approved the extensions from 2020 to 2028 of the Hillside 1 and II power contracts. At the time 2020-2028 was so far into the future, that the extensions were irrational. Would Mkhwanazi in his honest mind claim that by 2020, South-Africa would still not be utilising Eskom’s surplus capacity of 2000?

Also during same time period Mozal I and Mozal II smelters in Mozambique were approved by the NER. By then there was already a huge surplus capacity of primary aluminium ingot smelting for off-take by the local industry. Thus the long term Mozal power contracts were irrational too.

Readers must not forget: all of BHP Biliton’s aluminium smelters at Southern African ports import all of their ore from BHP-bauxite mines in Australia on the other side of the globe. South-Africa has the bulk of the worlds chrome ore, none of its aluminium ore. South-Africa also produces its own reducdant for ferrochrome smelting. All reductant for all of BHP’s import aluminium ore is imported, mostly from the USA.

How come then Mkhwanazi, former CEO of the NER, approving unique power contracts between Eskom en BHP Biliton, later CEO of BHP Billiton Aluminium South-Africa, now chairman of BHP Billiton SA, is also chairman of the South-African Chamber of Mines? With the hundreds of thousands of tons of imported aluminum ore per annum, Mkhwanazi should have been chairman of Australia’s Chamber of Mines.

Eskom has asked NERSA to review the BHP Biliton power contracts. Within 2 months, NERSA will hold public hearings in this regard. The NER as legal predecessor of NERSA, who had approved these controversial contracts will come into the spotlight. So will the chairman of BHP Biliton SA, Xolani Mkhwanazi’s former position as CEO of the NER, during the time period when most of these controversial contracts and their irrational extensions were approved by the NER.

Jacob Mouw