The terms of the controversial power supply contract between Eskom and mining giant BHP Billiton, which detail how much the company has been milking Eskom over the past two decades, are going to be opened up to public scrutiny.
Eskom spokeswoman Hilary Joffe said on Friday that the utility would comply with the ruling of the Supreme Court of Appeal, which compelled it to make the details of the contract known to News24.
The Friday ruling will lift the shroud over the deal. BHP Billiton has tried every legal avenue to stop the news group from getting access to the contract, preventing it from exposing how much the sweet deal cut its electricity costs.
Since the 1990s, BHP Billiton has been paying a fraction of what other electricity users pay for the supply of power to its aluminium smelter complexes in Richards Bay and in Maputo, Mozambique.
The Court dismissed BHP Billiton’s appeal to reverse the South Gauteng High Court’s 2011 judgment that the company and Eskom had to give details on the pricing formula of the deal to News24’s Afrikaans business unit, Sake24.
Sake24 had requested these details under the Promotion of Access to Information Act and Judge Frans Kgomo at the time agreed that the application was in the public interest.
Last year Eskom’s financial director, Paul O’Flaherty, told parliament that the utility had taken a decision to refer the contract to the National Energy Regulator of SA (Nersa) for review as it had become a burden to its balance sheet.
Eskom said it had tried to renegotiate the deal with BHP Billiton, but had opted to refer it to Nersa because these attempts had been unsuccessful.
It said it might suffer loses of up to R5.5 billion over the next eight years if the deal proceeded in its current form.
The contract was concluded during a time when Eskom had surplus supply and the government wanted to boost the aluminium industry. But because they agreed to price the electricity in line with the price of aluminium on the open market, the price at which electricity was sold to BHP Billiton has followed the declining trend of aluminium prices on the London Metals Exchange.
This made the generation and distribution of electricity to the smelters a lot more expensive than what BHP Billiton paid for the power.
The contract binds Eskom to supply electricity to the Mozal smelter in Maputo until 2026 and to the Hillside smelter in Richards Bay until 2018.
The contract has been subject to parliamentary debate for some time, with opposition parties wanting a review of it.