Minerals Council of South Africa CEO, Roger Baxter. PHOTO: Songezo Ndlendle/ANA

CAPE TOWN – The most critical challenges facing South Africa is the sustainability of Eskom which would require some sort of workable solutions but not the price increases, Minerals Council of South Africa chief executive, Roger Baxter said on Tuesday.

“The need for fiscal discipline by the state and cost control within state-owned enterprises (SOEs) is critical. On the most critical challenges facing mining, and South Africa as a whole is the sustainability of Eskom," he said.

“In the Minerals Council’s response to Eskom’s application for a 15 percent per annum increase for three years, we have stated categorically that, should this application be granted, this would sound the death knell of many parts of the mining industry. And, it would be self-defeating for Eskom in that they would lose a large proportion of their paying, reliable, baseload customers.”

Baxter was speaking at the 25th annual Investing in African Mining Indaba underway at the Cape Town International Convention Centre (CTICC).

He pointed out that the proposed 17 percent price increase by 2021 was no option to sustain the power utility as this would hit hard on the mining sector.

“If Eskom gets their 17 percent price increase by 2021, there will be no deep level mining or deep level platinum mining in South Africa. It’s just not an option, so having some sort of workable solution is absolutely key and our view is that government has to play a key role and we will play our role too but not with this sort of price increases,” Baxter said.

On Monday, Eskom confirmed it had increased its tariff hike application for the coming financial year by some 2 percent to 17.4 percent. 

Eskom's current tariff application has encountered strong opposition, with the private sector, opposition parties and pressure groups saying if it were granted by National Energy Regulator the impact on the sluggish economy would be dire.

African News Agency (ANA)