Eskom pays for Medupi delays

EXXARO Resources received R601 million from Eskom in the six months leading up to the end of June for coal the parastatal had contracted to buy for its new Medupi power station, but could not receive due to delays in the building of Medupi, BDLive reported on Thursday.
According to the report Exxaro CFO, Wim de Klerk, expects the amount to rise to R1,3 billion come December. The latest supply agreement is that Eskom will start taking coal from November. 
The payments being made by Eskom can be viewed as penalties in terms of take or pay agreements. These agreements were previously negotiated between Transnet and the coal exporters. “In setting its tariffs, Transnet insists the coal exporters guarantee volumes of coal to be railed. If that coal is not provided on schedule, the exporters still have to pay the railage charges,” de Klerk explained.
Exxaro has invested R10.2 billion to expand its Grootegeluk colliery to supply coal to Eskom. The construction delays at the
power station has meant that Exxaro is not currently benefitting from coal sales as
originally planned which put the group under severe financial pressure.
Meanwhile planned platinum mines in Mokopane are also waiting for some clear indication on a delivery date for electricity from Medupi power station. “We cannot mine without electricity and every time Medupi gets delayed, it pushes our plans back,” Gerick Mouton, project director for Platreef Resources’ planned mine in Mokopane, said last week.