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Does the coal contract between Eskom and a certain company (name furnished) has been renegotiated in the past 36 months

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Does the coal contract between Eskom and a certain company (name furnished) has been renegotiated in the past 36 months
08/08/2012

Question for written reply

Question no.: 2037

Date of publication: 08 August 2012

2037. Mr L W Greyling (ID) to ask the Minister of Public Enterprises:
(1) Whether the coal contract between Eskom and a certain company (name furnished) has been renegotiated in the past 36 months; if not, what is the position in this regard; if so, (a) what were the reasons for renegotiating the contract, (b) what clauses were negotiated and (c) what new agreements have been reached; 
(2) Whether the price of coal has increased; if not, what is the position in this regard; if so, by how much? NW2516E

Reply:

According to Eskom:

(1) Yes the contract between the parties has been renegotiated. 
(a) The renegotiation process arose as a result of a dispute between the parties in respect of penalties raised by Eskom in respect of poor quality coal received. Formal arbitration proceedings were instituted by a certain company and the arbitrator requested that the parties explore a settlement having regard for the issues in dispute. 

(b) Coal quality parameters were renegotiated in respect of the Abrasive Index (AI) and the associated penalty ranges were amended. 
(c) The applicable penalty range was reduced from being applied on a weighted average monthly basis to a rolling 7 day average basis. 

(2) Yes, the price of coal has increased as a result of the higher risk assumed by a certain company by the limited range in respect of the AI now imposed. Historic penalties raised by Eskom as a result of poor quality coal which was disputed by a certain company was accepted and all penalties have been settled. The pricing cannot be disclosed for commercial reasons as this will prejudice Eskom in future negotiations. 

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