South African state-run power utility Eskom has outlined plans to invest up to ZAR12bn (nearly US$900m) over the next 5 years to ensure the quality of its coal supplies for its power plants. The company is facing critical supply shortages: in 2018, Eskom had 6 of its 15 coal-fired power plants operating with less than 10 days of coal supply, which is well below the minimum threshold of 20 days. The group will support the development of "cost-plus" coal mines - mines developed in return for long-term coal supply at cost, plus a modest margin - to secure a predictable supply.
Eskom suffers from significant financial difficulties and only focuses on supporting its coal-fired plants. It dropped its nuclear strategy in 2018 and is currently assessing whether its current business plans are sustainable or whether it shall break up its activities into separate entities overseeing its activities, namely power generation, transmission and distribution. Eventually, it needs urgent relief from its debt burden and this is likely to depend on the outcome of its tariff application to the National Energy Regulator of South Africa (Nersa). Eskom asked for an annual electricity tariff hike of 45% electricity price hike spread over the next three years and hearings are currently going on.
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