Higher coal prices add to Eskom’s woes

The higher coal prices mean consumers will cough up more for electricity

The embattled State utility, Eskom, has to pay about 20% more for coal. Analyst say soaring international prices are putting pressure on local prices which, according to Eskom, already grew by 30% last year alone.

Two months ago, a ton of coal cost $100 on world markets. Now the price has shot up to around $140 because of strong demand, mainly from India.

"All over the world everyone is looking for coal because all economies are developing… so they need energy… that's why we are in this situation," says Exxaro Resources CEO Sipho Nkosi.

According to analysts, consumers can expect to pay up to 20% more for electricity in the next two years. Coal analyst Xavier Prevost says: "There will be an increase in coal prices going to Eskom, and there will be an increase in electricity prices in the future… (as to) how much that will be is still to be determined, but I would say between 10 and 20%."

Eskom used 120 million tons of coal last year and will need about 140 million this year as it battles to contain the energy crisis gripping the country.