The Public Protector has found nothing untoward or wrong in the dealings that took place between BHP Billiton and Eskom in respect of the contracts they signed with each other for the supply of electricity to the former’s aluminium smelters based in Richards Bay.
The main thrust of the allegations the Public Protector was asked to investigate included the accusation that BHP Billiton, as the single largest consumer of electricity in the country, had secured vastly discounted rates improperly and without the authorisation of the National Energy Regulator of South Africa (Nersa).
The Public Protector found Eskom had correctly applied its discretion – at a time when the utility had significant excess capacity generation – to enter into agreements supplying BHP and its subsidiaries for electricity at tariffs significantly lower than its standard tariffs at the time.
Insofar as the supervision of Nersa was concerned, the Protector found that Section 15(1) of the Eskom Act allowed the utility to enter into special tariffs with companies that it had entered into Negotiated Pricing Agreements (NPAs) during the 1990s.
Contracts concluded in the 90s (like the Bayside and Hillside potlines 1 and 2) preceded the creation of Nersa, and therefore did not fall under Nersa’s oversight.
The contracts for the Mozal smelter and Hillside smelter potline 3 that were renegotiated in 2010 did fall under the oversight of Nersa and was approved by them.
It also found no substantiation that there was a conflict of interest when BHP hired Mick Davis from Eskom following the conclusion of the agreement.
The report was signed and dated November 30 2016 and it brings to a conclusion a multi-year investigation into the nature of the relationship between the two companies. The investigation had been brought at the insistence of the DA’s Shadow Minister of Energy, Pieter van Dalen, back in 2010.