The Energy Intensive Users Group of Southern Africa (EIUG) has welcomed the ‘Short-Term and Interim Long-Term Negotiated Pricing Agreement (NPA) frameworks’ approved by the Department of Mineral Resources and Energy (DMRE) and is encouraging its members to apply for these opportunities where applicable.
Through previous NPAs, industrial and mining companies that rely heavily on electricity for production have secured favourable tariffs, typically indexed to the price of the commodity being produced and usually for a time-defined period.
Securing an NPA has hitherto involved an extensive approval process through the National Energy Regulator of South Africa, partly owing to the absence of an overarching policy framework.
In a statement, the EIUG acknowledged the efforts made by the DMRE towards stabilising energy supply, including the NPA framework.
It continued to argue, however, for the introduction of an ‘industrial tariff’ for large power users to level the playing field with international competitors.
EIUG members collectively account for over 40% of the electrical energy consumed in South Africa, but material electricity hikes over the past 13 years, together with weak economic conditions, have had a negative impact on their businesses.
“The lack of cost reflectivity in our electricity pricing, including high cross subsidies, and continuous supply interruptions have severely affected business efficiency and competitiveness. The Covid-19 lockdown has further negatively impacted many of our member businesses, especially those most vulnerable to international commodity prices,” the EIUG said.
It called for sustainable solutions, indicating that the NPA framework did not represent the “ultimate solution” to all the challenges.
Nevertheless, it was a “welcome step forward” and the EIUG was thus encouraging its members to “review their individual circumstances and apply for these opportunities where applicable”.