Electricity tariffs get attention to promote Coega

‘Lower rates could facilitate investment’ ED RICHARDSON THE GOVERNMENT is looking into electricity tariffs for large electricity contracts such as the one to be built at the Coega smelter project, according to reports. Speaking at the meeting on the cabinet’s progress in the economic, investment and employment cluster, Alec Erwin, Minister of Public Enterprises, said lower tariffs could facilitate capital inflows and investment. Canadian-based aluminium giant Alcan is in negotiations to establish a smelter at Coega. Erwin said that Coega’s smelter project, which according to Coega is expected to produce 660 thousand tons of aluminium per year, required about 50 megaWatts of power. Industrial development in the rest of the region would benefit from the upgrading of the electricity infrastructure to serve the smelter. However, the minister says that the developmental pricing being offered is not a subsidised price. It will only be valid during the construction period of the contract. The tariffs form part of the government’s strategy for a “developmental pricing framework” to help stimulate export growth and in turn push the South African growth rate to six or seven per cent. Erwin added that government could not afford to expose exporters to logistical price increases on port and rail charges. SA’s port and railway infrastructure is being improved in line with the National Freight Logistics Strategy to lower logistics and transport costs. Mandisi Mpahlwa, minister of Trade and Industry, said that increased expenses for exporters would hamper the government’s attempts at increasing export growth to 10% in the next financial year. It would be an obstacle to speeding up economic growth and meeting the target of halving employment by 2014. Export growth started taking off in 1997. Since then it has been a few percentage points above overall economic growth.