JOHANNESBURG-Eskom’s huge procurement programme has great potential to stimulate local industry, however, the state-owned utility has warned that this comes at a price - higher electricity tariffs.

The cost of procuring locally for the utility’s power station building programme has been increased by the high cost of local inputs such as steel, cement and chemicals.

Brian Dames, the Eskom chief operations officer, said in Parliament last month that an option for procuring from “alternative, established suppliers” must to be available to ensure the continued operation of Eskom’s capital programme.

Eskom was among a group of state-owned enterprises which briefed Parliament’s trade and industry committee on ways business could contribute to achieving the goals of government’s new industrial policy action plan. The plan seeks to leverage the procurement spend of state-owned entities to foster local business.

Eskom told the committee that establishing new industries would entail additional cost in investment and skills development in the immediate future. It said that a portion of South Africa’s electricity pricing reflects this cost of local industry establishment.

The country’s capital expansion could be procured globally at lower cost, but national imperatives guide high localisation, which adds a cost premium, said a spokesperson.

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