As demand drops, Eskom sends precautionary force majeure notifications to coal suppliers

Eskom has sent precautionary force majeure notices to all its coal suppliers, notifying them of the possibility that it may ask them to curtail supply as a result of lower demand since the start of the national lockdown.

“None have yet been asked to curtail supply. We are not even certain that this force majeure may be implemented, as it is not clear what the demand profile will be once the lockdown has been lifted,” said Eskom spokesperson Sikonathi Mantshantsha.

Force majeure describes a clause which exempts companies from fulfilling contractual obligations in cases of unforeseen disruptions beyond their control.

In an update to shareholders on Tuesday morning Exxaro – one of the power producer’s largest coal suppliers – said it had received a force majeure notification for coal supply agreements in place for the supply of the Medupi and Matimba power stations. 

“As indicated in the letters received, this will be applicable for the period starting at 16 April 2020 until one month after national lockdown has been completely lifted.”

Exxaro said it does not believe that the force majeure is warranted, “as the powers stations are still capable of supplying power”.

“Exxaro will vigorously defend its position in this matter and take the necessary action,” it added.  


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