Eskom has reached an in principle deal with BHP Billiton that will release it from a long-term tariff agreement that triggered book value losses of billions last year, acting CEO and chairman Mpho Makwana says.

However, attempts to renegotiate a similar contract with Anglo American to remove liabilities also linked to embedded derivatives was proving more difficult.

Eskom finance director Erica Johnson said this was due to the recalcitrance of one of the parties to that contract, the Skorpion Zinc mine in south-western Namibia.

"There has been a bit of a challenge, Skorpion Zinc has been difficult to engage," Johnson told Parliament's portfolio committee on public enterprises.

Makwana said the contract with BHP Billiton to supply electricity to the mining giant's Mozal and Hillside aluminium smelters accounted for 95 percent of Eskom's embedded derivative liabilities that led to a book value loss of R9.5 billion last year.

He said Eskom had "been held to ransom by the long-standing liability" on derivatives that linked the tariff to aluminium prices, causing panic when these plunged in the wake of the global economic crisis.

The renegotiated contract with BHP Billiton was subject to audit and should be signed at the end of May, he added.

"On May 27, we will sign against that audit opinion."

But a defensive Makwana declined to answer questions from MPs on whether Eskom had in the past been selling power to Billiton's smelters at below cost.

He had informed MPs that for the current financial year Eskom's generation costs came to 23.4 cents per kilowatt-hour and its production costs to 41.6 cents per kilowatt-hour.

He said he had the answers to their questions at hand but would prefer to respond in writing because the issues were complex.

Inkatha Freedom Party MP Mario Oriani-Ambrosini tried to object but was silenced by committee chairwoman Vytjie Mentor, whom he later accused of routinely seeking to censor briefings.

There were more fireworks when Makwana threatened to take legal action against Democratic Alliance MP Pieter van Dalen after he claimed to be in possession of a "secret" internal document showing that Eskom had been supplying power to the Mozal plant at 12 cents per kilowatt-hour.

Van Dalen also claimed that the severely cash-strapped electricity utility was owed R100 million on the contract to keep Mozal running.

Makwana refused to respond to the allegation and rejected notions that the company suffered a loss in real terms after aluminium prices tumbled.

He insisted that embedded derivatives would not have become an issue had international financial reporting standards not changed in the new millennium and forced the company to report long-term liabilities that would arise under the deal.

He said the terms of the long-standing contracts with the mining houses also had to be understood in the context of South Africa's political commitments "to empower our neighbours" under the New Partnership for Africa's Development (Nepad) launched by former president Thabo Mbeki.

"We are taking this at face value when in fact other components of value were embedded in this".

The deals with BHP Billiton and Anglo American have been blamed for Eskom's cashflow and supply capacity problems, with commentators saying the country's energy woes would be eradicated if the deals were cancelled.

Makwana said the two contracts accounted for just under 10 percent of South Africa's electricity consumption. Public Enterprises Minister Barbara Hogan had put the figure at "approximately five percent" but the CEO said this was because she was referring to their share of peak-hour consumption.

Hogan had consistently refused to divulge finer details of the deals, which were inked from 1994 onwards when South Africa had excess electricity supply and sought to sell power cheaply to attract investment.

The minister said indiscretion would make the country look "silly".