POWER utility Eskom wants contracts that will give it the flexibility to buy the best coal at the best prices. POWER utility Eskom wants contracts that will give it the flexibility to buy the best coal at the best prices. Acting CEO Brian Molefe complained yesterday that the company was "tied" into contracts that were old and not fulfilling Eskom's current needs. Molefe said Eskom was unable to pull out of the agreements when the quality of coal deteriorated. Instead, it had to get into "expensive", short-term contracts to meet its power-generating needs. Molefe said the company wanted to contain costs and get the best on its coal-supplier agreements."We have indicated to all of our coal suppliers that we will no longer be interested in cost plus nine. "We are interested in a tender for coal of a certain quality. Whoever can supply us with coal of a certain quality at the best price, we will buy from them," Molefe said, presenting Eskom's annual results for the year ended March 31. He insisted that the company was not insolvent. "We are cash positive but we have these huge capital expenditure projects. It is not a hopeless situation," the acting CEO said. Eskom's profits fell 49% in the last year, mainly as a result of load-shedding. The power utility reported a net profit of R3.6-billion - down from R7.1-billion just a year earlier. The state-owned firm blamed the plummet on a 0.7% decline in electricity sales, a third of which were caused by load-shedding imposed across the country to ease the pressure on the power grid.The scheduled power cuts also led to primary energy cost increases of R13.6-billion, as Eskom turned to independent power producers to lighten the strain on the system.Non-payment by municipalities continues to be a problem. Soweto alone owes R4-billion on top of the R5-billion that is owed by all the municipalities in the country. Attempts to get payment from Soweto residents has so far not yielded extensive positive results. Soweto residents, who are supplied with electricity directly by Eskom, were billed R730-million over the past year, of which only R119-million was paid, reflecting an average payment level of 16%.Molefe said Eskom's financial position would only improve once the electricity tariff was cost-reflective. Last month the National Energy Regulator of SA rejected the power provider's application for an additional 10% tariff increase in the current year, on top of the 12.69% already granted.But Molefe is confident that Eskom will get its tariff increase, saying Nersa rejected the application based on the "timing" and it would be reintroduced. - Additional reporting by BDLIVE..