The National Energy Regulator of South Africa (NERSA) has approved electricity hikes to almost half of Eskom’s initial application.
South Africa’s power utility, Eskom, had applied to have the electricity prices hiked by 17.1% for 2019/20, 15.4% for 2020/21 and 15.5% for 2021/22. However, NERSA made an announcement of Thursday, 7 March 2019 in Pretoria, that Eskom’s proposed tariffs were declined. NERSA chairperson Jacob Modise says the body received 119 000 written comments on Eskom’s application and public hearings were held in seven out of the nine provinces. Eskom’s requests were opposed by business, labour and civil society in these submissions.
To remedy this, NERSA approved the tariffs to increase by 9.41% for 2019/2020, 8.1% for 2020/21 and 5.2% for 2021/22. These proposed tariff hikes by Eskom are a means to remedy the power utility’s financial standing. During the February 2019 budget speech, the National Treasury came to Eskom’s rescue by allocating funds to the value of R23 billion annually for the next three years. Eskom is currently in a R420 billion debt.
In the past, Eskom has blamed its financial woes on plant maintenance and breakdowns as well as delays in the completion of new power stations.
Although Eskom has received aid in the form of the National Treasury grant and the approval of tariff hikes, Chief Financial Officer Calib Cassim informed NERSA that the power utility is likely to continue making a loss for the next few years, despite the price hikes.
“We are projecting a net loss of close to R20 billion at financial year end…This loss situation will continue for the next few years even with the applied-for increases,” he said.