Eskom won't revise 16% tariff hike

Eskom says the electricity tariff hike is necessary for infrastructure maintenance and growth.

Eskom's Megawatt Park offices in Sunninghill. Picture: Taurai Maduna/EWN

JOHANNESBURG - Eskom on Friday reiterated its argument that it cannot afford an electricity tariff hike any lower than the one it has already proposed.

The power utility made its closing remarks on the last day of the National Energy Regulator of South Africa (Nersa)'s public hearings in Midrand, north of Johannesburg.

Eskom wants a 16 percent hike per year, for the next five years.

The cumulative increase will be 104 percent after the five-year period.

Eskom says the increases are necessary to maintain revenue, as well as to cover operating costs and maintaining financial stability.

The power utility says the request covered the cost of supplying power, investing in the future and financing new capacity.

Eskom's Paul O'Flaherty says an inflation-linked increase is just not feasible.

"Our primary energy costs are 8.6 percent, our coal costs are on average 10 percent. Our operating costs are at eight percent and our manpower costs are at inflation. We're an expanding company and we need additional resources."

He said the 16 percent will secure a revenue of R1 trillion, but even that is not enough.

"We have to go to the debt markers to raise an additional R200 billion. That's just pushing the debt limits to the maximum. There's no further equity injection available."

O'Flaherty said Eskom cannot afford a lower tariff increase.

He said for every one percent reduction, Eskom would acquire an additional R25 billion debt.

"Those are the only sources of cash that we have to balance the books."

South Africans will know at the end of February whether Eskom gets its tariff hike.

Nersa's Thembani Bukula said the regulator now has the unenviable task of considering the hundreds of submissions.

"We are going to go back, take all the inputs, consider them and balance them out. On February 28, we'll come up with a decision."

Almost all the interested parties have warned of the negative impact the hikes will have on the economy.