Eskom wants 25% tariff hike from July

It’s emerged Eskom now wants a 25 percent tariff hike from July, double the expected increase.

FILE: Deputy President Cyril Ramaphosa has met with his advisory panel and business leaders about government's plans to help Eskom. Picture: EWN

JOHANNESBURG - Deputy President Cyril Ramaphosa on Friday met with his advisory panel and business leaders about government's plans to help Eskom.

The closed meeting took place amid reports that the utility now wants a 25 percent tariff hike from July, double the expected increase.

Energy expert Ted Blom said that even if Eskom is granted the hike, it will only offer short term relief.

"The number of 25 percent actually rings quite true, high run models for the last 10 years and that indicates that even if Eskom does get a 25 percent increase, every single year for the next 15 years they'll be fully bankrupted in 2030. They have an appetite to increase cost faster than they can collect tariff increases."

Meanwhile, Ramaphosa said there was a need to develop short, medium and long term solutions to deal with the electricity problems.

STANDARD & POOR'S DOWNGRADES ESKOM

Standard & Poor's (S&P) on Thursday downgraded Eskom to BB-plus following management suspensions.

The ratings agency said the negative outlook reflected that Eskom's operating performance has not yet stabilised due to rising costs.

It also said it was of the opinion that the material execution risk remained associated with government's support plan.

S&P's Mashiyane Mabunda explained, "We're not too sure if they're aware of how much is at stake in terms of financing needs for operations as well as the build projects for the Medupi and Kusile power stations, which they're far from finishing."

The rand reacted to the ratings announcement, extending losses against the dollar.

Earlier on Thursday, the rand dropped to R12,32 to the dollar, a two percent decrease.