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'Eskom's tariff hike is aimed at covering vital costs'

Molefe was speaking at the hearing to discuss the tariff increase being requested by the power utility.

Nersa's public hearings for Eskom's application for a 25,3 percent tariff hike in Nasrec on 23 June 2015. Picture: Gia Nicolaides/EWN

JOHANNESBURG - Acting Eskom Chief Executive Officer (CEO) Brian Molefe has told a National Energy Regulator of South Africa (Nersa) hearing the electricity tariff increase it seeks is not aimed at making a profit, but to cover vital costs.

Molefe was speaking at the hearing to discuss the tariff increase being requested by the power utility.

Eskom is applying to Nersa to implement an all-inclusive 25,3 percent increase until the end of the 2017/18 financial year.

Out of the 25,3 percent hike, around 12 percent has already been approved.

Molefe explained that 9,5 percent is needed to buy diesel to keep running open cycle gas turbines, which will ensure the country has less load shedding.

The remaining percentage is for an environmental levy, which is still in Eskom's application.

Molefe has made it clear that Eskom needs to buy diesel now and the impact and cost of load shedding will be much more than what they are asking for.

PUBLIC PRESENTATIONS

In his opening address, Molefe reiterated the hike will help keep the lights on and will cost less than load shedding is costing the economy.

The acting CEO said spending money on diesel to operate generators will cost far less than having load shedding as this has a major impact on the economy.

He said every R1 billion spent on diesel saves the economy up to R6 billion.

Several other people including energy experts, unions and other businesses will be making their presentations today.

The hike application comes despite ongoing load shedding which government says will be around for at least the next two years.

Last week, Parliament held public hearings on two proposed pieces of legislation, one that authorises a R23 billion special appropriation to the power giant and another which effectively writes off a R60 billion loan that was made to Eskom in 2008.

This follows Finance Minister Nhlanhla Nene's announcement of a complementary package to strengthen Eskom's financial position.

DA STAND FIRMLY AGAINST TARIFF HIKE

Democratic Alliance (DA) leader Mmusi Maimane explained paying more for electricity will result in job losses.

"Not only is inflation potentially going to go up, but industry and business face the risk of not being able to improve their turnover and this has significant implications on job losses. None of us are going to be getting a 25 increase next, so should Eskom be given the same?"

Maimane announced the DA's opposition to Eskom's application for an electricity price increase.

He said Eskom needs a CEO that will be 'frank' with South Africans about load shedding and where the utility is heading and said Molefe has already misled the country.

DA said South Africans cannot be expected to pay more money for electricity while Eskom's top executives earn around R11 million in bonuses every year.

He also said Eskom needs a permanent head whose sole duty is taking the state-owned utility forward.

Despite Molefe's previous experience also heading Transnet earlier this year, Maimane said Eskom needs a permanent CEO.

"We can't have a CEO whose job has not yet been confirmed by the state."

Maimane also emphasised that Molefe has not been honest with South Africans.

"He has been informing South Africans that there will be no load shedding but there is. I'd rather have a leader who is going to be frank with South Africans."

Molefe is expected to stay on in his acting position until the middle of next month unless the board and the public enterprises minister indicate otherwise.

The utility said it needs more money to keep buying diesel, which is imperative to keep the lights on.

Nersa will make a decision by the end of the month.

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