Eskom CEO pleads with Nersa for 25.3% tariff hike

Brian Molefe says the power utility needs more money to keep the lights on.

Acting Eskom CEO Brian Molefe

JOHANNESBURG - Eskom's acting CEO Brian Molefe has pleaded with the National Energy Regulator of South Africa (Nersa) to approve the application for a tariff hike, saying it's essential to keep the lights on.

Nersa is holding public hearings at Nasrec, south of Johannesburg, into Eskom's application for a 25.3 percent electricity price increase.

About 12 percent has already been approved, but Molefe says the utility needs more money to continue buying diesel.

The acting CEO has explained that the tariff hike Eskom is seeking will include 9.5 percent, which will be used to run open-cycle gas turbines.

These diesel generators operate every day in order to minimise load shedding.

If they are not used, South Africa would experience stage two load shedding every day from early in the morning until the evening.

Molefe says they need to continue buying diesel, as this will cost much less than the impact of constant load shedding.

"We'll calculate costs that are prudent and our tariffs will be based not on what our desires for profits are, but on what is necessary for us to cover costs. And that is why we are here, praying, that you [Nersa] give us the money to cover the costs of diesel."

He says Eskom's financial situation should stabilise from 2018 onwards, as more generating capacity is added to the grid and the utility can start paying back its debt.


Meanwhile, energy expert Chris Yelland says Eskom has not considered affordability while applying for an electricity price increase.

Making his presentation to the energy regulator, Yelland said Eskom had not considered if South Africans could actually afford a tariff hike.

He said there were funding alternatives which could help the utility keep the lights on, for instance, selling non-core assets.

He said the reason Eskom wanted to make customers fork out is due to the delay in completing the Medupi and Kusile power stations, which is why it had incurred extra diesel costs.