Eskom tariff hike could lead to restructuring

Nersa approved a 9.4% tariff increase which will allow Eskom to recover R11.2 billion.

Eskom. Picture: Reinart Toerien/EWN

JOHANNESBURG - Organisations and business have expressed concern about the 9,4 percent electricity tariff hike which comes into effect from April, saying some companies will have to start restructuring.

The National Energy Regulator (Nersa) announced the tariff increase yesterday which allows the utility to recover R11.2 billion.

Eskom had wanted to recover R22,8 billion and says it's now in a difficult position.

The Chamber of Mines says job losses and restructuring at mining companies are a last resort, but may be a consequence of the tariff hike.

Spokesperson Charmane Russel said, "Our concerns remain in place but certainly the tariff hike that was agreed to is far more palatable than the 16 percent that was asked for. It is still high though if you take a look at the fact that the electricity price increases have gone up by about 300 percent in our industry over the last seven years."

The utility says it will do its best to avoid the risk of load shedding, but it may have to reconsider using open cycle gas turbines, which use diesel, because it believed its costs would be covered.

At the same time, the Organisation Uniting against Tax Abuse (Outa)'s Ivan Herselman says they want to study the reasons behind the tariff increase to determine if it's justified.

"We still believe that the 9,4 increase is charging too many of the inefficiencies to the consumer."

Energy expert Chris Yelland says it's not all bad news.

"Customers have reason to be happy that the full claim of Eskom was not granted."

Meanwhile, Public Enterprises Minister Lynne Brown wants a report from Eskom on how this increase will affect its build programme.

Click here to view EWN's cartoon on the tariff hike.