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Eskom objects to 5.2% tariff hike

The power utility had requested a 30% hike as part of its plan to recover tens of billions of rands lost to coal procurement, as well as the lower than expected electricity sales between 2014 and 2017.

Eskom offices at Megawatt Park in Johannesburg. Picture: EWN

CAPE TOWN - Eskom has objected to the National Energy Regulator's decision to offer the company a 5.2% electricity tariff increase.

The power utility had requested a 30% hike as part of its plan to recover tens of billions of rands lost to coal procurement, as well as the lower than expected electricity sales between 2014 and 2017, which some have labelled as the "Gupta years".

Eskom has on Tuesday briefed Parliament's energy oversight committee on the impact of Nersa's decision, as well as the company's financial performance.

The company says the lower than expected increase will negatively impact on its operational and financial sustainability.

Eskom is in a dire financial situation and needs over R70 billion to meet its financial obligations this year.

The company is also required to repay a R20 billion loan by the end of August.

Eskom interim CEO Phakamani Hadebe tells Parliament that receiving a qualified audit has also added to Eskom's financial woes as lenders refuse to extend more credit.

“After that qualified audit report, investors just moved out from Eskom. In other words, they couldn’t fund and Eskom couldn’t source new funding, whatsoever.”

The state-owned enterprise is, however, confident of turning the corner, saying the appointment of a new board has resulted in increased investor confidence.