Eskom warns against collapse: Unless tariff increase is approved

Eskom warns against collapse: Unless tariff increase is approved

- Eskom claims that it is facing financial collapse unless tariff hikes are not approved

- Should this happen, the SOE warns that the entire nation would suffer the consequences

- This comes as the power seeks interim relief in a bid to increase what citizens pay for electricity

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Eskom has issued a warning to South Africa, claiming that if tariff increases are not approved, it will face financial collapse.

The embattled state-owned entity says that this will see both the government's credit ratings and consumers' well-being suffering.

Facing a debt burden of R450 billion, Eskom is struggling to balance both unexpected breakdowns and the cost of this debt.

The National Energy Regulator of South Africa received an application from the power utility seeking to obtain R843 billion in revenue through price hikes.

READ ALSO: Ramaphosa: Government intends to reduce political interference at SOEs

However, this would have seen tariffs climbing 15% over the next three financial years, and NERSA only approved a 9.41% hike.

This decreased annually, seeing Eskom falling short to the tune of R173 billion, excluding a R23 billion bailout from National Treasury, Briefly.co.za gathered.

Eskom is adamant that it was wrong of NERSA, challenging the issue in the Pretoria High Court.

Fin24 reports that Advocate Matthew Chaskalson insists Eskom will face financial collapse if interim relief is not granted:

“Genuinely, it is a national crisis. We will submit to you, your worship, that there is a very real risk that if we have to wait until the start of 2021/2022 financial year, the country may have collapsed by then."

The advocate also urged the court to ignore allegations that the power utility was used as a vessel for state capture:

“We are not saying that state capture was not a mess of history. But we are saying forget about state capture, let’s look at what reasonable tariffs would be in a regime where parliament has agreed that electricity must be financed at a point of provision."

While NERSA has yet to have an opportunity to present its arguments, the regulator said in an affidavit that electricity prices would have more than doubled if it hadn't taken the bailouts into consideration.

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Source: Briefly.co.za

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