Eskom Says Hefty Tariff Increase Due in April Beyond Its Control, SA Has a Mouthful

• Embattled power utility Eskom has proposed a 20.5 per cent tariff increase amid public hearings in its application to Nersa
• The entity maintains the proposed hike is mainly influenced by two factors, including an increase in carbon taxes
• Social media was rife with criticism from civil society against the application, with many calling out the rot setting in at Eskom

JOHANNESBURG - Eskom is arguing that its proposed 20.5 per cent tariff increase for 2022/23 was driven by the requirement to increase purchases of energy from independent power producers (IPP) and an increase in carbon taxes.

The embattled power utility announced the proposal on Monday during the first day of public hearings into its application to the National Energy Regulator of SA (Nersa). The increase in purchases of energy and carbon taxes accounted for 13.8 per cent of the proposed price hike.

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Adding to the outlook, the national power supplier said operating expenses that shot up and other cost escalations in primary energy accounted for 7.5 and 6.5 per cent, respectively.

News24 reported that IPP costs for Eskom are expected to go up as more non-utility generators come on stream. As a result, in its application, Eskom requested a negative return on assets of 6.38 per cent to prevent an astronomical rise in costs.

Increase will affect the poor

Briefly News has it on good authority that determinations of the tariff are done by Nersa, which utilises a legislated method that, in turn, defines how much Eskom can justifiably make from consumers, assuming the utility functions optimally.

New tariffs will be introduced on 1 April for non-municipal customers and 1 July for municipal customers. But, of course, there is a public backlash against the national power supplier's application for a tariff increase.

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Among a host of critics, Stellenbosch Municipality's Executive Mayor, Gesie van Deventer, said she submitted a rejection to Nersa on Friday, 14 January, following Eskom's application, per an IOL report.

"We reject Eskom's application and request that it be withdrawn. The proposed increases for the next three years will have a damaging effect on the economy. Our residents can't afford these increases. They are unjustified and unfair," said van Deventer.

SA mounts a strong response

South Africans on social media expressed similar frustrations, even berating the purported corruption that has set in at government-owned entities. Briefly News scanned the comments to bring readers all the best reactions.

@Stanley Mlala wrote:

"Eskom has evergreen contracts which are now hiding behind the so-called independent powers producers and looting the people as shareholders. I believe its high time all their partners are investigated on their beneficials and conditions of the contracts. This is destroying our economic growth and advancement."

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@Xolani Qulu said:

"Why not allow IPP (Independent Power Producers) to sell directly to the public. Eskom does not want direct competition at the expense of both taxpayers and parasitizing the public."

@Greg Mariba added:

"Eskom is providing cheap electricity. Hence this cheapness is hobbling their operations. Electric power in SA has to be increased by at least 100 per cent in the next 18 months for Eskom to stabilise its generating capacity."

R3.7b in assets linked to State Capture seized

Elsewhere, Briefly News previously reported that the National Prosecuting Authority (NPA)'s Investigating Directorate has seized over R3 billion in assets linked to State Capture.

The assets could be forfeited over to the state. Among the confiscated items is a R57 million private jet, a R17 million office park and a mansion worth R12 million. The assets belonged to people who were allegedly involved in State Capture while former president Jacob Zuma was in power.

When the cases go the trial and if the suspects are found guilty the assets will be permanently handed over to the state. A large portion of the assets is linked to Eskom followed by the Gupta family and associates according to EWN.

Source: Briefly News