By Mfuneko Toyana
JOHANNESBURG, June 30 (Reuters) – Cash-strapped power firm Eskom will seek an even bigger tariff increase next time around after South Africa’s energy regulator rejected the utility’s bid to raise prices in July, industry experts said on Tuesday.
State-owned Eskom is struggling to meet demand in Africa’s most advanced economy and has been relying on diesel-fired power stations to shore up supply in a bid to prevent power cuts that have become an almost daily feature in the country.
On Monday, the energy regulator turned down Eskom’s bid for a 9.58 percent hike to buy diesel to run its gas turbines and pay independent power producers, saying the application lacked crucial information.
However the regulator, NERSA, said it would “leave the door open” for Eskom to reapply.
Some analysts and industry players predicted the utility would request a tariff rise again, and that it would be higher.
“We think Eskom will go for … 12 percent (rise) next year. Eskom always asks for more than they need because they expect NERSA to give them less,” said Shaun Nel, spokesman for the Energy Intensive Users Group (EIUG), a business lobby group.
EIUG, which represents major companies in South Africa, including mining houses such as AngloGold Ashanti and BHP Billiton, had lobbied hard against a hike, citing the negative impact high power prices had on production.
Peter Worthington, principal analyst for Barclays Africa, also said he expected Eskom to reapply for a rise, and for it to be higher than 9.58 percent.
“We view yesterday’s news as a credit negative for Eskom,” said Barclays Africa’s Worthington.
