By Prinesha Naidoo
President Cyril Ramaphosa has appealed to the board of South Africaâs cash-strapped power utility to suspend its biggest electricity-price increase in more than a decade as the nation faces two more years of rolling blackouts.
Eskom Holdings SOC Ltd. won approval by the national energy regulator to raise electricity tariffs by an inflation-beating 18.65% and 12.74% for the next two years on Jan. 12. The first increase is set to take effect in April.
âIt will not be fair to impose the tariff on our people while there is loadshedding,â he said, using a local term for power cuts.
Ramaphosaâs comments come after Eskom said the country could face two years of persistent blackouts as it overhauls its aging power stations. He spoke in the central Free State province.
The tariff increases are a key input in the National Treasuryâs plan to a shift portion of Eskomâs debt of about 400 billion rand ($23 billion) onto the stateâs balance sheet. Itâs expected to announce the quantum of the transfer in Februaryâs budget.
South Africa is suffering from an energy crisis, with Eskom implementing blackouts for more than 200 days last year and every day so far in 2023. The rolling outages are needed to protect the grid from collapse when the companyâs aging, mostly coal-fed plants canât meet demand.
An additional 6,000 megawatts of capacity is needed to stabilize the grid and a âgreat deal of progressâ is being made in unlocking logjams to close the shortfall, Ramaphosa said.
In addition to procuring extra capacity, the government will ensure Eskomâs diesel-fed power stations at Gourikwa and Ankerlig have enough fuel to boost power output when the coal-fired plants canât meet demand, he said. That would reduce the severity of outages.
Eskom produces almost all the countryâs electricity, and blackouts curb output in Africaâs most industrialized economy. Intense outages imposed earlier this month have taken a toll on industry and agriculture, and thereâs a 45% chance of the nation slipping into a recession this year, a Bloomberg survey of economists shows.
To contact the reporter on this story: Prinesha Naidoo in Johannesburg at [email protected].
To contact the editors responsible for this story: Paul Richardson at [email protected], Ian Fisher, Arijit Ghosh, Rene Vollgraaff.
© 2023 Bloomberg L.P.
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