CAPE TOWN — Even Bell Pottinger wouldn’t shake the public perception that further Eskom electricity price hikes (19.9% rumoured from April next year), are unacceptable when the utility’s CEO was going to get R30m for just 22 months work and claims of billions in shady tenders abound. Putting aside whether such a draft revenue application to the national energy regulator is justified in business terms, given legitimate internal challenges, what moral authority or credibility does Eskom have left when its Gupta company links fester unresolved? This new hike from next year comes on top of imminent winter electricity price increases. In February, the National Energy Regulator of South Africa (Nersa) approved a maximum 2.2% electricity tariff increase for Eskom for the 2017/18 financial year. Nersa has however capped municipal electricity tariff hikes at 1.88%. Public tolerance of the poorly-run utility would be greater if its CEO Brian Molefe hadn’t stepped down after being strongly linked to the Guptas, saying it was in the ‘interests of good corporate governance’. That, before being willingly reinstated, then fired, then taking his employers to court for unfair dismissal! Relationships are built on trust and no amount of spin or bluster can correct that. – Chris Bateman
Eskom has confirmed that the board approved a draft revenue application for national energy regulator Nersa’s approval, after a leaked document showed it wants clients to pay 19.9% more from April 1 2018.
“The previous multi-year decision made by Nersa for the period 1 April 2013 to 31 March 2018 comes to an end on 31 March 2018,” Eskom chief financial officer Anoj Singh said in a statement on Monday.
“Therefore, there is a need for Eskom to make the next application. Nersa has approved that Eskom can make a revenue application for a single financial year – the 2018/19 year.”
The statement follows a report in Moneyweb, which revealed details of a confidential document Eskom sent to the South African Local Government Association (Salga) and the National Treasury for their input.
The document also revealed that Eskom wants municipalities to pay 27.3% more for bulk electricity purchases from July 1 2018.
“The draft application is for total revenue of R218.7bn, an increase of 6.6% from the current year. The price impact is however much bigger because of the lower sales volumes,” Moneyweb explained.
#Eskom Nersa granted Eskom 2.2% increase for 2017. Eskom says this is way below inflation. Can't have another below inflation increase.
— POWER987News (@POWER987News) June 5, 2017
The application follows Eskom’s last application, which saw the tariff increase by 2.2% in April 1 2017. Municipal customers will experience an average 0.3% increase with effect from July 1 2017, Eskom explained on Monday.
Eskom said that in order to meet the relevant legislative and regulatory requirements, the Eskom board had approved a draft revenue application for consultation with Salga and Treasury, which was submitted to the two organisations during April 2017.
“The Municipal Finance Management Act (MFMA) requires Eskom to consult with these entities before submitting its final revenue application to Nersa,” Eskom explained.
“They are allowed 40 days to provide comments. Eskom has received their responses.
“The responses from Salga and National Treasury are being considered. Eskom envisages that it would submit the final revenue application to Nersa during June 2017.”