Eskom tariff hearings begin

Johannesburg - Public hearings on state-owned power utility Eskom's application for a tariff hike began on Monday in Mpumalanga, the National Energy Regulator of SA (Nersa) said.

The hearings for Eskom's required revenue application for the period April 1 2010 to March 31 2013 are being be held in all provinces from January 11 to 21.

The electricity parastatal said the tariff had to be raised to fund its R385bn expansion plan.

On Monday, Eskom, Sappi SA, TSB Sugar, Mpumalanga Cane Growers, SA Institute of Electrical Engineers, the Congress of SA Trade Unions (Cosatu) and Tankless Geysers for Africa would participate in the hearings.

Analysts had warned that Eskom's proposed tariff increase would harm South Africa's mining industry.

In a survey carried out in December by research company TNS, more than 80% of a sample of people surveyed felt the proposed electricity price increase would be difficult to cope with.

"Eight out of ten people will battle to cope with the mooted electricity price rises - only a quarter feel they are justified," the company said of the 2 000 people questioned.

Eskom had initially asked for three annual electricity price increases of 45%, but this request was revised to 35% a year for three years.

"This comes in the wake of pressure from all political parties as well as Cosatu, with significant concerns being raised about the inflationary effects of such large price rises, as well as the impact on an economy still struggling to cope with the current recession," TNS said.

Eskom had - in additional to the proposed tariff hike - made loan agreements with several banks for funding, the most recent last month when the parastatal announced that it had loaned $1.7bn from five French banks -- BNP Paribas SA, Calyon, Societe Generale SA, Natixis SA and Credit Industriel et Commercial.

Eskom said the loan would be used to purchase turbines for its coal-fired power stations, Medupi and Kusile.

- Sapa