Cabinet may cut Eskom price hike

Pretoria - South Africa is looking at ways to help power utility Eskom bridge its funding gap without having to rely on its requested 45 percent rise in power tariffs every year for the next three years, an official said on Wednesday.

"Government is looking at interventions to reduce the hikes while at the same time ensuring Eskom meets its obligations (to build new power stations," cabinet spokesperson Themba Maseko told Reuters on the sidelines of a cabinet meeting.

Maseko said Eskom's request, which was faced with criticism from consumers and industry, was "too heavy".

The government wanted the utility's R385bn power expansion programme to continue, but without hurting the economy and people, he said.

"The government wants the Eskom programme to continue without the 45 percent hike. It will have a major impact on the economy and will impact on inflation and living standards of the poor," he said.

Eskom has said it would rely on tariff increases, borrowing and government loans to fund its expansion programme, crucial to keeping the lights on in Africa's biggest economy.

In September, the utility submitted an application for tariffs to rise by 45 percent each year for the next three years or to be increased by 146 percent in one go.

Both suggestions were criticised by economists and industry figures, who said such increases would stoke inflation fears and force industrial majors to shut parts of their operations.

The utility is now preparing an amendment to its request based on discussions with the government and municipalities and will submit a revised proposal by the end of this month.

- Reuters