Johannesburg - Eskom will know on Thursday whether the National Energy
Regulator of SA has approved its requested 34% interim price
hike application.
Nersa confirmed that its decision would be made public on
Thursday. It had fast-tracked the parastatal's application. An
electricity subcommittee meeting to consider recommendations to
Nersa took place on June 17.
The parastatal's interim application unleashed a throng of
criticism from trade unions and civil society groups due to its
anticipated effect on the poor.
The government seemed divided on whether the parastatal should
be allowed to inflict the steep hike, with Public Enterprises
Minister Barbara Hogan urging for it. Energy Minister Dipuo Peters
however warned against putting up prices too quickly due to the
effect on the poor.
In her budget speech on Tuesday, Peters argued that tariffs
rising too quickly would lead to "unintended consequences".
"It is an important matter that needs to be put into proper
perspective, particularly as it relates to the latent concerns
about the impact on the indigent.
"At the outset, I must state categorically that we do not agree
that the tariffs must rise rapidly. It is our view that this will
lead to unintended consequences, not least of which would be an
adverse economic impact in the face of the recession we are
currently experiencing," Peters said.
The Congress of SA Trade Unions, which had vehemently opposed
Eskom's application, on Wednesday welcomed Peters' remarks.
"The minister correctly points out that the tariffs must be
structured to ensure that the big users subsidise the domestic
users," it said in a statement.
Peters also indicated that her department had initiated a
process which would enable government to provide a cushion for the
indigent, and would develop an appropriate pricing policy framework
to structure the tariff regime so that the indigent were insulated
from increasing tariffs.
The trade union federation said it would seek a meeting with the
minister on this process.
It expressed displeasure about Hogan's support for the increase.
"We want to remind the minister that Eskom finds itself in this
untenable situation because government, and her department in
particular, deliberately failed to invest in the electricity sector
because it wanted to privatise Eskom," it said.
Hogan had cautioned that if the parastatal's interim application
was not approved, the country would face higher increases later on,
Business Day reported.
During public hearings on Eskom's application earlier this
month, chief executive Jacob Maroga said the country's electricity
supply would be at risk if Eskom did not receive its 34 percent
tariff hike.
There was a large shortfall in its finances after taking into
account government funding and loans, hence the parastatal's
interim application for a 34% price hike to come from the
consumer's pocket.
Interim hike
Eskom applied for the increase for the current financial year.
It intended applying for another price rise later in the year to
cover the balance of its three-year pricing model.
The hike would be an "interim" move pending finalisation of
Eskom's funding model, likely to be thrashed out by the end of
September.
During Nersa's recent hearings, the parastatal was widely
criticised for missing the legislated deadline for a price hike
application and for failing to provide sufficient information to
substantiate the need for the tariff hike.
- Sapa