Eskom hike a blow to consumers

Johannesburg - Eskom's tariff increase will be hard on consumers in the medium term, consultancy Frost & Sullivan said on Thursday.

Earlier the National Energy Regulator of SA (Nersa) announced it had given state-owned electricity provider Eskom a 31.3% tariff rise for the 2009-10 financial year.

This was just short of Eskom's request for a 34% tariff hike. "The increase will be hard on consumers in the medium term, but we maintain that a long-term view needs to be taken on this issue," said Frost & Sullivan's energy industry manager Cornelis van der Waal.

"These decisions must be taken in the interests of the country's economic development, the sustainability of industry and ensuring a reliable supply of electricity," he said.

Hiking tariffs now was the best way to support these long-term goals, Van der Waal said.

Eskom - which supplied 95% of the country's power - had been battling to cover cost increases while embarking on a five-year expansion programme.

The electricity supplier had said it required over R150bn to fund a R385bn expansion plan to build new power stations. According to Nersa, Eskom's tariff hike would come into effect on July 1 and would last until March 31 2010.

Eskom would submit another request for a tariff increase later in 2009 that would include a three-year period to the end of March 2012.

- Sapa