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Johannesburg - The ministry of finance and ministry of public enterprises on Friday warned that electricity tariffs would need to be increased despite the government's extension of guarantees to Eskom.
Finance Minister Pravin Gordhan on Thursday announced a further guarantee of R174bn to Eskom, bringing the total guarantee by the government to R350bn.
The extended guarantees will enable Eskom to continue with its entire build programme through to 2017.
"The guarantee will enable Eskom to continue the capacity expansion programme it has committed to over the next seven years, including the Medupi, Kusile and Ingula power stations as well as the associated transmission infrastructure," the ministries said in a joint statement.
"The guarantees will deepen financing options available to Eskom and reduce its cost of funding," they added.
But they pointed out that the issuance of the guarantees are a result of Eskom's changed funding needs emanating from the lower-than-expected tariff increases that were approved by the National Energy Regulator of South Africa (Nersa).
Nersa announced in February that Eskom could increase its tariffs by an average of 25% in each of the three years out to 2013.
"The support that government provides to Eskom has enabled the smoothing of electricity tariff increases," the ministries said.
"However, it must be recognised that ultimately tariffs need to increase to fully reflect costs," they added.
Finance Minister Pravin Gordhan on Thursday announced a further guarantee of R174bn to Eskom, bringing the total guarantee by the government to R350bn.
The extended guarantees will enable Eskom to continue with its entire build programme through to 2017.
"The guarantee will enable Eskom to continue the capacity expansion programme it has committed to over the next seven years, including the Medupi, Kusile and Ingula power stations as well as the associated transmission infrastructure," the ministries said in a joint statement.
"The guarantees will deepen financing options available to Eskom and reduce its cost of funding," they added.
But they pointed out that the issuance of the guarantees are a result of Eskom's changed funding needs emanating from the lower-than-expected tariff increases that were approved by the National Energy Regulator of South Africa (Nersa).
Nersa announced in February that Eskom could increase its tariffs by an average of 25% in each of the three years out to 2013.
"The support that government provides to Eskom has enabled the smoothing of electricity tariff increases," the ministries said.
"However, it must be recognised that ultimately tariffs need to increase to fully reflect costs," they added.
