Eskom seeks massive tariff hike: report

State power provider Eskom is seeking to raise tariffs by an average of 15% over the next three years, according to an application seen by Moneyweb.

The power utility is expected to submit the application to the National Energy Regulator of South Africa (Nersa), and has reportedly already been sent to National Treasury and the South African Local Government Association.

Like many other state entities, Eskom has been crippled by corruption, management inefficiency and overstaffing, which saw the group report a loss after tax of R2.3 billion for the year ended March, from a prior profit of R900 million. The group’s sales revenue is declining, with price increases offset by declining sales volumes.

According to economist Mike Schüssler, if Eskom’s application is successful, consumers could pay approximately 20% more for electricity in 2019/20, and roughly the same over the following two years.

The economist warned that such a move would add almost one percentage point to inflation, further squeezing consumers already overburdened with debt.

Eskom had R399 billion of debt at the end of March, according to data compiled by Bloomberg, and has been flagged by ratings companies as a key risk to South Africa’s economy.

The group is expected to submit the application within days. Nersa will then invite written submissions and make its decision in December, Moneweb said.

“The new tariffs will take effect on April 1, 2019 for Eskom’s direct customers and on July 1 for consumers supplied by municipalities,” it said.


Read: Eskom counts R2.3 billion in losses as irregular spending blows up to R19.6 billion

 

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Eskom seeks massive tariff hike: report