Eskom has reiterated its calls for a 20.5% tariff increase for the 2023 financial year, warning that the hike is necessary for the continuation of its operations.
In a presentation to the National Energy Regulator of South Africa (Nersa) on Monday (17 January), the power utility said the increase was partly being driven by purchases from independent power producers (IPPs) and carbon taxes – two costs which are outside of Eskom’s direct control. These two costs alone make up around 13.8% of the requested increase, it said.
The group has also indicated that it plans to ask for a further 15.07% increase in 2024 and a 10% increase in 2025. However, this will depend on the actual increase that Nersa grants Eskom this year, with the regulator rarely giving the power utility the full increase that is asked for.
On 5 March 2021, Nersa approved a hike of 15.06% for Eskom’s direct customers, which was subsequently implemented on 1 April 2021. A hike of 17.80% for municipalities was implemented on 1 July 2021.
Over and above the requested tariff increase, Eskom said it is still dependent on further equity support provided by the government to remain a going concern.
It added that every effort is being made to find further efficiencies within the business, to address corruption and fraud, and to make inroads into addressing municipal and other debt.
“Eskom’s sales growth has generally trended slightly downwards. The decline can be generally attributed to large power users as a result of low competitiveness, high ore extraction costs and volatile commodity markets – particularly in the ferrochrome, steel, gold and platinum industries,” it said.
“Several factors have contributed to the decline in the underlying economic growth of the country. These include, but are not limited to, finite natural resources, low investor confidence, infrastructure bottlenecks, labour unrest, load shedding, rising local debt and unemployment.
Eskom added that the global Covid-19 pandemic and the associated lockdown restrictions in South Africa have had far-reaching consequences and added substantial downward momentum to an already compromised economy.