Price hike double-blow to hit South Africans next week

South African consumers can expect a double-blow from the energy sector next week as petrol price and electricity tariff increases take effect.

The first blow will come from Eskom which has announced that will increase electricity tariffs by 15.63% on 1 April 2021.

This follows the power utility and the National Energy Regulator of South Africa (Nersa) reaching an agreement on Eskom’s allowable revenue for the 2021/2022 financial year.

The settlement was confirmed in a court order handed down by Justice Joseph Raulinga on 15 February.

Raulinga had in January 2021 heard Eskom’s application to have an earlier High Court order allowing the increases executed, pending Nersa’s appeal of the matter in the Supreme Court of Appeal.

The High Court in 2020 found that the power utility should recover R69 billion in a phased manner over a three-year period.

Nersa had reportedly negotiated with Eskom and reached a settlement of R10 billion to mitigate the risk of the court ordering a R23 billion addition, the amount the High Court had originally found Eskom was entitled to for the next financial year.

This would have resulted in an increase of 21%.

The new court order stated that “an amount of 5.44c/kWh will be added to the average standard tariff for Eskom customers in the 2021/22 tariff year making the aggregate standard tariff for Eskom customers in the 2021/22 tariff year 134.30c/kWh”.

These price hikes are already filtering through to end-users in different municipalities, as seen with recent price adjustment notifications from areas like the City of Joburg.

Petrol price

Motorists should also expect a further hefty hike in fuel prices in April, with 95 ULP heading into record territory when the Department of Mineral Resources and Energy makes the official adjustment next Wednesday (7 April).

The additional 27 cents to the General Fuel Levy and Road Accident Fund levies announced by finance minister Tito Mboweni in February come into effect in April and will add extra costs to every litre of fuel purchased, in addition to the increased monthly adjustment.

The Automobile Association (AA) forecasts that petrol is set for an increase of 73 cents a litre, diesel an increase of 39 cents, and illuminating paraffin and increase of 37 cents, before the additional taxes. With the increase to the levies factored in, petrol could rise by as much as R1 a litre, and diesel by 66 cents a litre.

The levies are not added to the cost of illuminating paraffin, it pointed out.

“This means that the fuel price for April will be in the region of R17.32 a litre for ULP 95 inland, comfortably surpassing the previous high of R17.08 set in late 2018,” the AA said.

With the increases to the levies, motorists will, from April, be paying R5.96 per litre of fuel to the GFL and RAF levies, or between 35% and 40% to taxes on every litre purchased.

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