Eskom’s application for a 16-percent price hike over five years is vital to cushion the economy against a shock of a sudden tariff rise, Public Enterprises Minister Malusi Gigaba said on Tuesday.<\/p>\n
Briefing the parliamentary committee on public enterprises, Gigaba was hesitant to declare whether Eskom’s application to the National Energy Regulator of SA (Nersa) should be altered.<\/p>\n
“I’m saying the 16 percent application is necessary… it might come down, but I hope it doesn’t go up,” said Gigaba.<\/p>\n
Gigaba told MPs to await Nersa’s decision, which would be made after a series of public hearings and consultations with interested parties, including business and trade unions.<\/p>\n
The minister did, however, warn that if Nersa decided on lowering electricity tariffs significantly, it could have dire consequences.<\/p>\n
“If it comes down, it must not come down to such an extent that the build programme will be impaired,” Gigaba said.<\/p>\n
He said the big debate over the coming months would be around whether the country could afford the tariff rises.<\/p>\n
Gigaba said he had already engaged various stakeholders in this regard.<\/p>\n
“We raised sharply the responsibility not to subject the South African economy to shocks of high tariffs increases, but at the same time in particular consider the poor.”<\/p>\n
Gigaba said changes to the inclining block tariff (IBT) were also contained in the Eskom proposal, to guard against unintended consequences for the poor.<\/p>\n
“Poor households are losing out on the benefits because the IBT system is measured on consumption and not socio-economic conditions, meaning when poor households with multiple dwellings’ consumption rises they are mistakenly charged higher tariffs,” said Gigaba.<\/p>\n
Gigaba said he would be directed by the outcome of the Nersa process as to the ultimate tariff, but hoped it would take various factors into consideration.<\/p>\n
“We need to consider the build programme being undertaken and the risk of it being stalled by the inability of Eskom to raise revenue to pay its debts and loans.”<\/p>\n
Gigaba said it was still government’s aim to bring tariff increases down to single digits following the next Multiple Year Price Determination.<\/p>\n
Eskom seeks 16% tariff hike every year for 5 years<\/a><\/strong><\/p>\n Eskom quiet on electricity tariff hike claims<\/strong><\/a><\/p>\n Electricity situation urgent: FMF<\/strong><\/a><\/p>\n Eskom seeks extension for tariff application<\/strong><\/a><\/p>\n