South Africa\u2019s government plans to intervene to keep power prices lower after the state utility asked a regulator to allow it to raise tariffs by 36%.<\/p>\n\n\n\n
Electricity Minister Kgosientsho Ramokgopa said he\u2019s confident action will be taken before the National Energy Regulator of South Africa rules on Eskom Holdings SOC Ltd.\u2019s application by the end of the year. By comparison, South Africa\u2019s annual inflation rate was 4.4% in August.<\/p>\n\n\n\n
\u201cThere could be a policy intervention we could make to provide some measure of relief,\u201d Ramokgopa said at a Standard Bank Group Ltd. conference in Johannesburg on Tuesday. In addition to preserving the financial viability of Eskom, \u201cwe don\u2019t want to undermine the ability of the economy to grow\u201d and we don\u2019t want to push the poor deeper into poverty, he said.<\/p>\n\n\n\n
Eskom\u2019s tariff application for its next financial year is the latest impediment to economic growth presented by South Africa\u2019s struggles with power supply. While the rolling blackouts that hit Africa\u2019s biggest economy intermittently since 2008 \u2014 deterring investment and forcing companies out of business \u2014 were brought to a halt about six months ago, electricity costs have risen 600% since 2006.<\/p>\n\n\n\n
The government pledged a R254 billion bailout for the indebted power company in February 2023. That amount was cut by R4 billion a year later, after Eskom failed to meet a condition attached to its debt-relief plan.<\/p>\n\n\n\n
\u201cWe will provide the relief to everyone,\u201d Ramokgopa said, without specifying what action will be taken other than saying the government could suspend certain requirements it has of Eskom. \u201cI am confident that this is not the figure we will be seeing.\u201d<\/p>\n\n\n\n
Prices will fall as the country takes on more renewable energy as private companies build more plants, the minister said. South Africa currently relies on coal for about four-fifths of its power and Eskom has a near monopoly.<\/p>\n\n\n\n
Eskom said its application was based on the costs it will incur to provide power. The utility also applied for an 11.8% increase in its 2027 financial year and 9.1% hike the following year.<\/p>\n\n\n\n
City Opposition<\/strong><\/p>\n\n\n\n South Africa\u2019s second-most populous city, Cape Town, has said it will take legal action against the proposed price increases.<\/p>\n\n\n\n On July 18, shortly after the formation of the first coalition government since the 1990s, President Cyril Ramaphosa said in a speech that the government will take action to rein in rises in administered prices such as electricity.<\/p>\n\n\n\n In a wide-ranging speech, Ramokgopa said the government\u2019s plan to incorporate reliable natural-gas supply into its energy mix has \u201cfatal flaws\u201d and will need to be reworked, giving little further detail.<\/p>\n\n\n\n He added that companies will need to adapt to the imposition by the European Union of a so-called carbon border adjustment mechanism, effectively a tax on goods coming into the bloc if they are produced using energy from fossil fuels.<\/p>\n\n\n\n \u2018Climate Ambitions\u2019<\/strong><\/p>\n\n\n\n \u201cWe are arguing that it is a trade instrument \u2014 that won\u2019t take us very far,\u201d he said in reference to South Africa\u2019s opposition to the measure by one of its biggest trade partners.<\/p>\n\n\n\n The EU has climate ambitions and \u201cwe are understanding where they are coming from,\u201d he said, adding that Eskom could sell its green energy at a premium to companies that want to avoid the charges.<\/p>\n\n\n\n Ramokgopa announced that the country is working on providing off-grid power supply to remote communities with the aim of boosting access to electricity to 100% by 2029 from about 94% now. Two pilot projects will open in the rural province of Limpopo this month, he said.<\/p>\n\n\n\n
\n\n\n\n