Eskom revises electricity tariff

Tuesday, December 1, 2009

Pretoria - Power utility Eskom has revised its tariff application to the National Energy Regulator of South Africa (NERSA) from 45 percent to 35 percent every year for the next three years.

Acting Chairperson Mpho Makwana said Eskom had decided to revise its application following consultation with various stakeholders to ensure the security of the country's electricity supply, while not adversely affecting South Africa's socio-economic process.

"Eskom has applied for a revenue requirement that translates into a price increase of 35 percent.

"This will be for each year of the MYPD period and will lead to a real price of 43 cents per kilowatt hour in financial year 2010/11, 85 cents per kilowatt hour in financial year 2011/12, and 70 cents per kilowatt hour in 2012/13," said Makwana.

The newly appointed chairman, who replaced Bobby Godsell who resigned earlier this month, was briefing reporters in Johannesburg on Tuesday after the parastatal submitted its revised Multi-Year Price Determination (MYPD) application to the regulator.

The power utility had originally asked NERSA to grant it a 45 percent tariff increase when it submitted its application at the end of September.

Makwana said that despite the revised lower increase, Eskom would still have a shortfall of R14.1 billion in the 2011/12 financial year and R7.9 billion in 2012/13.

"We'll address the shortfall by intensifying our efforts to raise the required borrowings as soon as possible," said the chairman. The utility would increase borrowings by R8.5 billion over three years as well as bring in R20 billion in new equity which will lessen the shortfall.

In the event that this does not happen the parastatal's projects would need to be completed in phases. The new coal-powered Kusile Power Station which is located near Witbank will be phased in one year later.

Eskom will then sell part of Kusile to a private equity partner within 24 months. The Sere Power Station will also be phased one year later.

Makwana said that as a last resort Eskom would have no choice but to approach the regulator again during the MYPD2 period.

"However, with the participation of all stakeholders and all South Africans this option can be avoided," he said.