Not Implementing Eskom Tariff Hike Could Be Disastrous – Experts

Experts invited to the African National Congress’s energy symposium said the governing party should not stop Eskom from implementing a tariff hike on electricity.

Energy regulator, Nersa, granted Eskom an 18,65% tariff hike, which is expected to come into effect from 1 April.

President Cyril Ramaphosa said he’d asked Eskom to hold off on implementing this.

However, Wits University Economist, Dr Kenneth Creamer, said this would be disastrous for the power utility and the government in the long term.

“The problem with that is you can weaken Eskom further, and we will have to bail it out more, we will have more load shedding. So, we need to have sensible joint solutions that are sustainable. We need to have targeted support instead of cutting it for everybody, target it for people that need it, the small businesses, the farmers.”

Meanwhile, the SA National Energy Development Institute’s Sicelo Xulu said Nersa grants Eskom cost-reflective tariffs which consider revenue needed to be generated by the entity versus its operational expenses.

He said Eskom cannot do the much-needed maintenance on its ageing power stations if there is no money for it.

“So, let’s say now we take a pause from the tariff increase point of view, so it means Eskom has to go back and rework its income statement and be able to make sure that they actually cut the expenditure so that it balances the revenue at the end of the day, because otherwise, it would be an unfunded programme.”