Eskom warns of negative repercussions if increases aren’t granted

Without the additional revenue generated by the average annual electricity increases requested by Eskom, a sustainable, uninterrupted power supply is not possible.

This was the message from the power parastatal as it concluded its tariff application presentation to stakeholders at public hearings conducted by the National Energy Regulator of South Africa (Nersa) on Tuesday. Eskom confirmed its requirement of an average annual electricity increase of 17.1%, 15.4% and 15.5% over the next three years.

“An inflation-based revenue growth, as suggested by a number of stakeholders, would unfortunately push Eskom closer to the brink since a funding gap of R50 billion exists even with the requested increases,” said Calib Cassim, Eskom chief financial officer

He said the requested revenue was “crucial” to ensuring that Eskom restored operational efficiency and delivered on its mandate of supplying reliable electricity.

“The current financial situation is unsustainable and presents a risk to security of supply and Eskom’s going concern status,” Cassim said, highlighting that he was “encouraged” that Nersa had already approved two short-term incentives that addressed distressed industries successfully.

“There is a need to tie up these interventions with South Africa’s industrial policy and economic development strategy to ensure sustainability for all,” he said.

“If Eskom cannot meet its commitments to produce electricity, it affects the customers as well as the country. An inadequate security of supply has more negative repercussions to economic growth and social welfare than a tariff increase required for Eskom’s sustainability,” said Cassim.

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