Eskom, seeking to expand power generation capacity in Africa’s biggest economy, has applied to raise tariffs by a nominal 34%, the regulator said on Friday.
”On 5 May the National Energy Regulator (Nersa) received an interim price increase application from Eskom requesting a 25% real price (34% nominal) increase,” Nersa said in a notice in a local newspaper.
South Africa’s inflation is at 8,5%.
State-owned Eskom has said it needed a significant rise in tariffs to build new plants meant to fill a supply shortfall.
The utility had said it had delayed the application for new tariffs to take into account the impact of the financial crisis on consumers, and its own ability to borrow. Moody’s rating agency cut Eskom’s local and foreign currency ratings last year, reducing its ability to secure funding from markets.
”The economic environment has worsened, which means that a higher increase is needed this year,” Eskom’s spokesperson Fani Zulu told Reuters.
”Thirty four percent is within reach,” he said.
South Africa’s power regulator approved a 27% tariff hike to Eskom last June, well short of the 53% increase requested by Eskom.
The regulator said at the time electricity prices could rise by between 20% and 25% a year over the next three years. It has since said this estimate could change.
Eskom plans to spend R385-billion over the next five years to build new power plants. The utility has said it would rely on an increase in electricity tariffs, equity and borrowings to raise the funds.
The Treasury said in February it would provide the utility with loan guarantees of R175,97-billion over the next five years, in addition to a R60-billion, three-year direct loan to the company announced last year.
The government has acknowledged years of under-investment in power generation, which led to chronic power shortages after the economy expanded and demand for electricity grew.
Eskom, which provides 95% of power in Africa’s biggest economy, has rationed electricity since January last year, when a near-collapse of the grid forced mines and smelters to shut for days, costing the economy billions of rands. – Reuters