Get more Mail & Guardian
Subscribe or Login

Eskom electricity hikes won’t shock SA’s battered economy — De Ruyter

Eskom will try to avoid sudden large increases in electricity costs, the cash-strapped power utility’s chief executive André de Ruyter said on Monday.

De Ruyter’s statement — made during a discussion on a podcast by the Free Market Foundation — comes two weeks after the National Energy Regulator of South Africa (Nersa) announced it would allow Eskom to recover an additional R6-billion through tariffs. This followed a high court judgment ordering the energy regulator to review its previous tariff decisions.

The tariffs relate to Eskom’s price structure application for the three financial years from 2014 to 2017 and a supplementary revenue application for 2018-2019. At first, Nersa gave Eskom a total of R32.6-billion for recovery. But after the court order, the regulator allowed another R6-billion to be recovered from its customers.

The announcement sparked concerns that steep tariff increases will hurt businesses already reeling from the Covid-19 economic downturn and load-shedding.

On Monday, De Ruyter said Eskom needs cost-effective tariffs to recoup revenue. “Now, the quantum of electricity that we sell has for a fairly long time now remained pretty flat,” he said. 

“And that is attributable to a lack of growth in the economy. There’s a debate going on [about] whether or not this lack of growth is attributable to a lack of reliable electricity, or whether there’s just not enough of a growth driver in the economy.”

But, De Ruyter added, he believes Eskom and Nersa will be able to address the electricity tariff issue “in a way that does not cause a price shock to the economy”. 

Both entities want to avoid causing further distress to households and businesses, he said. Eskom is considering taking a phased approach to recovering these lost revenues, De Ruyter said.

Last week, energy expert Ted Blom projected that Eskom would need to increase tariffs by 25% every year under the current business model. To avoid this, the utility must open up the grid, he told the Mail & Guardian.

Low revenue is not the only factor affecting Eskom’s bottom line. Eskom is labouring under an unsustainable debt burden, De Ruyter said. According to De Ruyter, the utility’s net debt varies between R460-billion and R485-billion.

In his State of the Nation Address last week, President Cyril Ramaphosa emphasised Eskom’s role in the country’s economic recovery.

“The load-shedding of the last few months has had a debilitating effect on our country. It has severely set back our efforts to rebuild the economy and to create jobs,” Ramaphosa said.

“Every time it occurs, it disrupts people’s lives, causing frustration, inconvenience, hardship.”

Ramaphosa added that Eskom’s woes are an inevitable consequence of its inability over many years — due to debt, lack of capacity and state capture — to service its power plants.

Over the next few months, Ramaphosa said, Eskom will implement measures to “fundamentally change the trajectory of energy generation in our country”. 

These measures include enabling the development of additional grid capacity from renewable energy, paving the way for independent power producers, and negotiating supplementary power-purchase agreements to acquire additional capacity from existing wind and solar plants.   

Subscribe to the M&G

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them.

Sarah Smit
Sarah Smit
Sarah Smit is a general news reporter at the Mail & Guardian. She covers topics relating to labour, corruption and the law.

Related stories


If you’re reading this, you clearly have great taste

If you haven’t already, you can subscribe to the Mail & Guardian for less than the cost of a cup of coffee a week, and get more great reads.

Already a subscriber? Sign in here


Subscribers only

Mbeki tells ANC that land without compensation goes against the...

‘This would be a very serious disincentive to investment,’ says Thabo Mbeki in a document arguing that the ANC should not proceed with the Constitutional amendment of section 25

Micro-hydropower lights up an Eastern Cape village

There is hidden potential for small hydropower plants in South Africa

More top stories

Eskom kept paying because Trillian kept working, Zondo commission hears

Former senior executive Prish Govender tried to justify why payments to McKinsey and the Gupta-linked consulting firm continued in the absence of a contract

Vaccine technology transfer hub a win for South Africa

The first batch of locally manufactured jabs could be expected in the next nine to 12 months

High court calls meeting on bid to halt ConCourt appointments

Casac has launched an unprecedented bid to have the politics-laden interview process to fill vacancies at the apex court started from scratch

Kenneth Kaunda: The man behind the statesman

Zambia’s founding father left a lasting legacy

press releases

Loading latest Press Releases…