NEWS

One Thing's For Sure About Gigaba's Growth Plan ... We Will Pay More For Electricity

Nuclear may also still be on the cards.

13/07/2017 14:04 SAST | Updated 13/07/2017 14:28 SAST
Bloomberg via Getty Images
Electrical lights illuminate commercial office buildings at night in Pretoria.

Finance Minister Malusi Gigaba's Inclusive Growth Action Plan holds a single certainty for you: you are going to pay more for your electricity.

Gigaba said on Thursday that the beleaguered electricity parastatal will approach the national electricity regulator, Nersa, "regarding Eskom hardship".

Eskom is the most indebted of the state-owned enterprises and holds a significant proportion of government's contingent liability (its guarantees that allow public companies to borrow).

Eskom wants substantially higher tariff hikes than it has been allowed by Nersa and it is now likely to get political support to pressure the regulator to grant these.

The gap between what Eskom wants to charge its customers (that's you, me, businesses and municipalities which buy wholesale from Eskom) is huge: Nersa allowed a 2.2 percent hike in 2017 while Eskom is seeking 20 percent to bolster its balance sheet. This is a 17.8 percentage point gap, the difference of which will be funded by electricity consumers.

In everyday terms, multiply your electricity bill by a conservative seven times if Eskom gets its way with the regulator.

Gigaba also said Eskom is developing the case for Eskom soft support until tariffs are adjusted in 2018 for submission to Treasury and the Eskom board. This means taxpayers are likely to pay more to subsidise Eskom via the fiscus.

Nuclear still on the cards?

While Gigaba did not name-check the nuclear deal, he has repeated President Jacob Zuma's phrase on the potential Trillian Rand deal, but added an important caveat: a new energy plan (which includes nuclear) will be reviewed by the minister of energy by next month with the pace and scale determined by the circumstances of Eskom's hardship and overcapacity.

Zuma has always said nuclear will be purchased at a pace and scale set by the economy.

His phrasing on Thursday sounded like Gigaba was stepping back from the nuclear deal, although the freshly minted Minister of Energy, Mmamoloko Kubayi, last month went on a jaunt with the Russian nuclear giant Rosatom to the Atom Expo in Moscow. Rosatom is widely regarded as the frontrunner to win the bid to build an explosion of nuclear plants in South Africa.

In April, the Cape High Court set aside the first attempted nuclear deal on procedural grounds related to a lack of public consultation.