23/03/2018 06:44 SAST | Updated 23/03/2018 06:44 SAST

Eskom Wants Whopping 30 Percent Electricity Tariff Increase To 'Pay For The Gupta Years'

Experts say Eskom is unlikely to be granted its request, which will amount to consumers paying for corruption and mismanagement.

A man walks past electricity pylons in Soweto, South Africa, March 5, 2018.
Siphiwe Sibeko / Reuters
A man walks past electricity pylons in Soweto, South Africa, March 5, 2018.

Eskom needs to recover massive revenue losses, and electricity users will pick up the tab. According to Mining Review, Eskom wants tariffs to increase by 30 percent by the end of 2018, over and above its annual tariff increases. Meanwhile, municipalities are also adding their markup on the 6 percent increase already granted to Eskom earlier this year.

The power utility is facing a massive cash crunch and was granted a R20-billion loan facility earlier this month.

Energy regulator Nersa has reportedly invited the public's comment on Eskom's new request, which reportedly seeks to cover R66-billion lost between 2014 and 2017.

According to Mining Review, Eskom's documents submitted to Nersa state that the R66-billion hole in its balance sheet is thanks to its over-estimation of electricity sales and overspend on coal, gas and imports.

Former senior Eskom executive Ted Blom, now at Mining and Energy Advisors, told TimesLive that if the increase is approved, it will amount to the public funding "the gravy train". He reportedly said Eskom's financial problems are thanks to corruption and mismanagement.

"The corruption is to a large related to the Gupta years."

Energy analyst Chris Yelland told TimesLive that Nersa is unlikely to grant Eskom's request. He pointed out that Eskom wanted a 19 percent increase in 2018/19 but only got 5 percent, and said the power utility would be "lucky if they get half of what they apply for".

Meanwhile, Eskom is still doing battle with several municipalities who have not settled their debt. According to IOL, Eskom cut power to the Free State's Tokology municipality last week after debt renegotiations failed.

Eskom reportedly said in a statement, "After allowing the municipality a grace period to meet Eskom's terms to settle its outstanding debt of R36,464,659.52 for the bulk supply of electricity, Eskom is left with no choice but to further intensify the ongoing scheduled supply interruptions to the municipality."