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Eskom mulling its options in Molefe Labour Court bid

Business Report
Eskom said yesterday that it was working on its legal papers after its former chief executive Brian Molefe headed to the Labour Court in a bid to get his job back.

In a major turn of events, Molefe has taken his fight to stay on in his lucrative job to the Labour Court in Johannesburg. He wants the decision to remove him to be declared invalid and he has cited Eskom and Public Enterprises Minister Lynne Brown as respondents.

This is the latest development in the saga around Molefe. Prior to the board's decision to remove him, Molefe had been at the helm of Eskom for a few weeks.

But following the intervention of an inter-ministerial committee, Brown ordered the Eskom board to fire Molefe.

In a terse statement, Eskom said its legal team was working “expeditiously” to finalise its papers. In the court challenge, Molefe had called into question the legality of the decision to remove him.

Meanwhile, Eskom said it had approved a draft revenue application for consultation with the South African Local Government Association (Salga) and the National Treasury over electricity tariff hikes.

ALSO READ: Brown to probe Eskom

Eskom spokesman Khulu Phasiwe said the power utility had submitted the draft application to them in April.

“The Municipal Finance Management Act requires Eskom to consult with these entities before submitting its final revenue application to Nersa (National Energy Regulator of SA).

"They are allowed 40 days to provide comments. Eskom has received their responses. The responses from Salga and the Treasury are being considered. Eskom envisages that it will submit the final revenue application to Nersa during this month,” Eskom said.

The utility said it had implemented Nersa’s decision of an average 2.2percent tariff increase for the 2017/18 financial year. The increase was effective for Eskom customers from April 1, 2017. Municipal customers face an average 0.3percent increase effective on July 1.

“The previous multi-year decision made by Nersa for the period April 1, 2013 to March 31, 2018 comes to an end on March 31, 2018 - therefore, there is a need for Eskom to make the next application. Nersa has given the go-ahead for Eskom to make a revenue application for a single financial year - the 2018/19 year,” Eskom’s chief financial officer Anoj Singh said.

Phasiwe declined to comment on the accuracy of reports that Eskom was seeking a tariff increase of almost 20percent. He said the utility would only comment on the figure it would submit to Nersa as part of the application. “We cannot comment on the figure to National Treasury and Salga. That figure is not final,” he said.

He added that Nersa had given Eskom an option to apply for tariff increases over one year - 2018/19. “The current multi-year price determination (MYPD) comes to an end in March next year,” he said.

Such a move was necessary given the legal challenge to the MYPD methodology.

The Pretoria High Court last year set aside the regulator’s decision to increase electricity tariffs by 9.4percent under a regulatory clearing account (RCA) application for the 2013/14 financial year.

It said Nersa’s determination to allow Eskom to recoup R11.2 billion was irrational, unfair and unlawful.

Nersa is appealing the high court's decision.

RCA is a monitoring and tracking mechanism that compares certain uncontrollable costs and revenues assumed in a MYPD decision - made by Nersa - to actual costs and revenues incurred by Eskom.

BUSINESS REPORT

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