ESKOM asked the National Energy Regulator of SA for a tariff hike of more than 45 percent over the next three years.     Bloomberg
ESKOM asked the National Energy Regulator of SA for a tariff hike of more than 45 percent over the next three years. Bloomberg

Eskom looking to make up R170bn shortfall

By kabelo.khumalo Time of article published Apr 4, 2019

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JOHANNESBURG - Embattled power utility Eskom said yesterday that it had received R170 billion less than it had initially asked for in tariff increases and government support, and was in discussions with the government to provide it with further support.

This comes as the utility pledged to limit load shedding to stage one in the next five months.

Eskom chief executive Phakamani Hadebe said that the support of R23bn a year the power utility received from the National Treasury in February was not cast in stone.

“When we’re working on strategy, we expected the government to give us R100bn over three years, and the tariff increase by the National Energy Regulator (Nersa) gave us a shortfall of R102bn, and there was also an RCA (regulatory clearing account) that left a hole of R19bn,” Hadebe said.

“That is why we are discussing with the government to see what else can be done. Because the agreement we have with the government is that three pillars of the strategy should happen at the same time.

“Eskom should save R20bn, the government should give us R100bn over three years, and, thirdly, Nersa would give us a figure we are looking into.”

Hadebe said he was hopeful that the government will give the utility a hearing, as the 2019 Budget Review stated that the R69bn assistance over the next three years might be reviewed, depending on whether the “inflation, growth and tariff situation changes”.

Nersa said in March it would allow Eskom electricity tariff hikes of 9.41percent for the first year, 8.1percent for the second year, and 5.22percent for the third year.

Eskom initially requested a rate hike of more than 45percent over the next three years, citing financial problems, including debt of more than R400bn.

Moody’s this week warned that capital transfers from the government, combined with the tariff increases announced by the Nersa last month, “may prove insufficient to address the company’s long-standing financial troubles”.

Eskom said it would decentralise its decision-making systems and grant power-station managers more authority to take decisions.

Hadebe said the decentralised system would allow more accountability.

“We want to make sure that critical decisions are taken by power-station managers, and they get held accountable for their decisions.”

Member of Eskom technical review team Phindile Mooketsi said the task team had found that one of the reasons for the utility’s operational problems was the high number of acting power station managers. She said this hampered their decision-making.

Eskom said four power-station managers were in acting positions, and it would fill the posts in the next three weeks.

Eskom chairperson Jabu Mabuza said the utility’s cost analysis indicated that ditching plans to complete Medupi and Kusile would not be feasible. He said the power producer had set aside R4.5bn to address challenges at the two power stations.

The New Development Bank this week said that it would provide Eskom with a loan of $480million (R6.78bn) for an environmental protection project at Medupi Thermal Power Plant.


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